5 Tips for Lower Logistics Costs when Importing from China

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Both Hornet and our customers spend a lot of time on product – specifications, samples and quality – but for every project the total cost includes logistics charges such as freight, warehousing, customs clearance and import duties.  These can all add up, so it’s worth taking a moment to reconsider how you manage your logistics.  Here”s some tips to start you off:

1. The location of your manufacturer can have a big impact on transportation costs.

It’s easy to forget that China’s a big country, about 25% bigger than Australia.  Add to that, whereas Australia’s population and economic activity is concentrated near the coasts and major ports, much Chinese manufacturing takes place inland.  So there may be a significant freight cost even before product gets onto the ship to leave China.

When comparing quotations, it can be helpful to make sure all potential suppliers quote FOB (freight on board) at the same port or location.  Also remember that a more remote factory has more transport stages, with more risk of delay, and if you need a factory audit there may be additional travel costs to factor in too.

Hornet’s China offices are in Zhejiang and Guangdong, conveniently located close to major ports as well as major manufacturing areas with factories able to supply the vast majority of our clients’ needs.  This helps control China-side transportation costs.

2. Plan ahead so you can use sea freight instead of air freight.

Air freight is obviously much more expensive than sea freight, so if you can get organised early enough to ship by sea, you can make great cost savings.

Air freight is charged per kilogram and is especially expensive for heavy items like books or liquids.  Beware very light and bulky items too!  There’s only limited space in the cargo hold and if your cargo takes up too much space the airline can’t fit other goods in, so they’ll charge you for that lost opportunity.

For ocean freight, be aware that lead-times are not just the time at sea.  It can take a week or more to load containers onto a ship – and the containers need to be packed in advance of that.  Likewise, you need another 1 to 2 weeks at the destination port for unloading, unpacking and customs clearance.  If your product volume or size is small and you don’t have a full container, this may take even longer.

3. Warehouse product in China for distribution to countries outside Australia

If you’re shipping a lot of product to destinations outside Australia, it may not make sense to bring it all the way to Australia first.  Hornet has secure warehouses in China (in Zhejiang and Guangdong) and can arrange shipments to destinations worldwide, by sea, air or courier.

It may also be worth using our facilities in China to store a small amount of product for international shipping.  This is really effective for international drop shipping – for example when clients have online orders for end-customers outside Australia.  The cost of storage in China is far below Australian rates, plus you avoid customs and import charges.

4. For repeat business, a higher manufacturing volume warehoused in China may be more cost-effective overall.

Here’s another way to benefit from affordable warehousing in China.  If you have steady or long-term demand for your product, look at placing a larger manufacturing order and storing a part of the product in China.  What you save on the factory cost per unit could be far more than the warehousing charges.

5. Make sure you control your costs after your product has reached Australia

Warehousing, order fulfilment and end customer delivery costs can add up.  Even if you’re happy with your supplier, it’s worth reviewing costs every so often.  If you’re not happy, you should certainly explore your options.  Check out Hornet’s local partner Xpadite – together, we offer truly end-to-end solutions.

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July 26th 2013