The global shipping crisis presents an unpredictable variable overhead for many businesses. With shipping costs increasing daily and the availability of stock remaining uncertain, fixing delivery costs and timeframes are problematic. And this is something that looks set to continue over the next 12 months. The impact is proving crippling for many businesses.
As a result, current predictions are that consumer prices could increase by 1.2% – 7.5% between now and 2023, dependant on the product type and your location. Yet the current shipping crisis is proving equally challenging for business customers.
While some businesses have turned to air freight for international delivery of smaller items, costs are still notable. In addition, as many customers are looking to companies to reduce their carbon footprint, this is a short term solution, if any.
In 2020 articles started emerging concerning deglobalisation, and policymakers and business leaders speculated on the future of international trade. 2021 has seen some significant recovery; however, not for all. Smaller economies and poorer countries are falling behind.
Furthermore, UK businesses are being encouraged to export and exploit a broader market in B2C and B2B sectors.
In the long term, this is another hot topic demanding international collaboration. In the short term, what can you do to stop the increase and unpredictability of shipping costs from eating away at your gross margin?
Analyse Your Supply Chain
The first step is to analyse your entire supply chain. Look at everything you supply, import and export and see where you can improve. Is there anything you can source locally? Or any steps you can take to streamline your logistics?
Concerning deliveries, have you assessed all options? You may need to use different delivery services for other products.
Speak to courier and logistics services and see if they offer deals or rewards for fixed-term contracts. It is undoubtedly advisable to monitor this situation to ensure you get the best deal.
See What Your Competitors Are Doing
Next, do some market research. What are your competitors doing, how much are they charging, and how are they coping?
Complete some online research and make a few phone calls. This is an administrative task, and a few well thought out questions could herald some excellent results.
Network – Two Heads are Better
As this problem affects so many businesses, perhaps there is an opportunity to pool resources. Reach out to your network and any other companies in your industry. Is there an opportunity for an unofficial conglomerate in supply chains?
Engage Your Customers
You may not be able to avoid passing on costs to consumers or business customers, so involve them in the process. Tell your customers what you are doing to address the global shipping crisis. Create a shipping policy and keep it updated. Include a disclaimer stating that delivery charges are subject to change. An example has been provided below and sourced via Law Insider. However, you must seek the advice of a legal professional before implementing such a clause.
Price Changes – In the event of any specific requirements (including without limitation any design, specification, order quantity, shipment dates/changes) representing a price increase, or in the event of changes in market conditions that impact costs, the Buyer will be notified and afforded an opportunity to confirm within (5) business days from Seller’s notice. In the event that Buyer does neither confirm nor object in writing within (5) business days from Seller’s notice, the price increase is deemed accepted by Buyer.
Most customers are ethical and like their suppliers to be as well. Inform your customers that you are keeping your business supply chain local where possible and doing everything else you can to avoid passing on costs to them while ensuring expedient delivery. Then if you do have to increase prices or items are delayed, you can demonstrate that you have acted appropriately. In addition, your customers know where they stand in advance.
Also, think of a loyalty incentive you can offer. What could you give your customers to sweeten the deal? You may be announcing an increase in costs, but you are also offering a customer loyalty facility or such. It’s not a ruse; it’s just clever business.
There is a vast range of courier solutions available. There has to be a predictable element to your delivery costs. By researching delivery services, you can improve your ability to budget for this overhead.
The following websites all offer comparisons on delivery costs and cater for parcel, pallet, road, sea and air freight, nationally and internationally.
- My Parcel Delivery – Hermes, My Parcel Delivery, Parcelforce, UPS
- Parcel2Go – DHL, DPD, FedEx, Hermes, Parcelforce, TNT, USPS, UPS, Yodel
- ParcelHero – DHL, DPD, FedEx, Hermes, Parcelforce, TNT, UPS
- Worldwide Parcel Services – AMI, APC, DHL, DPD, Interlink Express, UPS
We also found a helpful guide to walk you through the whole process of shipping: