Efficient logistics and cost management are the priority for every company’s supply chain. Yet, businesses that export internationally often focus only on their shipping rates when it comes to reducing their costs. This is especially true for European food exporters selling into the US marketplace. The appeal of a large market and historically low ocean shipping rates make it easy to lose sight of the costs that matter the most – total landed costs. Most companies, even those already exporting to the US, can sometimes underestimate the complexity of shipping and selling products in the US and their businesses struggle as a result.
Negotiating lower shipping rates, whilst important, should not be seen as the only opportunity for optimising total landed costs. The end to end process and network of partners that companies use to get products to their US customers, and the cost implications of those decisions, are important considerations as well.
Companies that view logistics as part of a strategy can reduce their costs by understanding the impact of issues at each stage of their supply chain. In the case of selling to the US from Europe, the real work only begins once the product is at its US port. In fact, 26% of a company’s costs are in the supply chain, while only transportation only making up 4%. So, logistics decisions should be made not just on transportation costs, but on how they affect the entire supply chain.
Finding the Right Supplier Partnerships
Shipping internationally to the US requires - and benefits from - a different approach to supplier partnerships than what may work best within Europe. But like any cross-border supply chain, the country specific customs regulations, unique logistics infrastructure, and business culture are real barriers that companies need to overcome.
All partners within the logistics chain, including carriers, warehouses, and customs broker must be aligned to serve a company and their customer’s needs. Otherwise each supplier will concentrate on their own goals, and not what is best for the customer. The right partners are those that can ensure smooth customs clearance and final customer delivery, including minimizing damage claims and charge backs, and even creating opportunities for consolidation.
A deep understanding and experience with the US food market is another basic requirement in finding the right partner. Food products are unique and time-sensitive, therefore, creating a consistent and reliable programme takes planning. The ability to navigate the stringent delivery and packaging requirements of the industry is invaluable to ensuring deliveries happen on time, damages are minimised, and charge backs are avoided.
And of course, the basics of customer service should be an expectation of any partnership. This includes proactive issue identification and resolution. With a shipping process that extends from Europe to locations all around the US, this is no easy task. This is only possible through full supply chain visibility that leverages technology and a connected network of transportation resources.
The Role of Technology
Technology is another important consideration in choosing the right partners, and essential for shipping to the US. The use of technology has come a long way in the shipping industry. The complexity of managing rates, objectively weighing the large number of mode and carrier options, as well as the expectation by customers of real time tracking information are all made easier and more efficient with technology. And again, the importance of each is magnified for time sensitive food products.
Technology makes objective decision making possible. The best example is seen by considering the many shipping options available in the U.S. Countless rate, service, and carrier options complicate decision making but technology ensures the right choice is always made to balance cost and service. Logistics technology can provide network modeling to optimise shipping costs, account for tight lead times, and minimize time to market.
Analysing and bench marking against KPI’s is another technique for improving internal operations. While the expense of technology can be high, cost models are coming down, making it affordable for even small businesses, and enabling them to stay competitive.
Create a Plan
Success in the competitive US marketplace takes a high level of supply chain efficiency. This means every European food manufacturer shipping to the US needs a network of logistics partners that are working towards a common goal - while leveraging technology to the benefit of costs savings and better operations. Engaging with an experienced partner who is currently operating within the complex US food-retail market is the most direct way to reduce total landed costs and improve any supply chain network.
