Shipping Costs to Account for

Shipping costs are paid to a range of businesses, including freight brokers, carriers, third-party logistics providers, and trucking companies. Freight forwarders calculate costs in a variety of ways, and some include components like inventory depreciation and value-added services such as reverse logistics and data reporting.

Today, an increasing number of logistics companies also invest in advanced technologies to streamline their operations. A significant chunk of their budget goes toward next-gen technology like automation, robotics, artificial intelligence, and enterprises resource planning. While robotics and automation are gaining prominence, some procedures and types of cargo still require humans for handling and in the decision-making loop. Logistics companies need to account for the human element and associated staff and labor costs.

Strategies to Reduce Logistics Expenses

Employee and Staff Costs

The first step to optimizing costs is ensuring your employees are productive, motivated, and performing at a low error rate.  You need to provide practical and sufficient feedback to your teams, along with access to employee engagement initiatives like healthy office snacks, wellness workshops, gym membership, etc. As well as motivating your employees, investing in cost-effective automated solutions can help improve productivity and workplace safety. Examples ca be inventory control systems, drones, autonomous mobile robots, and stacker cranes.

Warehousing Costs

When it comes to warehousing, there are some questions worth considering. How effective is the setup of your packing stations? Are you making the best use of your warehousing space? Is the layout optimal? Storage optimization is key to keeping costs down. To this, it is essential to account for factors such as product placement, warehouse flow, physical structure, and retrieval methods. Also, having proper theft prevention and identification procedures in place is key to preventing inventory shrinkage and financial loss. Red flags to watch for include items found close to loading bays and exits, unusual or missing invoices, dip in sales, and a mismatch between your sales records and inventory levels.

Transportation Costs

There are a number of ways to keep transportation costs down depending on the modes you commonly use. For land transport, for example, it is important to provide truck drivers with optimal routes to ensure fast shipping and avoid delays. Well-optimized routes help ensure that cargo doesn’t get stuck in road traffic and trucks aren’t running half empty. The most important factors to account for include load and weight capacity, avoidance zones, one-ways, sunset and sunrise times, weather conditions, and traffic.

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Ocean Freight Rates

Global ocean rates dropped 6 percent, mainly due to freight decreases on European, US West Coast, and ex-Asia routes. Asia – US West coast rates dropped 13 percent, Europe – US East Cost costs fell 50 percent while Asia – North Europe rates remain stable.

Air Freight Costs

Repeated coronavirus outbreaks and the ongoing war in Ukraine are disrupting air freight services and pushing cargo prices up. At the same time, as transatlantic passenger services have resumed operations, Europe – US East Coast prices fell by 28 percent compared to 2021. Due to labor shortages and increased fuel costs, prices are currently 50 percent higher than pre-pandemic levels.

Trucking Costs

Oil price increases cause diesel prices to hike. Diesel prices in the US are significantly higher than in 2021, mainly due to the sanctions imposed on Russia. If price increases are passed down to international freight forwarders, shipping rates could increase even further. The war in Ukraine is affecting inland shipping throughout Europe, with congestions and trucking logjams in many places.

In the US, railway backlogs and warehousing capacity remain a serious problem, with labor disputes causing further shipping disruptions.

Combined, all these can cause delays and transit time fluctuations for both exports and imports.

Freight Rate Forecasts

Many exporters and importers are wondering when shipping rates are expected to stabilize and go down. According to experts – not in the short term. Between 2020 and 2024, the air freight and passenger travel market, which has been the most affected by the ongoing health crisis, is forecasted to grow at a rate of 5.4 percent. The ocean freight industry is expected to grow at a rate of 5 percent for the same period.

At the same time, despite freight fluctuations and potential delays, freight forwarders can take a number of steps to navigate the current shipping crisis. First, comparing multiple modes and quotes can help ensure the most efficient and cost-effective service possible. Second, it is important to plan ahead and get prepared for transit time and freight budget changes.

Third, consider which mode of transportation is best for you. If you need shorter transit time, air freight is a better option. If you can afford a significant lead time, then ocean freight is a more cost-effective alternative. Finally, it is essential to stay in touch with your carrier so that you can plan for any changes in transit times. Have the manpower and capacity to handle cargo on arrival so that you can minimize possible delays.

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There is a wide variety of documents that you might need to present to comply with legal requirements and import and export regulations. Some documents are required by the custom’s authorities at the destination country while others may be needed by shipping couriers and logistics companies facilitating the movement of cargo and small shipments. The five most common documents for international shipping you should be aware of are bill of lading, purchase order, air waybill, and export packaging list.

Bill of Lading

In the simplest terms, a bill of lading is a formal contract between the owner of cargo and a freight forwarder, which confirms the receipt of goods to be shipped. Aa bill of lading should share where cargo is headed to, where it is coming from, and what is being shipped. It should include detailed information such as cargo description, type of commodity, weight, notify party, consignee, and shipper.

Purchase Order

A purchase order is an official document which confirms the receiving of an order. This document includes detailed information about the products shipped, parties involved, and the transaction itself. The three types of formats you should know about are purchase order request and non-electronic and electronic. Also known as E-purchasing and E-procurement, the electronic format is used by customers for products and services that are bought online. Non-electronic purchase orders are created by customers on paper when purchasing services, stock, or consumption materials. The bulk of purchase orders are still on paper because many customers require paper-based documentation for recordkeeping purposes. The third type, a purchase requisition or order request is a document sent internally when a business purchases products or services. It tells the manager or accounting department what goods are being purchased, in what quantities, when, and what the payment terms are.

Export Packaging List

This is a type of document that includes detailed information about the goods being shipped, including packaging type, safety measures, dimensions, and weight. It is typically used by couriers and freight forwarders to create a bill of lading. Also known as customer receipt, delivery docket, packing slip, and unpacking note, export packing lists include important details such as the weight and volume of each package and the entire shipment, the total number of packages, destination and origin address, and consignee, exporter, and shipper contact information.

Other shipping documents that are commonly used for international orders include certificate of origin, letter of credit, export license, and insurance certificate.

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Historically, European logistics providers used one mode of transportation, be it shipping containers by sea or moving goods by trucks. With time, the demand for intermodal freight and new shipping methods reshaped the industry, facilitating collaboration and partnerships between stakeholders and various sectors. Today, forwarders use a variety of shipping methods such as less than truckload, full truckload, flatbed shipping, and intermodal.

Less than Truckload

This mode of transport is typically used by multiple parties that share a common truck space. Multi-temp, dual-dump, and refrigerated trucks are increasingly used for LTL shipping. In general, less than truckload takes longer but is more cost-effective.

Full Truckload

With full truckload shipping, forwarders use a fleet of trucks or an entire vehicle to move cargo. Goods are loaded from place of origin and shipped long distances. The main advantage of FTL transport is that the whole shipment is moved by a single truck, significantly improving delivery times and speeds. It is a steady means of shipping which is why it is commonly used for perishable goods. Refrigerated transport as well as multi-temp and dual-temp vehicles are often used. As FTL transport is more expensive but faster, it is the preferred means of big retail chains.

Flatbed Shipping

With this mode of transport, goods are typically shipped on a no-roof trailer without a top enclosure. It is ideal for shipping containers or oversized cargo that will not fit into a standard truck. Typically, flatbed shipping is the preferred choice for freight that cannot be transported by other means due to its dimensions or size.

Intermodal Transport

Intermodal transport involves shipping large-sized cargo by means of two or more modes of transportation, with each carrier issuing a contract. The main modes supporting intermodal shipping include maritime, barges, rail, and trucking. Air transport is typically used with trucking but not with other modes.

Whether intermodal transport is used depends on factors such as frequency of shipments and the value of freight. This mode works well when cargo is in similar quantities or the flow needs to be continuous. Additionally, it is a good option for intermediate value shipments but not for low- and high-value freight. Low-value cargo is typically moved by maritime or rail transport while high-value freight is mainly shipped by air.

There are a number of benefits to using intermodal transport, including consistent capacity, cost-effectiveness, flexibility, and convenience. On the downside, intermodal shipping involves multiple modes of transit and disruption at one stage can affect the entire process.

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While small quantities can be mailed in a package, larger loads require van or pallet delivery.

 Small Amounts

For small shipments or to send as gifts, each bottle must be placed in a plastic bag and then into a bottle box. Adding foam or bubble wrap to the bottle box helps protect shipments against damage. Bubble wrap is used for extra cushioning when fragile items are transported. When sending bottles together with other items, adding bubble wrap to fill the empty spaces helps protect against damage. Before shipping, close the box and use adhesive tape to seal the edges and flaps.

Note that it is legal to receive alcoholic beverages sent by courier or mail when ordered from online retailers but this is not the case when it comes to shipping. Most freight forwarders include alcohol, whether beer or wine, on the list of restricted items.

Larger Loads

When shipping large loads, the two options are van and pallet delivery. Pallet delivery is a good choice for bulky or big loads, with liner paper placed on the pallet to ship packs or boxes of alcoholic beverages. Liner paper is used to spread load and decrease friction. Bubble wrap and stretch foil help secure pallets while straps are used to fix loads to pallets.

With no stop-overs and short transit times, van delivery is another option to move loads quickly. In this case, the vehicle is dedicated to a single shipment.  Depending on dimensions and weight, forwarders can use curtain-side or box vans. Curtain-side vans have 1,100 kg capacity while box vans are with 800 kg capacity. No labelling or packaging is required but it is best to package fragile items to avoid damage.

Rules for Shipping Alcoholic Beverages

Directive 92/83/EEC regarding excise duties sets out categories to which excise duties apply and the structure of excise tax. Certain regions and products and small distilleries and breweries benefit from reduced rates.

Excise duty rates vary within the EU and for different products, including ethyl alcohol, intermediate products, wine, beer, and other fermented beverages.

From 1 January 2021 new rules apply to importing alcoholic beverages from the EU to the UK. Shippers will be required to fill in customs declaration and provide details such as unique consignment reference, commodity code, and customs procedure code. Additional details include:

• Licenses and certificates
• Valuation methods and currencies
• Transport costs and methods
• Packaging, amount, and type of items
• Consignor and consignee
• Destination and departure point
• Declaration Unique Consignment Reference

Shippers are also asked to specify type of representation, i.e. whether it is direct, indirect, or self-representation (shipper submitting own declaration). Finally, traders must specify type of transport, which can be own propulsion, inland waterway, fixed transport installations, postal consignment, or road, rail, sea, or air transport. Different types of arrangements apply, including normal tariff, special fiscal territories, and other tariff preferences.

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Road Transport in the EU

Road transport accounts for over 75 percent of freight transport within the European Union. Road transport rates are the highest in Luxemburg based on population size, followed by Lithuania. In terms of national road transport relative to foreign road networks, countries such as Sweden, France, Finland, the UK, and Cyprus have the highest shares of above 90 percent. The share of foreign road transport is higher in countries such as Slovakia, Luxemburg, Slovenia, and Lithuania, ranging from 82.1 percent to 91.9 percent.

Maritime Shipping

Major EU ports are found in countries such as Spain, the United Kingdom, Germany, and the Netherlands. In 2018, the top 3 European ports were Hamburg, Antwerpen, and Amsterdam, making the Netherlands the biggest maritime cargo shipping country in the EU. In terms of types of cargo shipped, liquid bulk accounts for close to 36 percent of all processed freight, the largest quantity being processed in the Netherlands. Containerized cargo accounts for 23.9 percent of all commodities, followed by dry bulk – 23.2 percent. Ro-Ro units make for just 11.1 percent of all cargo processed by EU ports. The Netherlands and Spain processed the largest volumes of dry bulk cargo.

Air Cargo

Germany is the leading air shipping country in the EU, with over 16 million tonnes in 2017. Airports that handle the largest volumes of air freight in Europe include Frankfurt, Paris CDG, Amsterdam, London Heathrow, and Istanbul. In 2018, the Frankfurt Airport processed 2,087 tonnes of cargo, followed by Paris CDG (1,985 tonnes) and Amsterdam (1,708 tonnes).

European logistics providers that serve major airports offer a variety of services, from procurement logistics, consolidation, and first flight out services to complete import handling and full load air freight units.

Rail Transport

The share of international railroad transport in EU Member States depends on geographical location. International loadings accounted for close to 16 percent of all loadings in the EU in 2018. National loadings made for 51 percent, transit for 10 percent, and international unloadings for 23 percent. Countries that are strategically located in EU key corridors have higher rates of loadings and unloadings including the Netherlands, Estonia, and Latvia. Island countries and those at the periphery have lower rates, including Denmark and the United Kingdom. Such countries mainly rely on maritime transport to ship cargo to the nearest port and then transport commodities by road.

Countries with the highest shares of rail transit transport include North Macedonia (59 percent), Switzerland (65 percent), and Denmark (83 percent). The highest share of national transport is in countries such as Poland, Romania, Bulgaria, Portugal, Spain, and the United Kingdom.

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Pros for Forwarders

One of the main benefits for logistics services providers is the high level of safety and security associated with air transport. The obvious reason is the tight safety controls over air freight. As per EU standards, all cargo shipped by air must either be delivered through a secure supply chain or screened at airports.

The goal is to ensure that cargo does not include prohibited items such as semi-precious and precious stones, explosive devices, and alcoholic beverages. Another benefit of air freight is the quick transit times that help reduce the risk of goods being damaged, stolen, or spoiled. Fast shipping also allows forwarders to deliver valuable items and perishable goods in a timely manner and with a minimal risk of damage. In fact, forwarders using air transport pay insurance premiums that are between 10 and 30 percent lower compared to sea freight. For these reasons and because of the large pool of destinations, IFA members use air transport to ship cargo across Europe, whether small parcels or odd-size items.

Finally, another benefit of air freight is that additional packaging is usually not required due to the fast transit times. This means that forwarders save money and time on packaging associated with sea transport.

Cons and Risks to Consider

A major disadvantage for services providers is the fact that there are weight and seize limitations. Given the relatively limited space compared to ships, there are limitations to the weight and seize of cargo that can be processed and shipped. While cargo planes carry goods only, passenger planes also ship luggage which has a higher priority compared to cargo. Another disadvantage is the higher cost of air freight relative to ocean and land transport. In some cases, air transport can cost 10 times more than sea transport for the same distance. Estimates by the World Bank show that sea transport is 16 times less expensive than air transport.

This can be explained by the fact that the cost of land and sea transport is calculated by volume while the cost of air freight is based on weight. Another disadvantage for logistics services providers is that bad weather conditions can cause flight cancellations and delays.

This is due to factors associated with navigation, visibility, and aerodynamics. Air transport also contributes to environmental pollution, and it has a higher negative impact compared to land and sea transport. The reason is that airlines usually use older cargo planes to ship loads which are more polluting compared to new models. Lastly, air transport is not the best mode for oversized cargo such as vehicles, machinery, and equipment which are usually shipped by sea.

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Dangerous goods

Dangerous goods fall in different categories, including corrosive substances, radioactive material, and infectious and toxic substances. Other classes include organic peroxides and oxidizers, inflammable solids and liquids, explosives, and gases. The transportation of dangerous goods is regulated under domestic legislation and European regulations, directives, and agreements.

Different directives have been adopted to regulate the classification, certification, labelling, and packaging of goods, including the ICAO Technical Instructions and International Maritime Dangerous Goods Code. Businesses that transport and handle hazardous goods may have to appoint a safety advisor tasked with advising on safety measures, investigating incidents, drawing up reports, and monitoring compliance with safety measures and procedures.

Special and Perishable Goods

Examples of special goods include humanitarian aid, exhibition items, diplomatic luggage, perishable goods, and valuable objects. Perishable goods, for example, are items that deteriorate if not properly stored and transported. This category includes pharmaceutical products, flowers, fruits and vegetables, dairy products, and seafood and fish. Special types of vehicles and containers are used to control temperature during transportation, including freezer, refrigerator, and isothermal vehicles.

Freezer trucks maintain constant indoor temperatures in the range of -12ºC and -20ºC while refrigerator vehicles maintain temperatures of up to -20ºC. Isothermal containers with isolating walls and doors are also used for temperature control. Perishable goods can be transported by sea, air, and land transport. Items that are usually transported by air include frozen products such as fruit pulp and concentrates and fresh products such as dairy, meat, and fruit and vegetables.

Reefer ships are also used to transport perishable goods by sea, shipping items in reefers or refrigerated containers. Goods transported by sea include frozen and fresh products such as meat, concentrates, and fruit and vegetables. The Agreement on the International Carriage of Perishable Foodstuffs governs refrigeration transport and the shipping of perishable goods.

Non-Standard Sized Goods

This category includes oversized and non-standard items such as military equipment, satellites, boats, and locomotives. Other examples include presses, heaters, masts, and boilers. Shipping heavy freight and cargo with non-standard dimensions often requires special mechanisms such as metal constructions. IFA logistics services providers that specialize in non-standard sized goods also organize escorts, arrange the required permits and licenses, and choose the best route and mode of transportation.

Conventional Goods

This category includes a wide variety of goods transported by sea, air, and land. Examples of conventional goods include stationary and printed materials, vehicle parts, machine parts and spare parts, and electronics.

Partnering with freight ship companies, logistics services providers offer specialized services for different types of goods, including dangerous goods and goods under customs control, liquid and dry goods, and packaged and bulk goods. Other goods that are commonly transported by logistics companies include industrial and household appliances and telecommunications equipment.

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Here are some of the main trends which the international freight forwarders association has been following in 2018, and the predictions about the upcoming tendencies in the supply chain sector for 2019.

Storage and distribution automation and warehouse robotics

With the rapid advancement of technology and robotics, it comes to no surprise that more freight forwarders are implementing advanced warehouse and distribution management systems. These are especially helpful for increasing the efficiency of the contract logistics services provided, as well as for the storage and distribution needs of the customers of the European logistics network.

The goal of the companies from the European network for transportation is to achieve fully-automated warehouses, storage and distribution services.

Not only will this lead to a lower cost for manual labor, but it will save time, and will eliminate the need of having too many employees working in the storage and distribution centers of the freight forwarders network.

Needless to say, full automation will lead to lower costs for the customers as well.

More companies from the freight transport association are implementing automated guided vehicles and drones for faster, more precise and more efficient storage and distribution services.

Autonomous goods transportation and self-driving trucks

Although this trend is slower to being adapted mainly due to the legal restraints and lack of regulations for the use of self-driving trucks, it is clear that in the near future more companies from the international freight forwarders network will begin using this innovative type of transport.

Self-driving trucks will become indispensable for all types of transportation services, including complete loads, oversized cargo and combining small shipments in the European groupage services.

The use of Self-driving trucks will eliminate the hassle of handling the growing shortage of drivers, and will make controlling and tracking the shipments much easier. Also, the autonomous transport vehicles will not be required to stop and rest when performing international freight forwarding services, which will save time and money both for the freight forwarders Europe and for their customers.

The social responsibility of the freight forwarders directory

Green logistics and the reduction of the carbon footprint of the European logistics network is becoming a leading objective of all international freight services. The corporate social responsibility has become a leading factor for the list of logistics companies from IFA, not only because of the local and international regulations but also for a greater public appeal, for keeping the customers and employees happy and for a better public image of the brand and the services provided.

Expectations are that corporate social responsibility of the supply chain providers and members will continue to be a leading factor in the strategies of the companies providing international freight forwarding services in 2019 as well. This means that sustainability and the lowering of the harmful emissions in logistics and chain supply management will remain the key objective of the reputable companies providing European logistics services.

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Our freight forwarders network offers a number of cold chain solutions which ensure the integrity of the entire cold chain. These services include cold chain packaging, cold chain transportation, cold chain management, cold chain distribution and cold chain international freight forwarding.

What is a cold chain?

The European logistics network offers a reliable number of cold chain related services, to ensure that the entire cold chain is uninterrupted. The cold chain is provided to keep certain types of goods refrigerated at the required low temperature from the moment it leaves the production line until it reaches the end clients. These goods are kept at low temperature in order to preserve their qualities. Some products which the European network for transportation handles as part of the cold chain include various foods, fresh fruits and vegetables, frozen foodstuff, seafood, pharmaceuticals, chemicals, film and others.

How is the cold chain logistics service provided by the freight forwarders Europe?

Special storage and refrigeration transport is used for storing and transporting these perishable goods in order to ensure that they arrive safely to the end destination.

We have extensive experience with international freight services in which specialized transportation or storage is required to keep the goods in a good condition. We can provide you with advice regarding the handling and the frozen vehicle shipping as well as reliable refrigerated storage and transport.

The members of the freight forwarders association can also help you with the cold chain storage and distribution services by providing you with the best priced and fastest routes, by combining intermodal transportation services or our European groupage services, in order to ensure that the perishable or other goods do not spend too much time on the road or in storage.

We can quickly unload your goods and load them in outgoing transportation means to save you the time and money for storage as part of our cross docking services.

The members of our freight forwarders association are well aware of the varying shelf life of the different foodstuffs, so we will ensure that your goods are forwarded and stored properly and in a timely manner.

The different cold chain solutions offered by the freight transport association

We offer:

• Cold storage, refrigerated and freezer warehouses
• Temperature controlled cross-docking for foods
• Enhanced tracking and lot traceability for timely distribution
• Dedicated refrigerated transport
• Close monitoring of the temperatures of the vehicles and the goods at all times
• National and international freight forwarding of cooled, refrigerated or frozen goods
• Cold chain parcel deliveries
• Refrigerated intermodal transport in Europe
• Complete loads or small shipments under strict temperature control

Why pick the international freight forwarders association as a cold chain logistics partner

The member companies of the international freight forwarders network are all trained to follow the strict quality control European logistics standards and procedures for ensuring that the cold chain is not broken at any given moment during the loading, storage, transport, unloading, distribution, and delivery of your temperature sensitive products.

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