EXPORTING ESSENTIALS: SELLING PRODUCTS AND SERVICES TO THE WORLD SUCCESSFULLY (2014)
Chapter 9. Transport, Logistics, and Fulfillment Options
The number one thing you can do is figure out how to ship to people globally.
—Joanne Bethlamy, director, Cisco Internet Business Solutions Group1
The container is at the core of a highly automated system for moving goods from anywhere, to anywhere, with a minimum of cost and complication on the way. The container made shipping cheap, and by doing so changed the shape of the world economy.
—Marc Levinson, author, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger2
People have been trading with each other, between countries, across roads and oceans, for thousands of years. According to the International Maritime Organization, “We live in a global society which is supported by a global economy—and that economy simply could not function if it were not for ships and the shipping industry. Shipping is truly the lynchpin of the global economy: without shipping, intercontinental trade, the bulk transport of raw materials and the import/export of affordable food and manufactured goods would simply not be possible.”3 Since export shipment involves moving goods from one country to another—a somewhat riskier and more complicated enterprise than domestic shipments—it is extra important to find a company that offers safe, reliable, quick, and cost-effective transport services.
In this chapter, I discuss a range of air and ocean transport choices (containerized shipments, for example), including special state-of-the-art vehicles for cargo with special handling requirements, and a variety of methods for loading your export shipment. In addition, I’ll introduce you to global freight forwarders, logistics specialists, and third-party logistic providers (3PLs)—the all-around experts who will become an indispensable part of your export transport operation.
The quantity, value, and perishability of your product; your customer’s location; how fast the shipment is needed; and how much you are willing to spend will determine which method of transportation you should use. Oftentimes, a compromise among these factors takes place. Product movement between neighboring countries, such as the United States and Canada, is relatively simple and economical, and you can always ship overland by road, by conventional rail, or by double-stacked trains, whichever your customer prefers. Product movement over water is somewhat more complicated and expensive. Accordingly, I’ll focus on air and ocean shipping options. I’ll also take a look at third-party logistics providers that support e-commerce sales.
SHIPPING HAZARDOUS MATERIALS OR GOODS
Always remember that if you are shipping hazardous material or goods, such as products packaged in aerosol cans or containing dry ice, you must notify your transportation company. This type of shipment requires special transit treatment and is carefully regulated by the US Department of Transportation under the US Code of Federal Regulations, Title 49. These regulations determine which products may or may not be transported via air and offer guidelines for preparing the product for safe export. Whether shipped by air or ocean, hazardous goods must be properly certified, marked, and labeled and must be packed and handled with appropriate care. Should your transport company, freight forwarder, or 3PL provider be unable to guide you through the process of shipping a hazardous product, contact the US Department of Transportation (DOT) or International Air Transportation Association (IATA), or conduct a Google or Bing search with the keywords “Shipping hazardous material internationally” to obtain more information.
Air Transport
Shipping by air used to be an emergency strategy, used only when a customer needed a product immediately, but with the proliferation of international air delivery services such as Federal Express, DHL, UPS, and Airborne Express, it is now easy and economical to move your product around the world, even overnight. You’ll generally pay a higher price per kilo than you will for ocean shipment, but in some expense categories you’ll actually rack up some savings. For example, packing costs tend to run less for air transport. One major consideration is the weight of your cargo. Are you exporting feathers? If so, air transport would be cheaper, provided you don’t use cartons that take up a lot of space. Tractors, on the other hand, should be transported via ocean.
If exporting highly perishable items is your business, you’ll want to familiarize yourself with carriers that offer affordable worldwide express shipments of chilled, frozen, and fresh foods, such as seafood, meats, and produce. You will see more and more demand for this service as the market for organic, fresh, and convenience foods expands. I suggest you call the US Department of Agriculture’s international marketing office for additional help. It usually has directories, workbooks, and guides to assist exporters of highly perishable products.
The International Air Transport Association (IATA; http://www.iata.org) represents 240 airlines worldwide. When these members reach agreement on a fixed rate, they file a tariff with the US Department of Transportation (DOT; http://www.dot.gov). Tariffs define the rate, rules, and regulations governing air cargo deliveries for a given carrier or conference. Only when an exporter is charged by a shipper a cost that is beyond the maximum amount specified in the tariff (unless it is under a service contract) will she need to notify a regulatory agency to complain.
There are two major types of equipment used in air transport:
1. Air cargo containers: These types of containers are loaded by hand or forklift. They come in more than a dozen different styles and sizes.
2. Air cargo pallets made of wood or plastic (corrugated plastic is used but not recommended) with netting: These are also loaded by hand or forklift.
Which type of equipment you use depends on the type and quantity of the cargo you are shipping. To determine the absolute best way to ship your cargo, always discuss your situation with your transportation company. And don’t forget to find out the distance from your customer’s door to the closest seaport or airport. If one delivery destination is closer than the other, you’ll save your customer time but not necessarily money in the case of shipping to the nearest airport, because air cargo can be expensive.
The top two considerations when choosing air vs. sea freight are transit time and the cargo itself. It usually takes a product a couple of days to arrive by air, whereas sea freight takes anywhere from twelve to fourteen days. The cargo itself, whether delicate in nature (fine art, for example) or large in size (as is heavy equipment), forces you to make the best decision for your cargo shipment.
Caution Always check with your shipping specialist to verify the pallet requirements for your destination country. Some countries, for example, require certain types of wood packaging to be treated with chemicals or heat before being allowed into their country.
Ocean Transport
Shipping by ocean takes much longer than shipping by air, but it is nearly always much less expensive. That is why it will generally be your overseas customers’ preferred method of transport. Whereas with air shipment, the greater the volume of your shipment, the more expensive it becomes, with ocean shipment a greater volume of shipment actually decreases the cost. Ocean transport is less simple, though, because it involves many more choices that you may know very little about. These include the choice between terminals, vessel types, container loading options, and so forth. You’ll have to rely on your transport company to give you advice.
When choosing a transport company, you’ll want to find out the following:
1. The frequency that the vessels sail
2. The transit times
3. The reliability measures
4. The ports served by steamship line
5. The company’s safety record
6. The computerization for cargo management
The last point, computerized cargo management, is vital these days. You want to be able to track your cargo at any given point. If it gets lost, you want to know that the transport company can find it. Cargo management is an important part of the package you offer your customers—so anytime you find a new and better way to serve them in terms of cargo, jump on it.
Shopping for an Economical Transport Package
Shipping lines—whose vessels are still commonly referred to as “steamships” although the days of steam-powered shipping are long gone—can be classified as either independent or conference. Independent lines tend not to have as many ports of call, which can cause shipping delays. Sometimes, while comparison shopping, you will find an independent line that quotes you a rate that is cheaper than what the conference lines are offering. However, when using an independent line you can’t be sure of your shipper’s timeliness or reliability.
Conference lines, on the other hand, guarantee similar standards and rates. If you can contract with a conference line on an exclusive basis, rates are usually cheaper than, or at least competitive with, those offered by an independent line. The guarantee on rates during a specified period of time is a savings that you can then pass on to your customer or use to pad your own profit margin. Other types of ocean transport companies that have evolved over the years are NVOCCs, or non-vessel-operating common carriers, and shipper’s associations. NVOCCs book space on vessels and then sell the space to shippers with smaller cargoes in smaller-volume units. They consolidate these smaller shipments into container-loads under one bill of lading, and as a result can pass on more favorable rates to the small cargo shipper. You can also take advantage of a larger shipper’s economies of scale to move your smaller loads more cheaply. Shipper’s associations, similarly, were formed to pull together several different shippers’ cargoes to achieve greater volume and hence lower rates.
Don’t forget that ocean and air shipping itself is only part of the transport package you’ll need to assemble. To get your product to an ocean-going vessel for loading, you must also transport your cargo overland by truck or rail. How do you do this without spending an arm and a leg? The most advanced and efficient transport mode currently available to exporters to handle this problem is intermodal transportation. This is a start-to-finish transport package that takes your cargo from its point of origin to its point of destination (commonly described as “door-to-door”) under a single bill of lading. It involves the use of at least two different transportation modes—rail and ocean, for example—to cover the overland and overseas movement of the cargo. The company that offers the package is liable for getting the cargo from the point of origin to the final destination, and it will charge you a “through rate” to do so. The rate represents a substantial savings over what it would cost you to engage separate carriers for each leg of the trip. An added bonus: The company can issue a computer-generated bill of lading within hours of the cargo’s receipt at an inland terminal or immediately after the vessel has left port. This means faster turnaround time in collecting payment from your customer. Some intermodal service packages also offer container freight stations, which save you time and drayage (local transportation) costs by bringing their service closer to your door.
Tip With the Internet and the advent of e-commerce sales transactions for B-to-C transactions, most international carriers and third-party logistics providers now offer all-inclusive door-to-door landed costs (meaning they include the price of the product, the delivery charge, taxes, duties, customs, and in a currency your shoppers understand) on single-product shipments delivered to a consumer. In 2009, this was unheard of. What a difference five years makes!
If you are an exporter of refrigerated commodities, most sophisticated transportation companies can offer cost-efficient transport via refrigerated vehicles. For example, there are railcars equipped with individual generators to ensure the preservation of perishable products during transit. Some companies offer what is called a “motorbridge” (trucking) service to exporters of frozen meat and other perishables, which entails a through transportation rate from the producer’s door to the customer’s door. Other companies offer multipurpose vessels for more cost-effective shipment of noncontainerized cargo, such as tin, tea, equipment, and grain. These vessels are usually smaller in size than those found in a regular containerized ship, allowing them to travel safely through rough seas and narrow channels. They also make the difficult portside dockings at newly industrialized countries easier.
It’s imperative to shop around and compare rates to get the best-possible transportation package for your customer. Don’t be shy about questioning a transportation company or freight forwarder at length and in great detail about its service and rates. That is what it is there for, and you don’t owe them anything until after you’ve hired them. Always inquire about the latest and most advanced methods for moving goods overseas. Even as you read this, improvements are underway. Keeping current with the transportation industry will help you offer your customers the most innovative and cost-effective service and equipment options.
Break-Bulk and Container Loading
What kind of vessel you choose to ship your cargo, and what special handling, loading or storage apparatus, if any, should be used, will depend on the type and quantity of your goods. Here are a variety of common options and techniques for loading your shipment.
Break-Bulk
Better known as less–than–container-load, or LTL shipment, break-bulk shipment is the most likely option to be used by new exporters, whose first orders are likely to be small. It allows your customer to test the product in his market before committing to a large quantity, such as a full container-load or more. The shipper can still load the goods into a container, but the container will be delivered to a consolidation point (port of exit) where other shippers’ goods will also be stowed in the container. The advantage of this method is that it allows smaller, low-volume exporters to have their cargo containerized, although it is not as desirable as a sealed door-to-door container, as I will discuss.
To control the expense of small-quantity shipment, find a transport company that specializes in break-bulk. Naturally, when you are shipping a small trial order and hoping for repeat business, it will be to your advantage to control your customer’s costs by offering them the best rate possible. When shipping LTL, you’ll need to take extra care in packing and marking your cartons. (I’ll discuss carton marking in greater detail later.) Break-bulk shipments are commonly packed using the following materials:
· Pallets: Wood pallets must be strong enough to be stacked on racks and reused numerous times. Never let your cartons overhang a pallet. Your whole load might collapse! As previously mentioned, some countries require certain types of wood pallets to be treated with chemicals or heat before allowing the shipment to cross its borders. Check with your transportation specialist.
· Slipsheets: Used to pull your cargo to the point of loading, these sheets are usually made of fiberboard or plastic. They must be strong enough for the forklift operator to clamp onto and pull. Slipsheets cost less than pallets and eliminate the expense of transporting pallets back to the shipper for reuse. Cartons placed on slipsheets must be cross stacked, shrink-wrapped, or secured with extra-strength strapping.
· Crates: Wood crates are still popular with some shippers due to their strength and resistance to humidity, at any temperature and at any point in transit.
All onboard packing aids should be recyclable or reusable. Use the minimum amount of material necessary to protect your product. Pallets, slipsheets, and crates are loaded using the following methods:
· Bulk loading by machine or hand (for bulk commodities, for example)
· Hand loading using individual shipping containers, with or without pallets
· Unit loading using palleted or slipsheet stacks into containers with forklifts
Container Loading
Shipment by container-load continues to be the preferred method for exporting goods because each container is sealed (allowing it to stay closed from the factory door to the customer’s door), strong, theft resistant, and stackable. Containers are also easy to load and unload; transport by truck, rail, or ship; and store. The only time the container may be opened while in transit is for the customer’s inspection, so the transport of the goods becomes nearly bulletproof concerning safety and pilferage issues.
Note Exporting by container continues to grow. According to trade data produced by PIERS, “U.S. containerized exports were up 5 percent in February 2013 compared to February 2012, reaching 1,011,874 20-foot-equivalent units.”4 PIERS, a database of US waterborne trade activity, says this is the largest year-over-year increase since June 2012, when exports jumped nearly 10 percent.
Containers are available in various volumes and in a number of specialized constructions to accommodate various cargo types. Typically, shipping companies provide containers, but you can also rent or buy them new or used. If you want to do so, try eBay, contact a local shipping company to inquire about used shipping containers, or contact the Container Alliance (http://www.containeralliance.com/), a network of portable storage and shipping container providers.
A container can cost anywhere from $1,500 (used) to $8,000 (new). Rental costs range from $75 to $295 per month. You can also expect to pay delivery and pickup charges on any of these scenarios. The twenty-foot container, the most popular volume, works well for starting up with exports. The forty-foot container is the second-most popular choice. It’s important to resist the temptation to overload this larger container or you won’t be able to move your cargo over land! For large loads, a forty-five-foot container is an attractive bargain because it gives you a 27 percent increase in interior capacity over the forty-foot unit for the same handling costs. Containers come as large as forty-eight feet, but these are comparatively rare.
Just as you conducted market research on where the best market is for your product using a variety of sources, keeping track of where all your exports are going provides a good basis for asking yourself, “Should we be looking at these markets since there are so many containers going to that part of the world?” Take The Journal of Commerce’s annual ranking of the top fifty world container ports for 2012).5 Here is a snapshot of the top ten container ports, which shows heavy concentration in China (Asia):
1. Shanghai, China
2. Singapore, Singapore
3. Hong Kong, China
4. Shenzhen, China
5. Busan, South Korea
6. Ningbo-Zhoushan, China
7. Guangzhou Harbor, China
8. Qingdao, China
9. Jebel Ali, Dubai
10.Tianjin, China
The port of Shanghai handled 32.5 million twenty-foot-equivalent container units, considered the busiest container port in the world in 2012.
High-cube containers (referred to as HQ; they include twenty-foot, forty-foot, and other measurements) are oftentimes shipped at the same rate as a standard container but offer more cargo space and are typically one foot taller. Garment containers have a movable track system, so that prepressed and prelabeled garments can be shipped on their individual hangers, unloaded, moved right into a showroom, and racked for sale. Open-top containers, designed for awkward, oversize goods, such as heavy equipment, can be loaded from the top by crane. This reduces handling costs. Refrigerated containers come in high-cube and wide-body dimensions and offer temperature-controlled environments that can be monitored by means of an exterior temperature recorder, a central shipboard control, or even satellite transmission. Bulk-hatch containers, used for commodities such as corn and grains, can be loaded from the top or the rear for easy access and minimal handling. Vented containers allow for appropriate ventilation and thus eliminate potential condensation, preventing damage to moisture-sensitive goods like tobacco, spices, and coffee. Flat-rack containers, designed for moving huge goods, such as heavy equipment, lumber, and pipes, can be loaded from the top or the side, thus reducing handling costs. An expandable chassis accommodates a variety of box sizes and allows for easy offloading from ship, to train, to truck.
Tip If you are interested in learning more about shipping containers and who invented containerized cargo (hint: an American by the name of Malcolm P. McLean), read the article “The Truck Driver Who Reinvented Shipping,”6 and try The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger,7 by Marc Levinson. Both are fascinating reads!
Having shown you what’s entailed in getting your shipment underway, I’d like to introduce you to one of my favorite solutions for the shipping phase: the freight forwarder.
The Global Freight Forwarder: Your One-Stop Transport Pro
Global freight forwarders serve as all-around transport agents for moving export cargo, typically transporting it from a factory door to your customer’s warehouse or storage facility. Their service saves you lots of time, effort, and anxiety and is available for a very reasonable fee, usually under US$200 per transaction—an expense that you’ll include in your price quotation to your customer and recoup when you collect payment. These are just some of the things a freight forwarder will do for you:
· Handle all shipping arrangements on the basis of your specifications
· Take legal responsibility for the shipment
· Pay up-front costs to move the product
· Arrange for a carrier to arrive at your factory door at a specified date and time
· Book space with transportation carriers
· Handle all documentation and see that it is properly processed
· Arrange insurance, if requested
· Present documents to your bank in a timely fashion to meet your payment terms
· Suggest or make on-the-spot packing adjustments, if needed
· Move the product from the factory door to the port of exit, either by common carrier or rail
· Take responsibility for getting the cargo on the vessel in time to sail on schedule, thus enabling you to meet all the terms and conditions of your payment agreement
· Monitor the shipment from beginning to end and keep you informed throughout
· See to it that the shipment arrives safely at the foreign port of entry and proceeds from there, depending on the delivery terms that you quoted to your customer
If you were to undertake the transit of goods yourself, you would probably be overwhelmed by all these logistics, and you would certainly not achieve the savings that forwarders can, given the networks of service providers that they have in place and the volume and frequency of shipping that they do. You can find freight forwarders by conducting a web search using the keywords “Freight forwarders, international transportation” or you can check for listings in trade magazines or other international directories. You should find hundreds of them. In some instances, they will be categorized by the geographic area they serve, the type of commodity in which they specialize, or the transport modes they offer, such as air or ocean—most forwarders offer both. Pick two or three that seem like a good fit for your product and shipping destination. Some may be located near your office or by an airport or port facility that you expect to use often.
The Kings and Queens of International Shipping: UPS, FedEx, DHL, and TNT
Logistic experts UPS, FedEx, DHL, and TNT have long been considered the best in international shipping. Check with each of these companies in regard to their areas of expertise, including whether they not only ship worldwide but also handle fulfillment needs and collecting payments from customers worldwide.
· UPS Global Trade: http://www.international.ups.com/
· FedEx Small Business Center: https://smallbusiness.fedex.com/international
· DHL: http://www.dhl.com/en.html
· TNT: http://www.tnt.com/express/en_us/site/home.html
Tip The electronic filing of export information, formerly done with the Shipper’s Export Declaration (SED) form, is the system used by US companies to electronically declare exports with the US Census Bureau. The process, now called electronic export information (EEI), is done through AES Direct (http://aesdirect.census.gov/). The filing is required for items valued over $2,500 or on products requiring an export license.8 Most sophisticated carriers can take care of the electronic filing on your behalf for a small fee and provide options for you to self-file or provide your own company’s completed EEI. Check with each international carrier. Refer to Chapter 13 for more information.
Third-Party Logistics and Fulfillment Centers
Exporting represents a significant opportunity for online small business retailers. Setting up an e-commerce site automatically puts you in front of a potential 2.4 billion online customers.9 To service even a fraction of those customers, you’ve got to get up to speed on how to package and ship your products internationally.
A third-party logistics company (abbreviated 3PL) provides logistics services for part or all of your supply-chain-management functions. They can warehouse, pack, and ship your products to customers all over the world, for example. Some will even produce or procure goods for you. Many of these services can be scaled and customized to your needs.
Further, 3PLs allow you to leverage their industry expertise, achieve volume discounts, and realize other benefits (better carrier rates, for instance). To get up and running, many service providers require you to have a good technology program developer on board to install appropriate applications. Prepare accordingly.
Note Typically with a 3PL, you’ll need to integrate your e-commerce platform closely with that of the 3PL’s provider. Major carriers like UPS and FedEx, for example, offer tools or even application programming interfaces (APIs) that make it possible to calculate the landed cost and integrate shipping tools into your e-commerce platform. Consult with them on how to incorporate their APIs within your existing e-commerce platform.
Ask whether your provider can not only calculate the international shipping costs on transactions but handle the fulfillment part on B-to-C transactions as well. Decisions must be made on who will put your product in a box, label it, insert the appropriate commercial invoice (used as a customs declaration form), calculate shipping charges (including tariffs, duties, and taxes), and ensure the product arrives to a customer’s final destination timely, economically, and safely. These are things a 3PL will do for you. It may be worth investigating one or more from the list we will look at to make the fulfillment part of e-commerce easier on yourself and your customers as well.
Third-Party Suppliers
Here is a short list of third-party suppliers (3PLs) who specialize in helping businesses ship internationally and deal with the customs, tariffs, and currency conversions worldwide. The whole point of using 3PLs is to enable you to reach customers globally and take on new customers by using existing technology systems—all without hiring extra employees.
1. Pitney Bowes: Global Ecommerce: (http://www.pb.com/ecommerce/). Pitney Bowes helps you extend your e-commerce all over the world by providing a seamless international checkout process (including the benefit of a landed price calculation on international shipments)—the last step in completing an online transaction and making a sale for your online retail environment.
2. UPS: Order Management and Fulfillment: (http://www.ups.com/content/us/en/resources/techsupport/alliances/application_order.html). With the help of UPS, you can select from a list of approved service providers who integrate UPS technology into their business applications and software solutions. Note: Using these companies might require the assistance of a technology program developer to get the application installed and up and running.
3. Amazon Services: Fulfillment by Amazon: (http://services.amazon.com/fulfillment-by-amazon/benefits.htm). With FBA, you can store your products in Amazon’s fulfillment centers and have them picked, packed, and shipped by the company. The company also provides customer service for your products.
4. Shipwire: (http://www.shipwire.com/). With warehouses in the United States, Canada, the United Kingdom, and Hong Kong, Shipwire will work with your existing order-capture systems, including automating order submission, real-time shipping rates, and inventory status. Shipwire’s warehouses process and ship orders typically the same day and are strategically located to reach customers worldwide within a few days. When the company contacts a customer, it determines the best carrier, service, and packaging to get your product to its destination efficiently, while allowing you to control your order, inventory, and supply chain operations across its warehouses.
5. Bongo International: (http://www.bongous.com/). Bongo was established to enable consumers worldwide to purchase and receive goods irrespective of their physical location or payment method. So if customers want to buy something online and the store doesn’t accept their preferred international payment method, Bongo will. Membership is free. It focuses on enhancing your cross-border shopping experience and reducing the cost of international transportation. Not quite the supersize of UPS or Amazon but growing, Bongo International currently services ninety-five thousand international consumers and more than three thousand businesses globally.
6. Fulfillrite: (http://www.fulfillrite.com/). Fulfillrite’s order fulfillment software directly integrates with all major e-commerce shopping carts, including but not limited to: Shopify, BigCommerce, Magento, 3DCart, eBay, Amazon, Paypal, and others. Similar to the other companies listed, upon receipt of your merchandise, Fulfillrite inspects and sorts it. It then enters your merchandise into its system, which you have access to via the web portal. It does the order picking and packing and ships to any international destination via a carrier of your choice: USPS, UPS, FedEx, or DHL Global (Fulfillrite’s software is compatible with each of theirs).
7. Ingram Micro: (http://www.ingrammicro.com/). IM is a large wholesale distributor that primarily handles technology and is a global leader in IT supply chain, mobile device services, and logistics solutions. I am including it in the list just so you can get a glimpse of who the giants—Apple, Cisco, Hewlett-Packard, Wal-Mart, Amazon, IBM, Lenovo, Microsoft, Samsung, among others—use to distribute and market their technology and mobile products. IM also claims to work with companies of all sizes that can’t afford to manage procurement and distribution.
8. Speed Commerce: (http://www.speedcommerce.com/). A recent partnership between Speed FC and Navarre, Speed Commerce, provides distribution, third-party logistics, supply chain management, and other related services for North American retailers and their suppliers. It does everything from distribution and sales, to supply chain management, to packaging services.
9. Mercent: (http://www.mercent.com/). The company designs e-commerce marketing software for retailers. It does this by providing compelling online e-commerce innovations and technology leadership. Limoges Jewelry, for example, increased its online revenues by 84 percent and reduced its acquisition costs by 10 percent by using Mercent’s services.10
Tip Some people shy away from putting all their eggs in one basket. In the case of selling, distributing, and marketing your products worldwide, you might want to consider a master logistics provider that does it all. That way, you develop a strong relationship and achieve efficient distribution with fewer touch points (meaning less people handling your product), letting you focus on perfecting your sales and marketing methods.
Simple Methods to Improve Logistics and Boost Sales
There are a few other factors to consider before getting started with international carriers or 3PLs. Here are some steps you can take to improve your international e-commerce results:
1. Comparison shop between carriers and the various carrier-shipping-fulfillment options. Saving even pennies on each package you ship internationally can save you big bucks later on, and those savings can boost your bottom line. Use various online calculators (USPS, UPS, or FedEx, for instance) to get an idea of what it might cost to send your package to China as an example of the costs.
2. Audit your shipping and fulfillments costs quarterly. See if you are making or losing money. If you are losing money, switch carriers or take an entirely new approach toward the product you are exporting, the market you are entering, and the carrier you are using.
3. Scrutinize the rates of different carriers to decide whether to opt for a flat-rate price on each package or go by weight or measurement (whichever is greater) on the calculation.
4. To ship free or not to ship free? That is the key question. Free shipping is a growing trend in e-commerce. The most popular offer is free shipping in exchange for a minimum order in dollars. Second to that is free shipping for a limited time only, such as three weeks prior to a Valentine’s Day shipping deadline. I’ve always fallen for the free shipping offers, especially when I need a product and it’s coming from overseas, showing that it does have a positive psychological influence on consumers, resulting in increased sales. If you offer free shipping, make sure you don’t lose money on those sales!
Tip To quickly determine how easy or troublesome it might be to export to a particular market, go to the United States Postal Service’s international Postage Price Calculator (http://ircalc.usps.gov/), click on the country you wish to export to, and select the type of package and weight (like “Package” and “Two pounds”). Then, click “Continue,” select the next option based on your preferred delivery date, and click “Customs Forms” and “Other Service” to get an idea of what documentation is required. Make a note on any prohibitions and restrictions for that country. Bottom line: if you see anything that raises a red flag, whether messy customs restrictions or lengthy paperwork filing, cross the country off your list for doing business.
5. Consider an international mail consolidator service. As your shipping volume grows, you may wish to consider using this type of company to gather thousands of international mail packages from clients and deliver them directly to the postal system of each destination country. Depending on the services you use, an international consolidator can speed your package processing and provide good postal rate discounts. To find consolidators, conduct a search using the keywords “International mail consolidators.” You will find dozens of companies that offer this service. Or a good listing of providers can be found on the “Shipping Consolidators” page of the USPS Web site at https://www.usps.com/business/shipping-consolidators.htm.
Caution No customers on your e-commerce site? You might ask individuals to buy from the countries you’re targeting on your Web site on a test basis. Then, examine what could be preventing consumers from purchasing more from you online—and then carefully address all the reasons behind their reluctance. All things being equal, if you think you are doing everything right, only your customers can tell you how you are not meeting or exceeding their expectations.
Summary
You now have some guidelines telling you what transport and fulfillment methods are available to get your product to your customer and how to make a cost-effective choice. As you move on to put together a price quotation for your customer, including price per unit, total transport, and incidental charges, you’ll see exactly how valuable working with a good global freight forwarder, logistics expert, or fulfillment company can be in making the sale and delivering the goods.
Notes
1. “Cisco Exec on Growth of Worldwide Ecommerce, Cultural Differences,” Practical Ecommerce, June 10, 2011, http://www.practicalecommerce.com/articles/2841-Cisco-Exec-on-Growth-of-Worldwide-Ecommerce-Cultural-Differences.
2. Marc Levinson, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger (Princeton, NJ: Princeton University Press, 2006).
3. “The Role and Importance of International Shipping,” International Maritime Organization, accessed October 31, 2013,http://www.imo.org/KnowledgeCentre/ShipsAndShippingFactsAndFigures/TheRoleandImportanceofInternationalShipping/Pages/TheRoleAndImportanceOfInternationalShipping.aspx.
4. “U.S. Containerized Exports Jump 5% in February,” PIERS, Data in Motion: the PIERS Industry Blog, accessed October 27, 2013, http://pierstransportation.wordpress.com/2013/06/05/u-s-containerized-exports-jump-5-in-february/.
5. “The JOC Top 50 World Container Ports,” Journal of Commerce, accessed October 31, 2013, http://www.joc.com/port-news/joc-top-50-world-container-ports_20130815.html.
6. “The Truck Driver Who Reinvented Shipping,” Anthony J. Mayo and Nitin Nohria, Harvard Business School: Working Knowledge; the Thinking That Leads, accessed October 3, 2005, http://hbswk.hbs.edu/item/5026.html.
7. Levinson, The Box.
8. AESDirect, http://aesdirect.census.gov/.
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