Sea freight is a very important cost component for any business transaction which involves overseas shipment. Negotiating sea freight is an art. It takes time and genuine efforts to get best freight rates from carriers. However, few basic factors and tips included in this article will help you reduce logistics cost significantly

Ask Quotes From Competing Carriers

Shipping rates can vary drastically from one carrier to another. Carriers commonly classify pricing requests into one of three sets of customer types:

Retention- whereby the carrier gets the majority of the available business

Penetration- where the carrier already gets business but there’s opportunity to gain additional volume; and

Conversion- where the carrier has no or little presence.

Guess which customers get the maximum discounts offer? Conversion customers (i.e., shippers that give a carrier the least business). If you primarily use only one carrier and it’s been years since negotiating your agreement, there’s a good chance your loyalty is being unrewarded. Remember, if your goal is to reduce costs, your best friend during carrier negotiations is often the other carrier. The single best way to reduce costs is to leverage competition. In fact, shippers that routinely shift between and/or split their business with both carriers get the best pricing.

Seasonality Factor

Have you ever thought why prices are so volatile? For every freight-rate answer, there is a season, turn. Peak seasons yield higher price estimates. Depending on the nature of your goods, there are slow and heavier seasons and prices reflect supply and demand. In Asia, for example, from mid-January through early February an upsurge of cargo is evident, as businesses are eager to beat the Chinese New Year deadline when factories may shut down for weeks. With resulting space problems for cargo to get on to the vessels, rates may rise. In any niche good’s "peak season" where there is a big demand for cargo, rates are high. Plan and readjust your shipping dates accordingly to get better sea freight rates.

Avoid Amendments

Slight tweaks to your sea freight Bill of Lading might not only invite a real headache for your company but will also cost you additional charge. Changes may not even be possible after the goods have arrived to wherever they were assigned. Keep to your goal to be cost-saving hero without having to shoulder extra fees charged because you amended the Bill of Lading to the point where you incurred extra charges.

Use Preferential Trade Agreements

Do some research to see if you are eligible for various PTAs. You can save good amount of dollars in duties and taxes using this method.

Reuse Shipping Material Whenever Possible

When it comes to shipping and packaging discounts, volume is key. But that doesn’t mean that small businesses without significant shipping volume can’t cut their costs! One way to minimize expenses is to save the packaging materials you receive on personal and professional shipments. Reusing these items isn’t just eco-friendly; it’s friendly on your wallet as well.

Shipping Exchange

Try out logistics portal which helps you in finding best shipping freight rates and reduces your logistics cost drastically.

Buy Insurance From Third Party

While carriers charge about 80 cents for every $100 of insurance, third-party companies charge about 45 cents only. The savings can add up, if you frequently ship expensive items.