Mike has been using air freight regularly to ship more competitively priced products from global manufacturing hubs. However, on calculating the landed price of the goods, he wondered why the total cost per item always exceeded the budget.
When Mike looked into the finer-grain detail, he discovered he had been missing a few important factors because he’d just focused on negotiating costs direct with the airlines.
Read on to learn about these factors that can add or subtract hidden costs to your consignments including the applicable International Commercial Terms (Incoterms), pre-cargo planning, proper packaging, CAT [complete-accurate-timely] documentation and alignment with a resourceful freight forwarder.
Pre-calculate your door-to-door delivery charges
Airlines have very wide networks, and finding an airport near your delivery destination is not a hard nut to crack. However, delivering a special or sensitive consignment right to your customer’s door requires appropriate handling and the most efficient land transport choice.
In some cases, special requirements for port-to-door or door-to-port surface transport can even cost you more than your air freight. This is something that has to be factored in to the per-unit cost.
To manage this, planning your shipment movements in advance can help Operations Managers avoid these unforeseen charges. Get all of these elements priced upfront in the quote, and you won’t have them turning up later as nasty surprises in the landed cost.
To learn how to calculate your landed costs, read this blog.
Pack your cargo efficiently
Smart Australian Operations Managers know that packaging any cargo efficiently not only ensures cargo security but also helps save unnecessary freight forwarding costs.
Because aircraft are space constrained, airlines charge high prices on volumetric weight.
That means that every extra centimetre in your goods’ packaging can reduce its cost competitiveness.
Working with an experienced Australian freight forwarder means you can gain advice about all the tricks to packing your cargo compactly – saving on unnecessary extra freight costs.
Prepare error-free documents
Appropriate and complete documentation assists Operations Managers to deliver shipments in a timely manner and avoid additional charges. When the paperwork is flawed or delayed, however, it can result in detention of cargo, and potentially even heavy financial penalties.
Also, different countries have different requirements, and they all need to be fulfilled completely and efficiently. That’s when an experienced freight forwarder that has the knowledge of all the documents required internationally within any jurisdiction you’re importing from or exporting to can be a great partner. They can ensure the right It’s are dotted and t’s are crossed, and that all the paperwork gets where it should without unnecessary delays or added expense.
Alignment with an expert air freight forwarder
Freight cost distortions have many sources – fluctuating fuel prices, changing airline and government policies as well as other unexpected events.
Any savvy Operations Manager is aware that these are uncontrollable situations that can increase their projected cost per unit exponentially.
Having higher volumes and established professional relationships with the various airlines helps international freight forwarders manage costs for their customers to a greater extent. After all, they sign a yearly global contract with the airlines and achieve competitive prices.
By aligning with these international air freight forwarders, Australian Operations Managers get to leverage the same benefits and gain better control on their air freight cost.
Know your incoterms
Although there are 11 International Commercial Terms (Incoterms) understanding them can be both confusing as well as frustrating for even an experienced Operations Manager.
Not getting the full picture can mean paying extra or running into unexpected expenses.
That’s when consulting your freight forwarder that has a grip on the applicable Incoterms and their relevance for your company can assist you in reducing your freight forwarding costs.
It’s not just about the dollars per kilo!
Apart from negotiating your freight and transportation cost, Operations Managers should consider cargo packaging, documentation, transport mode, customs clearance, cargo planning and Incoterms to achieve the best bottom-line outcome.
Being aware of the hidden elements that add to international freight costs can help you reduce costs drastically – and make your landed products more competitive in the market.
For more than a century, BCR has continued to help small, medium and large businesses achieve an optimum logistics solution with warehousing and transportation, including air freight and sea freight services to and from the major ports including Brisbane, Sydney, Melbourne, Adelaide and Fremantle (Perth).