What are the 5 most main factors to be considered for Logistics Costs Reduction?

Here’s a list of the things that largely affect logistics costs:

• Fuel costs;
• Delayed arrivals at ports, leading to higher transportation fees;
• Complex regulations governing international trade (document processing, compliance checks);
• Subsequent delivery delays and increased warehousing expenses.

Consolidated shipments

It goes without saying that shipping goods in FCL (full container loads) is preferable to LCL (less than a container load); it’s safer and more cost-effective. Also, your goods are loaded according to your specifications in a space that is not shared with other vendor goods. Otherwise, you may experience customs delays through no fault of your own.

This being said, there are circumstances when LCL is the preferred and more economical option. Namely, for transporting a relatively small freight, a good way to reduce logistics costs is by consolidating shipments. This involves a combination of several smaller shipments from multiple suppliers sharing the same destination into one consolidated shipment.

Additionally, logistics providers constantly importing less than a full load from a certain country can partner up with another similar importer and combine their shipments as a more cost effective solution.

Cargo insurance

Logistics planning and cost saving strategies won’t mean much if you don’t insure your cargo properly. The insurance should fully cover the value of your products to prevent unpleasant surprises.

Using a single, integrated platform

Supply chain operations should always be integrated into a single platform, accessible to all involved parties. This way, you’re avoiding duplication of activities across operations. Such duplicated efforts are time consuming, impair your efficiency, and leave room for error.

Outsourcing

Over 2/3 of businesses choose to outsource at least a portion of their supply chain operations, mostly transportation and storage. The reasons behind outsourcing mostly include cost reduction, increased efficiency, and the convenience of entrusting important aspects of your work to more efficient and skilled professionals.

To avoid misunderstandings and excessive costs, it’s in the best interest of both the client and the logistics provider to agree on the most important issues. This includes the frequency and size of shipments, specifics regarding packaging, product handling, temperature control requirements, etc.