To Sea or not to Sea....

Importing

The cost to actually get your product from an offshore manufacturer into your warehouse  can sometimes add a considerable amount to the sourcing price. 

Often we jump to the conclusion that sending a shipment by sea is obviously going to be the most economical method. If you have (and need) a full container of goods and delivery time can accommodate the traditional sea freight times then this is probably a safe assumption to make. 

But what happens when you can't order a full container of goods. When you only need a partial container or a pallet (or less).

As a novice when I first tried to ship a LCL (less than container load) from an offshore supplier I did the natural thing, asked the logistics company to consolidate the container with someone else (save some $$ on the sea freight). Sure it did save on the actual "sea freight" component, but what hit us hard was the added costs: delay while waiting for another consolidation, delay getting it cleared going out of the LCC and coming into Australia, the cost to unpack the container on the docks and then pack the goods onto a delivery truck.

It all added up. So I started to think about the situation a bit "What would happen if I simply shipped a half empty container?" I know this goes against the grain for a lot of people. When we think of shipping goods we typically are trying to minimize the amount of empty space we pay for in that shipment. Sea freight is charged by volume not weight after all. So why intentionally ship a container that is half empty. Here is what I found: No freight delays waiting for another party to consolidate, easier customs clearance (both sides), no dockside unpacking charges. All up it worked out CHEAPER for us to ship the half empty container than to ship as a LCL. 

What happens when you don't even have a half container? Well typically you need to start getting quotes. Look at economy airfreight. Decide how much you really need? Do you need a pallet delivered in 6-8 weeks or would a carton shipped by air every week work out better for your warehousing and shipping costs?

Do some serious thinking and analysis of your situation and costs involved and you may actually find yourself saving some money in logistics and storage as well as potentially improving your supply chain agility and reducing the finances committed to excessive stock levels.

 


Brian Le Mon

Principal at EQP Optimsation Solutions

A lot of pondering and analysis of my work history brought me to the realisation that, in essence, the key to building and running a sustainable business can be distilled down into 3 main factors: EFFICIENCY, QUALITY and PROFITABILITY. As a result EQP Optimisation Solutions was born. Contact me directly on 0433 687 545 for a confidential discussion to discuss business mentoring or consulting solutions and how we can EQUIP your business for a profitable and sustainable future.

EQP Optimsation Solutions

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Phil Khor

Phil Khor , Founder at SavvySME

Awesome article Brian, thanks for sharing. This example of LCL shipping consideration shows that we can't always rely on our first instinct but on the experience of others around us. Thanks for being part of the community and bringing your experience to the table.