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It has never been easier, in general, for smaller companies to trade in international markets than it is today.
However, freight shipping is the one activity that presents significant barriers to overseas-market entry, as you may have discovered if your business is starting to look across international borders for its next step in expansion.
In this brief post, we’re going to set out some of the critical containerized-freight shipping challenges for small to medium-sized companies.
containerized-freight
Our aim here, if you’re new to the world of commercial importing and exporting, is to help you know what to look out for and where/how to concentrate resources to gain traction against larger competitors in what is becoming an ever-more-competitive arena.
Container Shipping Can be Tough for SMEs
The years 2020 and 2021 have not been easy for any company engaged in shipping containerized freight internationally. Container shortages and sky-high freight rates have spared no enterprise, regardless of its scale.
Container shortages
However, even before the Coronavirus pandemic rocked the global trade environment, SMEs faced disproportionately greater challenges in containerized freight shipping than their larger brethren.
That’s a situation that has changed little in the last two years, although new technologies are beginning to make life easier for those companies that ship on a smaller scale.
Are you considering a transition or expansion into international trade for your enterprise? Perhaps you have already begun and are only now beginning to look at the shipping side of things? In either case, the following rundown of SME containerized-freight shipping challenges might help you see where you will need to place the most intense focus.
Challenge #1: High Costs and Confusing Pricing
The costs of shipping a container-load of freight have never been higher, and right now, the control of pricing is firmly in the hands of the liner companies. That’s a massive problem for SMEs, for example, that last year might have been paying $4,000 to $5,000 (USD) to ship a 40-foot container from Asia to North America, and now face rates of $20,000 and above.
As if astronomical freight rates are not enough, understanding the anatomy of freight quotes and invoices requires an in-depth knowledge of the shipping industry that’s missing in many smaller companies, leaving managers unsure of their actual costs and what they comprise.
managers unsure of their actual costs
To further compound the issue, some costs are incurred only in the event of problems arising at the ports of loading or discharge and are impossible to foresee when booking a shipment.
For example, if your company chooses to book its containerized-freight shipments with a freight forwarder (which often makes a lot of sense), your quote might include the fees for:
Domestic transportation in the country of export
The maritime shipping leg the country of export to the country of import
The domestic transport in the country of import
Transshipment of containers or contents might be required within any of the above legs of the shipment, an activity that typically results in additional charges.
A Multitude of Cost Components
Aside from the segmentation of shipping itself, the cost of each segment be made up of several components, which might include:
Terminal handling charges
Export fees
Documentation fees
Then there is the potential for demurrage or detention fees if a container is held up in a port or returned late to the shipping company, not to mention all the potential surcharges that shipping lines apply, such as bunker, low sulfur, and pirate surcharges.
Ultimately, the sheer number of pricing components, combined with the vagueness applied by some forwarders or shipping lines, make it very hard for managers to get a clear and accurate picture of freight costs.
The latter option can become something of a chicken and egg situation. After all, before you can train generalists as international freight specialists, you need people with the appropriate expertise and credentials to develop and deliver the training.
Of course, you can seek external help with this, which would come at a cost but might give you the start you need. In case that’s an option you’re considering, we’ll conclude with a quick look at how a supply chain consulting company might support you in your quest for more effective container-freight management.
The Value of External Assistance with Container Freight Shipping
If you own or run a small or medium-sized enterprise and have difficulty managing containerized freight shipping, it might make sense to look externally for help. A reputable supply chain consulting firm can assist you with all of the challenges we’ve briefly covered in this article.
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