How to Reduce Freight Costs Despite Tariffs

Between new tariffs, Red Sea disruptions, and Panama Canal drought issues, international shipping costs have been rising due to one unpredictable event after another.

But it’s still possible to save on freight costs – if you know where to look.

We sat down with Amit Chen, CEO of Unicargo, to get practical tips for SMBs on how to reduce shipping costs – even when facing global disruptions.

Take Control of Your Freight

Amit emphasized that many extra freight costs are avoidable, and importers and exporters should invest the time in understanding where these costs creep up.

> “The onus is on you,” explained Amit. “If you are not aware of extra charges, and you’re not working closely with your freight forwarder, you could end up paying where you didn’t need to.”

Tip #1: Don’t Be Fooled by Base Rates

One mistake many small businesses make is focusing solely on ocean freight rates when comparing costs. “If you see a cheap price for ocean freight,” Amit warns, “remember that’s not the whole cost. You may be saving on ocean freight, but spending double on getting your goods from port to destination.”

Consider this: Each extra day of container storage at US ports can cost over $100. That adds up fast, and can quickly eclipse any savings you might find on basic freight rates.

Therefore, it’s important to keep these two things in mind when evaluating freight quotes:

• Make sure to look at the cost of the entire end-to-end journey
• Check that each quote includes the same services, whether port-to-port, door-to-door, or any other needs you have

Tip #2: Avoid Prepaid Freight

Here’s another pitfall to avoid: accepting prepaid freight from your suppliers.

Many suppliers offer to book freight for their customers, saving them the need to work directly with a freight forwarder. This option’s convenience may sound tempting, but it could end up being significantly more expensive.

One reason is that suppliers often receive kickbacks from the freight forwarders they partner with, and those costs ultimately get passed on to the importer. Another is that if your freight is prepaid, you lose the ability to work with your forwarder and ensure you are saving where you can.

Booking freight with a trusted freight forwarder allows:

• Better visibility into total costs
• More control over timing and scheduling
• Ability to optimize warehouse delivery
• Direct relationship with your freight provider

Tip #3: Master Your Warehouse Management

Picture this: Your container clears customs on day three after arrival, but your warehouse can’t receive it until next week. The result? A week of storage charges at the terminal that could have been avoided with better planning.

Many importers and exporters don’t realize how big of a difference working closely with your warehouse can make. Here are some steps to take – and your freight forwarder can help:

• Schedule warehouse delivery appointments well in advance
• Coordinate with your warehouse for immediate unloading
• Plan for chassis returns to avoid extra rental days
• Maintain clear communication between all parties

> “If your warehouse is aware of your shipment’s estimated customs clearance time, they can save you a delivery slot, and they’re more likely to be flexible about delivery time. That could save a few days – and that means saving a few hundred dollars easily.” – Amit Chen, CEO, Unicargo

Tip #4: Understand Equipment Charges

Many shipments require special equipment for delivery, and it’s important to talk to your forwarder in advance to understand what your goods will need, and where you can save.

For example, in the US, every day a chassis remains at your warehouse and isn’t returned means additional rental charges. And if you’re using a full container, it must be returned within a certain time frame to avoid extra fees.

Pro tip: Work with your warehouse to speed up your goods’ unloading time so equipment can be returned quickly, potentially saving hundreds in unnecessary rental fees.

Tip #5: Make a Plan

While global disruptions and tariffs may be beyond your control, managing these “hidden” costs isn’t. By focusing on elements within your control – from warehouse management to equipment charges – you can significantly reduce your overall shipping costs.

Here are some steps you can take to reduce your freight costs:

• Review your last three months of freight invoices
• Identify patterns in accessorial charges
• Develop a warehouse coordination strategy
• Review your equipment needs
• Partner with providers who offer transparency in total landed costs