It’s not uncommon for shippers receiving quotes to think, “How can I get this price to go down?” Don’t worry, you’re not the only one. It’s just a matter of fact that businesses are constantly on the lookout for ways to reduce operation costs, including shipping. Freight forwarding is a complicated industry, and for most laymen the math surrounding the cost calculations will be a mystery. Nevertheless, there are some elements that shippers should consider when searching for a cheaper quote:
1. Sharing Your Shipping Forecast
Your sales determine the volume and frequency of your shipments. Therefore, if you share your sales forecasts you will also provide the forwarder with an idea of the amount of shipments you will require. With this data, forwarders may be more willing to provide you with a cheaper quote, expecting they would get all the business from you. You can try giving the forwarder some constant cargoes, and check their loyalty and willingness to add a discount to your rates.
2. Bulk Packaging Goods
Many times, you receive the goods from your supplier in cartons containing small packages of your products. Packaging inside the shipping cartons adds volume, and a bit of weight, which turns into extra shipping costs. When possible, avoid internal packaging and ship in bulk. Save the packaging process for after your products arrive at their final destination, and then you can put together your sets before delivering to customers. Some shippers may not want the hassle of packaging their products, but it will save money if that is your goal.
3. No Peak Season Shipping
Peak seasons are always pricey. Everyone knows it, and still everyone ships during those hectic months. You can plan very well ahead and ship at least 2 months before any peak season, for a better price. For example, the Chinese New Year happened at the end of January 2017, and if you wanted to avoid peak-season-charges, you must have shipped in November or December 2016. Shipping earlier than needed may incur in some extra storage costs at destination, but it will – for sure – be less that the hundreds of dollars you have to pay during peak season.
In addition, you can try shipping sea freight instead of air freight, in order to have some weeks before the cargo arrives, and consequently you can avoid some storage costs at destination.
4. Negotiating for a Cheaper Quote
As obvious as it sounds, you have to take some extra time to negotiate. No forwarder will give you a cheaper quote automatically, you have to ask for it. However, it is not all that difficult to get better prices from your freight forwarder.
"Logistics firms often lack confidence and negotiation tactics. They are frequently at the mercy of their customers' professional purchasing departments,” said Joerg Hoppe, DB Schenker’s director and head of ocean freight for North/Central China.
You have the power to ask for what you need, within reasonable terms, and your forwarder will try to provide you with the best rates they can. Some forwarders might still be cheaper than others, but bear in mind that cheap rates do not always imply the best service. Do your due diligence about the forwarders and their rates, and you will find you have more options than you previously thought.
5. The Freight Forwarder’s Network
As it has been mentioned before in other articles we’ve shared with you, the network of a freight forwarder is a good indicator of the reliability of their service. However, it is also one of the things that can open that forwarder up to offering better rates. When a forwarder has a network of stable relationships with third parties and a strong international presence, they are able to negotiate lower rates for themselves. These cheaper quotes will then be passed on to customers like you.
The forwarders with strong networks have a global reach, with name/brand recognition (and agents) across nearly every country. These forwarders are usually multinational companies that have policies or rules to apply standard fees and profit margins in every part of the world. In contrast, forwarders who don’t operate as a part of a multinational network must usually make partnership agreements with other forwarders that have good coverage in certain locations. Though it’s not a hard and fast rule, partnerships with different agencies imply that there will be some extra cost in your final shipping rate. This is because each party must make a profit. But again, it’s not the rule, and not all of those agencies add extra costs.