If you are in an ecommerce business, big or small, when do you determine whether to use a freight forwarder to help streamline your business?
Ecommerce is a large part of many consumers' lifestyle today - it was much harder to set up shop a few years ago. Today, with the help of the likes of Shopify, Aliexpress, and other services to connect wholesalers to wishful entrepreneurs, ecommerce businesses are booming. And with that, comes the large question mark of how to transport product from your supplier to your customers, as fast and efficiently as possible.
The answer to that question relies heavily on:
1) The type of products you sell
Do you have a jewelry, clothing, toys, furniture, or even a phone case business? The type of product you sell will affect what suppliers you need and what lead times they have. Keeping lead time within your control is crucial to running a efficient supply chain for a ecommerce business.
2) The customers you sell to
Where are your customers located? Are they all within the same vicinity or spread out across multiple regions? Are they located internationally? If so, an efficient shipping method will be important.
3) The type and quantity of product you need to ship.
Going straight to a courier (e.g. Australia Post, China Post) can be a good idea if you ship more than 10 shipments a day. However, a courier usually specializes in a set of services, type of equipment and region. So, by signing a contract with just one courier , you are limited to the services and network that they can provide.
Using a freight forwarder is a good option if you import and export goods and need someone to arrange storage of your products or materials. A freight forwarder will negotiate prices with couriers, consolidate your freight, and ensure customs clearance for you. They are the middle-man between your supplier (shipper) and various couriers. A freight forwarder is beneficial when you have large cargo, have large quantity to transport, as they have extensive network and experience negotiating with local couriers to get you better rates.
Using a 3PL (third party logistics) is suitable if you need to combine a lot of services and types of products into one package. For example, if you need a warehouse to ship your products from, many logistics provider will combine this service with shipping your products from the warehouse to your customer. However, if you choose to use a 3PL provider, make sure to do your research as to where their responsibilities end and when yours come in.
So now you're ready to ship, and you know what type of product, the quantity and frequency of shipment you require. What shipping method do you need?
Well, as mentioned above, there are several options you can choose: Post, Courier, Air and Sea.
1. Regular Post: this is best used for small items. It will take 2-5 weeks to arrive, and only available for under 2KG. If you're willing to wait, this method is suitable for small to medium sized products (jewelry, clothing, small electronics). Regular post will set you back about $USD 15/KG.
2. Express Courier (ship to your door): the most popular used way for sales sample and small quantity order (under 200KG). For example, DHL, UPS, FedEx and TNT are some of the commonly used Express Couriers. Most courier shipment takes 2~5 business days to regardless of where you are in the world. Of course, you get the trade-off in cost, which may be up to $USD 50/KG.
3. Air Freight: If your product is in slightly larger than the prior category for a courier (over 200kg in volumetric weight), the fastest and most efficient option is air shipment. Compared to courier, the cost would be lower, approx. $USD 5-10/KG (depending on the weight), and will take 2~10 days to arrival. However, you will then need to handle documentation and customs clearance upon arrival, which you may be able to outsource to a freight forwarder at an extra cost.
4. Sea Freight: The most economy way to ship large amount of goods, but ocean freight also takes the longest (3~9 weeks). If your product is not sensitive to lead times or are seasonal, such as household goods, you may be able to benefit from lowered costs of shipping via container freight. Again, if custom clearance is a concern, outsourcing to a freight forwarder may be suitable for you.
Each come with unique benefits and it’s often a combination of these shipping methods to get goods to your business. You should take into account the time frame you need your products, the security of your shipment, and usually the biggest factor, the cost. And always make sure to keep your customers in mind, determine what experience they expect and how you can best optimize your supply chain to deliver that experience as much as possible.
So, your ecommerce business may benefit from a freight forwarder in different ways. Another important topic which we will cover in the next blog post in this Basics to Freight Forwarding series is Digital freight forwarding. Previously we also covered What is a Freight Forwarder and How to choose a Freight Forwarder. Stay tuned and subscribe to our blog for updates!
If you think your needs align with the tips we gave in this post, you can reach out to us by commenting below or contact one of our Freight Specialists to have a free consultation.
Whale Logistics are Australia’s leading Freight Forwarder and Logistics company located in Sydney and Melbourne. We deliver digital services such as Australian customs parcel tracking, parcel delivery box, and comprehensive ocean, air and road freight solutions. For cost competitive and innovative freight forwarding solutions, please click the link below to contact a Whale Logistics Freight Specialist today for a free consultation.