Money Saving Tips for International Shipping
As the world gets a handle on COVID-19, especially here in the US, the ripple effects continue to affect the retail industry.
When the pandemic hit, the world shut down. Suppliers, factories and logistics halted but consumers went into “panic buy” mode. Stuck in their homes with nowhere to go, demand for items like home office and entertainment items soared increasing the demand for consumer products higher than ever.
Supply chains could never keep up with this demand while safely managing COVID within their country’s guidelines.
To catch up, freight ships have gotten larger. They are carrying more products than ever before, but they take longer to unload creating large delays at ports all over the world.
What kind of impact could this be having on your business?
Even with higher shipping traffic and larger vessels, in some countries it’s hard to find space on a container to get your products on the water. Your shipment could be sitting at the port for weeks waiting for available space.
This is hardest on smaller brands that aren’t prioritized for loading or unloading at seaports and can’t afford the expense of air shipping goods. Since the pandemic, we’ve seen air shipping freight costs that are 5 to 9 times higher than rates we would have seen just a year ago.
This has also affected the cost of production in the US. Most materials are still made overseas, so expect continued increased costs due to shipping and delays or out of stocks. Larger brands are also choosing to produce domestically to weather the storm leaving smaller brands with limited options. Some factories that we work with domestically are already booked many months out. As a result, we continue to advise our clients to manufacture clothing in China or elsewhere overseas.
Experts believe the end is in sight and expect things to get back to our new “post-COVID normal” in the coming months.
But, business must go on! You still have products to sell! Here at Alice James Global, we have learned a lot about shipping under these stressed conditions, and here are some of our expert tips we suggest to help you manage your own shipping costs.
1. International Air Shipping with DHL
We have found that air shipping with DHL from India or Asia is usually more cost effective than other carriers. When we first saw the spikes in cost, we looked into multiple shipping quotes for every shipment and DHL was almost always significantly cheaper.
In order to receive all of the discounts available, you will need to set up a DHL business account. This can take a week or two (sometimes longer) so make sure to give yourself enough time for set up before your goods are ready to ship.
After you create your first shipment, call your assigned DHL rep to confirm you have received all of the available discounts. There are some “behind the scenes” discounts that can be applied that can have a major impact on bringing down this cost.
2. Split Shipping
If you need products right away but can’t afford to air ship your whole production order, split shipping is a great option to get you some goods to sell asap.
These supply chain issues can also affect your factory’s production timelines as they wait on materials and trims to be delivered. Working with them on creative ways to keep production progressing by split shipping materials could be another option to keep things moving.
3. Landed Duty Paid (LDP) Pricing
By purchasing products in LDP pricing terms, the shipping cost is included in the production cost you pay the factory. When you negotiate and confirm pricing, you will be able to account for this shipping cost up front when placing your order eliminating surprise cost increases.
With these terms, factories manage the shipping for you. If you are working with factories that import large production orders to the US, you’re able to take advantage of the cost savings of consolidating your shipping with their containers. This would be reflected in a lower LDP cost.
4. Embrace Longer Lead Times
Sea freight shipping will always be cheaper than air freight. If you can wait for the goods to be shipped by sea, do it. We are seeing shipping timelines on international air freight from 10-14 days and sea freight around 45-90 days.
Adjusting your design, development and production lead times to account for longer sea shipping timelines will benefit you in the future and allow you to stay ahead of any supply chain disruptions that may arise.
These are great cost-saving strategies regardless of what is happening in your supply chain, but especially now as we continue to endure the impact of the pandemic.
In the midst of a lot of logistical unknowns, we understand that learning about and self-managing these shipping challenges can be overwhelming. We know time seems to stand still when you’re patiently waiting for product you’re excited and proud of. We also know budget is at the forefront of many decisions, large and small.
If you are considering a partner to help navigate your shipping and production, we’re here to help. We know the industry, best practices, and workarounds, and we can help you get through it all, even a “post-COVID normal”.