Box lines firmly in control charging what they like on almost every trade lane!!

As recently reported in the Loadstar, shipping lines now appear to have carte blanche in regard to rates!

No sign that that container costs will 'normalise' in the near or even medium term. In fact, current rate levels could well be the 'new normal' for some considerable time. Now, more than ever, shippers need to examine every aspect of their inbound supply chain cost in order to limit the effect of the unprecedented rates on P+L's!

Detailed below five areas of opportunity which if managed correctly, may unlock some savings.

Container fill

Many businesses will wherever possible buy full containers from their supplier. However, in practice, this is rarely the case. A 40’ container has a capacity of 67 cubic metres, but most businesses do not  achieve a fill of more than 50 cube, leaving 17 cube of fresh air, which at current freight rates equates to over ￡2,500 of wasted space!

Through careful ordering and intelligent container unloading achieving a fill of 60 cube is quite possible saving ￡1.500 per container. For a medium sized shipper with an annual container volume of 1000 containers, the saving is in excess of ￡1,500.000!

Landside charges

Whilst landside costs remain the smaller proportion of the overall freight bill, there are always opportunities to reduce these charges. A good example is port of arrival or discharge.

Most containers arriving in the UK are unloaded at one of three main ports, Felixstowe, Southampton or London Gateway. For many businesses this means a lengthy road or rail journey before the container arrives at its final destination, with haulage costs in excess of ￡400/container! Routing the container through a geographically closer port of arrival can save hundreds of pounds. Example, businesses in the South West could use Bristol as opposed to Southampton, although worth noting that regional ports are often served by feeder vessels, adding some additional cost and time.

Rates

All businesses will seek some form of rate stability, fixing rates for an agreed period. In addition, worth linking any agreement to published freight indices, example Shanghai Containerised Freight Index (SCFI) with provision for reviews if market rate fall below the contract rate.

Choice of provider

It is often said that ‘the cheapest rate is not always the best’. In fact, the cheapest rate is never the best. Selecting a reputable provider, normally a freight forwarder, is key to maintaining quality of service as well as rate stability.

Freight consolidation

Sometimes overlooked as a cost saving opportunity, consolidating freight flows can pay dividends. Combining orders from different factories to ship full containers is common sense but sometimes ignored as a process to save money. Consolidation can be either informal, simply arranging for suppliers in the same geographic region to amalgamate orders into one container, or formally through the freight forwarder. Either way, container utilisation is maximised, resulting in fewer containers shipped, in turn equalling less cost!