The year 2022 has officially begun, and the start of the year calls for resolutions and reflections. In the world of logistics, it's time for a fresh round of shipping rate updates.
Shipping isn't cheap, and carriers increase their shipping rates every year, and it's no different for 2022. The freight cost in Thailand has been rising since October 2020 and peaked last year.
The e-commerce demand brings a shortage of warehouse space, truck drivers, and everything in between. Moreover, leading eCommerce stores further intensify challenges by continuously raising the bar and offering faster and cheaper shipping – all of this is expensive for small businesses to replicate and fulfill customer orders.
Moreover, exports seem to be the only driver shoring up the fragile Thai economy, ravaged by the Covid outbreaks, recording 17.1% exports. Furthermore, it is forecasted to increase by 3 to 4% in just 2022, according to Commerce Minister Jurin Laksanawisit.
Still, the lingering container shortages, increasing inflation, and steep freight costs threaten the overall shipping condition in Thai. Moreover, the spread of the Omicron Coronavirus variant is creating risks for achieving higher exports. In addition to this, the shipping growth prospects and shortage of workers are further escalating the shipping industry, making it hard for eCommerce businesses to provide free or even low shipping to their customers.
With Thai exporters and eCommerce businesses in desperate need of shipping space, containers, and workers, of course, finding the cheapest way to ship a package doesn't need to be the slowest service as well.
Following tips can help e-commerce businesses to cater to customer needs at lower shipping rates.
1. Crack Down Hefty Shipping Costs
Thailand is facing rising freight rates and logistics constraints that need to be tackled rapidly to prevent damage to trade. Undeniably, Thai eCommerce businesses are aware of the hefty shipping costs, and they need to crack down on the unjust and unreasonable fees in the shipping industry.
The main reason is the Covid-19 outbreaks, lockdowns, and preventive measures, resulting in a significant decrease in workers and port efficiency. Additional factors include temporary closures of factories, bottlenecks in gateway ports, and rising demands. Also, port congestion, longer transit times, and shipment delays result in slow and expensive shipping rates.
The delay in shipping schedules leads to a shortage of containers and other management challenges, resulting in a continuous cycle creating conflict among shippers, truck companies, and other domestic-related companies.
The eCommerce businesses and shippers often assume that freight and associated costs are fixed and can't be changed. But just because it's always been this way doesn't mean it can't be challenged.
After once the reasons have been identified, implement various strategies and intelligent approaches to save some cash. One of the simple strategies is to offer night-time freight pickups. It's a brilliant technique resulting in saving reaching as high as 50%.
2. Contract Steady Lane Volume
A great way to reduce shipping costs and build networks is by contracting a steady lane volume. In this method, the entire relationship is built on reliability and loyalty. The more trustworthiness you develop, the better the shipping company will work with you.
Even when the country’s capacity tightens, especially during the pandemic, there is a better chance that shipping carriers will focus on moving your freight volumes. It is all dependent on creating a reliable and steady flow. Carriers with long relationships with their clients tend to save more and have been recorded with savings of up to 12%.
3. Off-Peak Days Freight
Freight rates, especially sea and air, are heavily affected by seasonal factors. Hence, consider the peak seasons, conduct in-depth research, check pricing fluctuations and other relevant factors.
Moreover, low shipping days result in measurable savings, where Fridays in Thailand are usually considered an off-peak day. In the case of customer merchandise, Friday is the day to make a deal as many suppliers will try their level best to get hold of their stock by Thursday. This helps them keep their inventory under control and offer weekend sales to their customers.
Besides this, Mondays are typically low-volume days for shippers and carriers. Indeed, it all relies on the type of cargo and products.
Therefore, shipping on off-peak days is an excellent option for non-consumer goods and can save 10% than peak shipping days.
4. Go Beyond Serial Rate Shipper
Being an eCommerce business in Thailand, one feels forced to participate in the yearly RFP to decrease freight prices. But all this should never cost relationships. After all, starting fresh each year is not a good tactic.
The shippers build strategic and lasting relationships that result in numerous transportation and management advantages. After all, having permanent contracts allow freight carriers to establish their own network of customers. As a result, an efficient network is built, having lesser deadhead miles.
A shipping strategy taking full advantage of assets is more profitable, as it gives better rates and savings of 3-5% annually. Plus, contracted shipping locks the same rate for years to come.
5. Increase Delivery Lead Times
Businesses thinking of introducing planning in the supply chain can capitalize on future loads and assets. Notice of prior freight movements allows the carrier to organize its resources carefully. Shippers pay the highest costs for resources sitting idle at someone else's facility, which are waiting in line to load up.
Hence, when there is a well-planned supply chain, carriers achieve lower shipping fares and develop a supply chain. The efficiency and lower shipping prices depend on the notice's timeframe.
It helps shippers save 20% more than unplanned supply chain idle resources.
6. Diminish Dunnage
Various products have different requirements for shipping, such as the need for airbags, bracing, and blocking, preventing them from banging into each other and getting destroyed during a longer freight ride. Every so often, delivery service goes outrageous trying to safeguard consumers' products as every piece of dunnage you ship has its own space and weight requirements.
Businesses can achieve cost-cutting on every load by minimizing dunnage without impacting the product’s safety.
7. Build A Reputation For Loading Quickly
Businesses operating in Thailand keep a 2-hour loading window; hence, keep it in mind when planning and developing pricing. On the contrary, shippers are on the lookout for carriers offering faster loading as it helps them provide less price to consumers or, even better, free shipping.
Transporters with a steady load time routine can take it a notch further and include it in their shipping rate. As a result, it evades the necessity to embrace assessorial costs. They are a huge time drain. Every shipper wants to operate an efficient and effective shipping strategy –leading to doubled benefit.
Depending on your reputation, this strategy can help shippers save labor costs and offer free shipping to consumers.
8. Decrease Pallet Spaces
The eCommerce businesses in Thailand can optimize their pallet cube by stacking products on top of each other. It saves a lot of pallet space and makes it easier to store when shifted from one place to another. Moreover, a properly packed pallet box can go places in saving costs.
For instance, when you pack tiny stuff in a large package, it takes up extra space. As a result, shippers find it hard to fit a significant number of boxed goods on their pallets. Whereas, when the packaged box is according to the product, it stacks them up and ultimately saves space.
The best way around this is to ask your delivery companies for recommendations and develop efficient pallets. Of course, it depends on the type of product. But, it can lead to saving not only space but also a few extra cash in your bank account.
9. Ship Larger Product Orders, Less Often
The shipping companies must create ways that encourage their clients to place larger orders; after all, it is way more economical to ship larger orders one time than repeating it after every 2 or 3 weeks.
Yes, retailers tend to prefer smaller shipments as less product is in the inventory.
Hence, there is a significant need for innovative incentives to attract customers to make bigger purchase orders. These incentives convince your customers to have bigger inventory. One of the best incentives is sharing shipping savings.
Alternatively, they can also offer Vendor Managed Inventory. In this strategy, the shippers don’t charge their clients until the product is on the shelf in their stores.
These innovative shipping strategies are a great way to encourage your customers to take more oversized orders, resulting in up to 50% more savings than the small pallet loads even when minimum charges play their role.
10. Look For Shippers Near Your Ship-To Points
When businesses hire carriers near their ship-to locations, it's more likely that your load becomes a backhaul for your carriers, allowing you to get a lower shipping rate.
In simpler terms, filling empty miles is how carriers make more money. It also reduces freight costs.
It's just surprising how many shippers don't investigate their carrier stations near their regular ship-to points, as this could help them save 20% more.
Review Shipping Strategy And Adjust Accordingly
The existing shipping strategy must consider the freight changes expected to incur in 2022, and as the e-commerce owner, you have to find ways to keep serving your customers. However, it also presents an opportunity to rethink your shipping strategy from the ground up.
If none of the alterations and modifications fit your pricing strategy, conversion rates, and margins, then it's time to consider a new plan. Either shift from free shipping to flat rate shipping or calculated shipping rate. However, Thai business eCommerce can use Zaapi to build a formidable online presence and serve their customers fitfully.