5 Tips to Reduce Logistics Costs

Nancy Anderson
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Any company that seeks to survive and/or thrive, knows that controlling costs across the board is a top priority.

With the cost of fuel continuing to stay high, transporting items around the world has become a bit more costly, so any kind of savings is a desire of most companies. Close management of the logistics department is a good place to start, since those costs gets passed on to the cost of the item, and can account for anywhere from 5 to 50 percent of the items landed cost, depending on the type of industry in consideration.

Aside from fuel costs, there are so many other factors that add to the time and cost of shipping items around the world. Delays at the ports along with more and more complex international trade laws can lengthen warehouse time of items in transit. However, here are a few tips that can be watched for potential savings:

1. Buying from overseas may seem to be the most appealing and cost effective means, but take a close look to be sure. Run the numbers on the total freight, duty, inventory carrying, and brokerage fees required for the longer supply chain, and add in any additional costs like the sending of purchasers or engineers overseas to assist, and you will come up with the true landed cost of the items. Once all of that is calculated, you may find it to actually be more cost effective to buy domestic.

2. Look into possibly consolidating your shipments. If you have shipments coming from more than one company in a single country, see about consolidating it into one shipment, especially if you are dealing with shipments of less-than-containerload amounts.

3. Check the insurance coverage of the company involved. Many people just automatically buy into the carrier's insurance and that can be quite costly. Many companies are self-insured, and if they check their insurance policies they may find they are already paying for coverage for shipments of goods. if so, the added cost of carrier insurance is not needed.

4. Which is the cheapest mode of shipping transportation? For the most part, shipping by rail is more cost-effective than by truck, while water is less expensive than air. Always seek to get multiple quotes on cost in order to get the best rate for your needs.

5. Non-tariff trade barriers are always increasing in an effort to support human rights and animal treatment issues, to assist in reducing sweatshop labor and other associated problems. These restrictions can increase liability and compliance costs and need to be closely watched in the big picture of transportation costs.

Things are tight for everyone in business today, so anything that can be done to help keeps costs down can be a big help in keeping costs to the business and the customer at a more reasonable rate. If you have any tips to share on the topic, please leave a comment below.

Jeff McCormack resides in Virginia Beach, VA. where he works as a web designer by day. In his off time he is a husband, father, mail order book store manager, and musician. Aside from being a freelance writer for this Logistics Jobsite blog, he also seeks to assist in career choices and information by contributing to other Nexxt blog sites.

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