First Step Marketing

Reduce Packing and Freight Cost

Exporting companies need cost-effective packing and packaging in order to be competitive in world markets. Freight costs are based on volumes or weights and manufacturers can pay unnecessarily for thin air because of ineffective packaging.

1. Design products with freight costs in mind

Where possible product design should result in the smallest and lightest package to reduce freight costs. This can include products for local part assembly or completely knocked down. Local assembly costs can be less than freight costs and have the added attraction of providing some local participation.

2. Make sure crates and cases are as cheap as they can be

Companies who have traditionally exported for many years should look at the materials used and the design of their packaging. Look at the use of crates as opposed to cases and also consider the use of cartons as an alternative.

3. Make maximum use of container transport

Containerized transport requires less packaging.

4. Use your freight company to the best advantage

With containerization, roll on/roll off transport etc, new opportunities arise for cheaper freight. Always pressurize your freight agent to find the cheapest route.

5. Obtain discount for freight quantity

Negotiate with your shipping agent a discount based on the value of business you give him. Commit yourself to this value and obtain the discount which will be a useful contribution to your profits.

6. Consider purchasing second-hand containers

Cheaper rates can be obtained if you purchase second-hand containers and leave them on site. This may have the added advantage of providing a site storage facility during the course of a construction.

Cut Transport Cost

Some companies find operating their own transport division to be more profitable than using outside hauliers. Others maintain a small vehicle division as a convenience.

1. Be aware of comparative vehicle operating costs

When purchasing a new vehicle always compare the running cost per mile of the various vehicles available. The purchase price of vehicles can mislead you into buying the cheapest but you need to consider the whole cost, both capital and operating costs during the vehicle’s life.

2. Advertise for cargo to fill up a vehicle

Other local manufacturers may be willing to use your transport for their own goods which will be very helpful, especially when you only have part loads.

3. Obtain return loads

An empty vehicle really is a waste and an effort should be made to obtain a return load. Perhaps you could bring in supplies which are subject to an addition for carriage, thus eliminating the carriage cost.

4. Use petrol facilities at other companies/branches within your group

The facility to use fuel from other group sites would add to the benefit of purchasing petrol in bulk.

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This entry was posted on Thursday, June 26th, 2008 at 11:36 pm and is filed under Advertising, Cargo, Logistics, Transportation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.