Introduction
We all recognize that the absence of shipment or trade would heavily disrupt the daily human lifecycle. Shipping costs are among the most vital aspects of the entire expense structure of the companies that are involved in the business of trading.
In this article, you will learn about the most significant factors that influence shipping costs and thus, make more informed decisions to improve your shipping strategy.
Package Weight and Dimensions
This implies that the weight of your package is among the most crucial factors that define your shipping expenses. A larger package is more expensive to ship because it needs more fuel and handling as compared to a small package. Some shipping carriers base their fees on the weight of the package thus, weight is an important consideration when determining shipping costs.
Besides weight, the size of your package also influences the shipping prices you are going to be charged. They utilize dimensional weight (DIM) pricing in which the company charges based on the volume of the package. While they are large packages, if they consume a lot of space in the carrier’s vehicle, they will cost more to ship.
Shipping Distance
Another important factor is the distance from the point of shipment to the point of delivery. In general, longer distances mean a higher cost of fuel and a longer time in transit than shorter distances.
Shipping carriers apply the zoning system to establish the costs of shipping services. Each zone refers to a geographical region and the cost of shipping rises as the number of zones crossed rises as well. Knowledge of the zones applicable to your shipments will assist you in providing an estimate for the required payments.
Delivery Speed
Delivery speed can also be a major factor. There are different types of service options; the normal, the express and the overnight delivery services. Every decision comes with its own set of costs. Express delivery options like next-day shipping, are also considerably more costly than the standard because they require faster means of transportation and have a higher priority.
Delivery speed is the last decision that still depends on how urgent the shipment is. Faster services enable delivery to happen faster but should only be adopted where the delivery of the packages is urgently required in order to balance between the price and the service.
Shipping Method
The method of shipment that you select whether by air, sea, or ground influences the total cost. Each of the methods has its advantages and drawbacks regarding cost, velocity, and credibility.
Air Shipping: It ensures fast and good for high-value or perishable goods but the air delivery is more costly.
Sea Shipping: Cheaper for huge and massive consignments but less faster.
Ground Shipping: Ideal for domestic deliveries as it is affordable and easy to use.
Fuel Surcharges
Fuel surcharges are extra charges imposed by carriers to mitigate price fluctuations in fuel prices. These surcharges are not fixed and depend greatly on the present fuel prices. Fuel surcharges are normally reviewed on a monthly basis and may be affected by political instabilities, catastrophes, and variations in the supply and demand of fuel. These surcharges greatly affect the general shipping cost, particularly for distant and bulky cargo deliveries.
Handling Fees
These include charges for the actual physical activities of loading, unloading, and movement of consignments. They might be relevant to the packages that require specific handling according to their size, weight, or type. Other charges called handling charges are charged on large and heavy shipments and some other categories of dangerous goods and fragile commodities. To be free from these charges ensure that the packages meet the carriers’ size and weight requirements for shipment.
Insurance and Additional Services
Shipping insurance is an insurance policy that covers the consignment against loss or damage in transportation. Although it is an extra expense, it can actually pay for itself in the event of an accident to a certain extent. Tracking services, confirmation of a signature, or delivery notifications are often charged as extra services but they increase security and customer satisfaction. Consider the need to acquire these services based on the benefits they provide in relation to their costs for your shipments.
Customs and Duties
Custom duties and taxes are imposed on commodities at the point of import or export. These charges differ by country as well as the type of product to be shipped. Customs duties vary as a result of the value of the imported goods, the type of goods, and the originating country. It can also involve import taxes. In order to address these costs, one has to familiarize oneself with the laws of the destination country, declare properly, and categorize goods correctly.
Seasonal Demand
Freight charges can be a bit higher in the rush seasons including the holiday seasons due to congestion of the available carriers. For instance, the cost of shipping that is usually incurred during the holiday season may surge due to increased volumes of packages leading to costlier surcharges. Schedule the shipment in advance, so that it is not very expensive especially if one has to deal with the freight during festive seasons.
Carrier Rates and Agreements
Carrier charges depend on the policies of the carrier, their prices, levels of service provided, and the contracts that may be in place. Companies that move a large amount of cargo can always demand better rates and conditions with carriers, and, thus, save a great deal of money. Carrier relationships can also offer long-term consistency in rates and the ability to enhance service delivery.
Packaging Materials
The selection of particular packaging has an impact on the shipping prices. Adoption of lighter and stronger materials is likely to lower the costs that will be incurred. Of course, sustainable packaging may cost more initially than a conventional method of packaging, but the long-term advantages are also considerable. Choose a packaging type that is affordable, protective, and minimally influences our environment.
Warehouse and Storage Fees
Storage of the goods in the warehouse also attracts some charges which in one way or another contribute to the shipping expenses. Long storage times add to the expenses that clarify why it is vital to control inventory. Minimize the stock holding period and employ the JIT inventory method to cut storage expenses.
Conclusion
Shipping costs depend on factors such as package size, location, and delivery speed as well as the current state of the shipping industry. In this case, it is clear that by controlling the above-mentioned factors, one is able to enhance the management of shipping with the aim of improving costs and overall performance.
Do you want to take up the challenge and reduce shipping costs? Contact FOS Desk and you will significantly see changes when you use the above methods right now.
