So, you work for an international business and have been asked to present a shipping strategy to improve your supply chain. You have been asked to demonstrate how you can save time and money with your freight and need to deliver a successful presentation back.
Our step-by-step process can help you devise a solid shipping strategy by looking at your current operation whilst searching for areas of efficiency.
Our guide below details how to develop your own efficient shipping strategy, consolidate it and learn from others to deliver the best results for your business.
#1 Review your current shipping process and collect data
The first step you should take when developing a shipping strategy is to completely review your shipping as it currently stands. Use this review to collect data for each stage of the process, from purchase to the final delivery. A few key questions to ask include:
- How much volume are you shipping year on year?
- Does this change with seasonality?
- What are your main shipping methods (Air or Seafreight) and what are the reasons behind this?
- How have your costs fluctuated throughout the year and been impacted by the mode of transport?
- What KPIs are you using to track your performance?
- Are there any financial implications if you cannot deliver to your customer against the timeline you anticipated?
- Are you insured for shipping and what is your financial risk?
You may find that when commencing your review, you do not have much data to work with. This possibly demonstrates at the outset that your shipping process requires better visibility and tracking.
Visibility is key and should be a central part of your shipping strategy – gaining greater visibility so you can provide a better service to your customers and improve the supply chain in areas of weakness.
#2 Identify areas for improvement
Once you’ve detailed your shipping process thoroughly, you can use it to identify areas for improvement considering timelines, costs and the environment. This includes looking at the following factors:
Airfreight or Sea freight
Is it more efficient to ship your goods via the ocean or via the air?
How many shipments did you perform using each and how much extra money did you spend on airfreight when goods could have been sent via sea? Could you have avoided using air freight with better planning? Or, alternatively, should you have used airfreight for an ocean shipment that was unnecessarily delayed?
There are many advantages and disadvantages of using these two types of shipping methods, which you can read about in our blog here.
Sea freight timelines
Assess whether your sea freight timelines are typical of the market. You want to make sure your chosen shipping route works for your business.
You may be using a slower transhipment route that is not as efficient as a direct route but offers you low charges. Or, by contrast, you may be paying a higher premium for direct services that are required to meet your business timelines. To understand the difference between these two methods, you can read our blog on Direct Shipment vs Transhipment.
You can use a platform like Big Schedules to compare shipping routes on specific dates. The routes will contain the transit time, carrier, Container Yard (CY) cut-off dates, departure and arrival dates as well as the service and the vessel. Whilst we recommend Big Schedules as a great source of information, always check with your forwarder the details of the shipment they are specifically using.
Buyer’s consolidation refers to the shipping method whereby you combine numerous smaller shipments from multiple suppliers into a larger shipment, reducing overall costs in the supply chain.
There may be an opportunity to consolidate your shipment if you are picking up your goods from multiple suppliers. In freight terms, this would bring together two or more LCL (Less than Container Load) shipments into one FCL (Full Container Load) shipment.
You can read more about the benefits of this process in our buyer’s consolidation blog.
Detention and demurrage
Are you paying unnecessary detention or demurrage costs because you are not unloading the container in time? It may be the case that your cargo is simply sitting at a port, waiting to be loaded and some of these additional charges our out of your control.
Or are you keeping the driver waiting on-site? We’ve seen drivers wait several hours before being able to leave after an unload, resulting in increased transport (and ultimately consumer) costs.
There may be room in your shipping strategy to remove these unnecessary charges by resourcing correctly at your delivery point.
Stink Bug Season
Every importer should take into account if Stink Bug Season is impacting their bottom line. From September to May each year, the brown marmorated stink bug (BMSB) presents a greater biosecurity risk to Australia and strict measures are implemented by The Department of Agriculture and Water Resources to ensure the protection of our native wildlife.
Failure to prepare can cause increased costs and delays as ships arriving into Australia carrying stink bugs will have to be treated on arrival or in some circumstances will be directed for re-export.
Have you covered all your risks when shipping, including the risks of loss or damage? Do you have an adequate marine insurance policy that can adequately cover you in case the worst happens? Are you paying for a ‘per shipment’ insurance policy when you can save by paying on an annual basis? Or alternatively, are you paying a high annual premium when paying on a per shipment basis would offer a reduction in spending?
There are many risks associated with global shipping such as poorly designed packaging, vessel collision, fire and piracy. We discuss these risks, what insurance is available and how a policy can help you in our marine insurance blog.
As you start to get even more detailed during your review you may want to consider if there is an opportunity in your supply chain to reuse your containers and save on transport.
Container recycling is a concept for businesses that import raw materials and re-export products across the globe (or vice versa). When you are working with significant volumes (usually 200 containers per year or more) you may want to consider a shipping line contract in which you empty your raw product from one container and immediately load a final product for export into the same container. Container recycling can be complex so it’s worth talking to your freight forwarder if you think this may be an option for your business.
#3 Consolidate your review
Once you have undertaken a comprehensive review, you may find there are a few areas that can be addressed.
Select what is most achievable and what will bring the highest value initially. For example, re-using containers may be appealing, but you need to have a tight schedule on imports and exports and commit to work with dedicated shipping lines. Container re-use may simply not suit your business model.
On the other hand, you may find that you’ve been spending too much of your budget on direct routes for shipments that are not urgent. Transhipment, therefore, maybe a more viable option. Whilst it might be riskier, perhaps your marine insurance policy adequately covers you for any loss or damage.
#4 Bring in the experts
Bolster your presentation with expert analysis.
At ICE, we specialise in managing freight of all shapes and sizes. Part of the success of our business has been on delivering what we are good at and utilising the services of others where we do not have expertise.
Once you have thought about your supply chain and how you can improve its efficiency, it is prudent to talk to one of our consultants about how your ideas would work in practice. You can get live comparison costs and learn whether the strategy is right for your business.
#5 Gather successful examples
It is also useful to research other businesses that have made significant successful changes to their supply chains for enhanced efficiencies. Point out their relevance to your shipping strategy plan.
Identify some of the difficulties during this process in your presentation. Demonstrate how similar companies overcame such difficulties, and how your business can do the same.
Management will be more likely to accept your shipping strategy if there is supporting evidence that your idea has worked for other companies, especially if they are in the same industry as you.
Below we have selected three interesting case studies for you to start with:
#6 Prepare your presentation
The final step will involve bringing all the information together. Whilst all workplaces are different, here are our suggested key points to remember when delivering your presentation:
- A strong introduction – your boss should be hooked from the start so deliver a strong opening.
- Speaking with passion – your boss won’t be interested in what you’ve got to say about improving your shipping process if you’re not interested in it yourself;
- Voice projection and body language – Speak clearly. Not too fast and not too slow. Use hand gestures to visualise the importance of your message;
- Keep it simple – whilst shipping can be complicated, focus on the core message; and finally
- Simple PowerPoint presentations – use less text and more pictures. Throw in an amusing video to keep things interesting. Keep it to 10 slides and you’ll avoid ‘Death by PowerPoint’.
With the right amount of research and expert analysis to back you up, you can deliver a solid shipping strategy to your boss.
At International Cargo Express, we can help you thoroughly review your shipping process and give you tailored ideas to suit your business goals. Call us today for a no-obligation discussion or you can leave a comment below.