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13 Smart Strategies to Reduce International Shipping Costs

Phuc Le
August 24, 2023

Many businesses often operate under the assumption that their methods of international shipping and the associated costs are fixed and unchangeable. However, just because a certain approach has been traditionally followed doesn't mean it shouldn't be challenged. In fact, there are numerous opportunities to make improvements, even in areas as fundamental as arranging international shipments. 

Taking a more strategic approach can lead to substantial savings, potentially up to 50% of the regular international shipping expenses. Presented below are 13 specific suggestions aimed at curtailing these international shipping costs, complete with an estimated calculation of the potential savings.

1. Establish Consistent Volume Agreements for International Routes

13 Smart Strategies to Reduce International Shipping Costs

Creating ongoing partnerships with international carriers for specific shipping routes is a strategic move. By committing to regular shipments along a particular international lane, carriers can optimize their operations, which includes exploring opportunities for efficient backhaul utilization and expanding their global network. This heightened level of operational efficiency can lead to significant cost savings for your international shipping endeavors. Additionally, in the current landscape of limited shipping capacity, carriers often prioritize loyal customers who consistently provide reliable freight volumes, ensuring your shipments receive preferential treatment.

POTENTIAL SAVINGS: 2-12% compared to standard international shipping rates.

2. Optimize Off-Peak Shipping Days for International Shipments

Adjusting your international shipping schedule can result in measurable cost reductions. For instance, consider shipping a day earlier or later than usual. Fridays, known for their reduced shipping activity in the consumer goods realm, are characterized by retailers stocking their shelves by Thursday for weekend sales. Similarly, Mondays tend to have lower shipping demand, with carriers often seeking shipments to fill their available capacity. The feasibility of this approach depends on the type of cargo – non-perishable goods might offer more flexibility. Exploring off-peak international shipping options is especially advantageous for non-consumer product shippers.

POTENTIAL SAVINGS: 10% compared to peak international shipping days.

3. Leverage Nearby Consolidation Programs for Smaller International Shipments

Engaging in international retail consolidation is a mutually beneficial strategy. By consolidating your smaller international shipments with those of neighboring businesses destined for the same global retailers and distribution channels, efficiency is maximized. This method allows you to share the cost of a more economical international shipping solution, which could involve container or air freight consolidation. Meanwhile, retailers and distributors receive timely deliveries and can optimize their warehouse and storage space, resulting in reduced operational costs. To identify potential partners, explore local business associations, international trade organizations, or collaborate with a third-party logistics provider (3PL) offering consolidation programs for companies shipping to the same global customers.

POTENTIAL SAVINGS: Up to 25% compared to the cost of individual, unconsolidated international shipments.

4. Cultivate Long-Term Relationships Instead of Constant Rate Shopping

While annual RFP processes might seem necessary to demonstrate your dedication to reducing international shipping costs, the practice of severing ties and engaging new international carriers each year isn't the most effective approach. Consider it analogous to "speed dating" in the realm of international shipping. Establishing enduring, strategic partnerships with international carriers can yield considerable transportation management benefits that directly impact your financial bottom line. Longer contractual periods provide carriers the chance to attract additional customers within the same global region, resulting in a more streamlined network with fewer inefficient empty miles. A carrier that optimizes its global assets becomes more profitable, enabling them to provide you with more favorable international shipping rates. Moreover, a multi-year agreement, such as a three-year contract, secures a consistent rate throughout the agreement, mitigating annual fluctuations – and the possibility of increases. Committing to a long-term partnership with an international carrier also translates to enhanced service quality, a factor of significant value.

POTENTIAL SAVINGS: 3-5% annually; these estimated savings could potentially double during periods of tight international shipping capacity.

5. Extend Delivery Lead Times for Enhanced International Planning

Injecting meticulous planning into the international supply chain and furnishing international carriers with advanced notice about upcoming shipments empowers them to optimize resources, encompassing ships, planes, drivers, and warehousing facilities. Providing advanced shipping notifications allows international carriers to orchestrate their global assets efficiently. Notably, a major cost for international carriers arises from vessels and planes idling at ports or airports, awaiting loading. Elevating the planning timeline mitigates these costs and enables carriers to pass on some savings to you. The potential for improved planning extends across all facets of the international supply chain – from cargo pickups and staging to loading on ships or aircraft. Longer lead times equip international carriers to effect behind-the-scenes enhancements, resulting in heightened efficiency and offering you more favorable international shipping rates.

POTENTIAL SAVINGS: 5-20%.

6. Streamline Dunnage for International Cost Efficiency

Numerous products necessitate protective measures like airbags, strapping, and blocking to safeguard them during lengthy international journeys, whether across oceans or through international airfreight routes. However, excessive precautions can inflate international shipping costs unnecessarily. International carriers possess invaluable insights that can help you optimize your dunnage and reduce international shipping expenses without compromising on the safety of your goods. Do not hesitate to seek their guidance. Many international carriers implement dimensional weight pricing models that incentivize shippers to use appropriately sized packaging, reducing box weight and minimizing the need for excess dunnage.

POTENTIAL SAVINGS: 1-3% per international shipment load.

7. Foster a Reputation for Efficient Loading in International Shipments

When international carriers determine pricing, they often account for a 2-hour loading window. However, if a carrier knows that a particular shipper consistently loads cargo within an hour, it can influence the pricing and cultivate a positive carrier-shipper relationship. Shippers with a track record of swift loading times may even negotiate these favorable load times as part of their rate structure. This proactive approach eliminates the need to chase after additional charges, which can be a substantial time and resource drain. An operationally efficient shipper not only saves money but also becomes a preferred choice for carriers, resulting in a dual advantage.

POTENTIAL SAVINGS: Dependent on your current reputation. You can estimate that carriers often factor around $40 per hour into their rates for each hour it typically takes to load cargo.

8. Extend Pick-Up Windows for International Shipments

Offering international carriers later pick-up times, such as between 6-12 p.m., can transform your load into a backhaul opportunity. By providing pick-up times beyond the standard hours when other shippers have finished their shipping activities, you enable carriers to utilize their resources more effectively. For instance, a carrier might decline a load scheduled for a mid-afternoon pick-up due to conflicting routes. However, a later pick-up allows them to make the delivery and optimize their return trip with your freight. This approach contributes to maximizing asset utilization, particularly for longer international hauls.

POTENTIAL SAVINGS: 15-20% reduction from standard international shipping rates.

9. Optimize Pallet Spaces in International LTL Shipping

Efficiently utilizing the cubic space of your products, arranging them to occupy fewer pallet spots, and reconfiguring the packaging can all facilitate fitting more cargo onto a pallet and inside a trailer. For example, employing smaller boxes for small components instead of using large boxes can optimize pallet loading and save pallet spaces. Engage your international carrier for suggestions on creating more efficient pallet configurations, with recommendations tailored to the specific nature of the products being shipped.

POTENTIAL SAVINGS: Up to $150 per saved pallet space.

10. Promote Larger, Less Frequent International Shipments

Encourage your international customers to place larger orders, emphasizing the cost-effectiveness of shipping in bulk. Sending six pallets in a single shipment is notably more economical than dispatching two pallets every two days. However, retailers often prefer smaller, more frequent shipments. To address this, incentivize larger orders by sharing freight savings with the retailer or exploring options like Vendor Managed Inventory (VMI). VMI allows retailers to stock items without being charged until the products are on the shelves, incentivizing them to order more inventory upfront.

POTENTIAL SAVINGS: Up to 50% compared to the cost of the smallest international LTL shipments, which could trigger minimum charge requirements.

11. Seek Local Carriers in Proximity to Your International Destinations

Opt for international carriers situated near your intended delivery points. This increases the likelihood of your shipment being utilized as a backhaul, resulting in a more favorable rate. Filling empty return miles is a key strategy for carriers to optimize their earnings, and it's also an effective method for reducing your international freight costs. Surprisingly, many shippers fail to explore carrier terminals conveniently located near their frequent international delivery destinations.

POTENTIAL SAVINGS: 20% compared to standard non-backhaul rates for that particular route.

12. Involve Logistics in Early Decisions Regarding Product Design, Packaging, and Carton Selection for International Shipments

All these factors impact the utilization of trailer space to its maximum capacity. What some companies overlook is that packaging represents a small fraction of the supply chain cost, accounting for less than 10% of every supply chain dollar. In contrast, warehousing constitutes around 25% of the cost, while transportation accounts for approximately 60%. Therefore, it's prudent to approach packaging design and carton specifications with the goal of enhancing freight efficiency. The decision-makers in marketing roles may not inherently possess this mindset. Often, the impact of packaging optimization on international freight rates goes unnoticed by many companies.

POTENTIAL SAVINGS: 10% when considering the combined cost of packaging, warehousing, and international transportation.

13. Consider Outsourcing Your International Transportation Operations

Especially for smaller companies, international freight management might not align with core competencies. The expenses and time commitments associated with hiring, training, and maintaining a transportation team, as well as keeping up with evolving systems requirements, can be substantial. This is further compounded by the need to manage and retain a driver workforce. Enlisting the services of a third-party provider for international freight management shifts the financial responsibility of staffing and capital expenditures. Additionally, it opens the door to innovative solutions that proactive carriers often suggest. Moreover, carriers are inherently more efficient due to their ability to procure resources like fuel in bulk. If you possess your own fleet of trucks, it's worth exploring the possibility of outsourcing international freight to external experts.

POTENTIAL SAVINGS: 3 to 5%. Shippers with their own truck fleets frequently incur at least a 25% premium compared to the standard cost of outsourcing international delivery needs to reputable and dependable carriers.

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