How to make a profitable deal by reducing the shipping cost? The cost of shipping to warehouses is an important cost element that must be deducted before calculating the final profit. Everything you need to know about shipping costs.
How To Calculate My Freight Shipping Per-Unit Cost?
Modern trade has long taken several steps towards innovations. In addition to the usual railway and sea forwarding, air freight transportation has also been added to the list of opportunities. Of course, each type of transportation has its own advantages and disadvantages for the client, especially if we are talking about cost. Now the first positions are taken by forwarding companies, as it is a very fast and easy way to deliver all cargo types.
How Freight Rates Are Calculated?
There are many details to consider when calculating the cost. For example, if we have one unit of one consignment, then the following parameters are taken into account: weight, volume, and carrier rates. If the cargo consists of several units, then the mode of transport and the type of packaging are taken as the basis of the calculation.
If we are talking about railway and sea transportation, the cost will be determined by the container size, as well as the conditions of use (FCL or LCL). There are several main types of containers: 20’ and 40’, refrigerated, closed, or open.
Knowing all the details about the conditions of carriage, you can easily calculate the total cost of it. This will help you compare different shipping companies’ prices and make your choice based on the cost of shipping.
What The Landed Cost Is?
Now let’s deal with such a concept as дanded сost. Perhaps, a question “Why” has appeared in your head? Do not underestimate landed cost, as thanks to it you can calculate the company’s net profit, taking into account the path of the cargo from the starting point to the customer’s door.
Landed Cost Calculation
What does landed cost include? Usually, these are all expenses, starting from the cost of the goods and ending with any necessary expenses incurred during the cargo transportation.
Calculating the landing cost is a “pleasure”. For this, the experience and knowledge gained while working with cargo is important. A high price can scare off a customer, while a too low price will lead to losses for your company. Frequently, shipping companies offer special calculators that can estimate the correct cost. However, you should always make your own calculations in order to accurately estimate all costs. For that, you need to take into account the following points: delivery and customs costs, possible risks, overhead costs – and voila! Your landing cost is ready!
Importance Of Landed Costs In Pricing
The cost of services may often seem incomprehensible and unreasonable. This is why it is always worth calculating the landing cost, as it will help you understand the true value of the services you are selling, as well as understand how your business works.
By analyzing the cost of services, you can understand where it is worth reducing the price, and where, on the contrary, it can be raised. That is how you can improve and clarify the cost of the services that you sell.
An Overview Of Freight Shipping Costs
During sea freight transportation, there are two main factors that should be taken into account:
1. Freight price based on carrier rates.
2. Additional costs: customs, cargo clearance, possible risks, etc.
Moreover, the cost can be influenced by whether the goods can be combined with other cargoes (LCL) or whether they must be delivered in a separate container (FCL).
FCL (Full Container Load)
FCL or full container load is used when it comes to cargo that fits completely in 20’ or 40’ containers. Such cargo is sealed at the point of departure and opened only after delivery of the cargo to the designated place.
With this type of loading, there is no need to wait until all shipments are unloaded, which saves time. However, FCL is more expensive than LCL.
LCL (Less than Container Load)
Unlike FСL, LCL or less than a container load means that cargo is usually grouped with other cargoes since they do not take up the entire container space.
FCL vs LCL
While choosing between FCL and LCL, you need to focus on your cargo size and type. Accordingly, if the materials you are sending take up the entire container space and require special attention, FCL should be chosen. If the cargo does not fill the entire space of a 20’ or 40’ container, then it is wise to choose LCL. Also, remember that FCL is more expensive than LCL.
Sea Freight Per Unit
Sea shipping is used to move a large amount of cargo. This freight transportation is usually carried out if there is no time limit since sea shipments usually take longer than any other. On the other side, shipping by sea is several times cheaper than air freight transportation.
The shipping cost depends on the cargo itself and additional costs. However, you can choose the container you need (refrigerated, open, or closed), which can also affect the total cost of the service.
Balancing Costs For Various Items
There are many useful tips for profitable cargo transportation. For example, one of these concerns the transportation of bulk goods. If you load all the items into the FСL container correctly, distributing the total cargo among all goods, then the cost per unit will be lower.
If we are talking about LCL, then here it is worth paying special attention to weight and volume, since everything will depend on these measurements.
Calculating Freight Costs On Arrival
It is possible to calculate the cost of transportation upon arrival, which is useful for both the shipper and the recipient of the cargo. To do this, you need to have all the data on the sea traffic, as well as draw up actual bills. Thanks to this, you will not need an estimate, since you will have all the necessary accounts.
As we can see, modern trade is based on speed, security, and reasonable prices. This is what the customer expects from every logistic and transport company. It all requires a careful approach to the delivery of goods and a reasonable cost of the services. If you carefully approach the delivery process, your business will only benefit and accurate calculations will help attract customers but not frighten them off.