Key do’s and don’ts for shipping your exports
Shipping is often one of the last considerations when a business decides to export products abroad. Ali Lajevardi, Senior Business Advisor, BDC Advisory Services, says it should be part of the strategic conversation early in the process.
Lajevardi’s team coaches entrepreneurs on international expansion. He says getting your products to a foreign market is typically a significant expense—“in some cases equal to the cost of making the product.” The cost and complex logistics can materially impact your margins and choice of target country.
“Shipping doesn’t tend to be on the strategic map,” Lajevardi says. “Businesses often think about it too late in the process.”
“It needs to be part of planning from the get-go because it can affect your long-term competitiveness in the target market. Shipping can’t be the last thing you think about. It should be at the beginning. This will help you decide if it’s better to go to the United Kingdom or Singapore or any other potential markets.”
Lajevardi shares four do’s and don’ts for shipping your exports.
Review your strategic goals
Start by developing a roadmap for international expansion that considers your readiness for the venture, the competitive landscape at home and in target markets, and an expansion strategy.
Continue by reviewing your market entry strategy. Make sure you’re clear about these questions:
- What are your business goals?
- What will you be exporting?
- What is your competitive advantage and customer profile in the target market? How are they similar or different from those in your current markets?
- Who is your competition?
- What are your hoped-for sales levels?
- What are your financial and operational resources for the export project?
- What are the trade, regulatory and other barriers and opportunities?
- How do you plan to enter the market (e.g. through a distributor or agent, local partnership or acquisition, physical office, online marketplace and/or direct sales)?
- What are your expected lead times?
Doing this homework is crucial for making the best decisions about shipping your products. “You want to keep your logistics plans aligned with your strategic goals and choose shipping options that satisfy these goals,” Lajevardi says.
Build expertise or find good partners
International logistics is a specialized task that requires professional in-house expertise or solid partners to handle the multifaceted logistics and transportation challenges.
“You need a professional to do this successfully, at least at the beginning of your export journey,” Lajevardi says. “You will need some help especially if you are starting to set up a system for exporting and you want your product at the right location at the right time.
“It’s super-important to have a very good, reliable partner if you don’t have enough volume or capacity to hire in-house expertise, especially if you deal with complex products or a multimodal logistical context.”
Even with an in-house specialist, you may still have to work with an outside partner for some aspects of the shipping process. You generally need expertise or partners for three main functions:
- transportation, warehousing and last-mile delivery
- customs clearance
- insurance and financing
Several types of partners can help you:
Third-party logistics and freight forwarders
These experts have broad expertise on the entire shipping process from pick up to drop off. Their services can include:
- advising on the optimal mode of transportation (i.e. land, sea or air) and carriers
- hiring and coordinating various carriers, hubs and storage services along the shipment route
- freight consolidation and deconsolidation
- packaging and labelling
- pick-and-pack and billing support
- last-mile delivery to the final destination
- x-ray screening, temperature control and other handling needs of special products such as food or fragile items
- coordinating with customs brokers and insurance providers
Depending on the nature of products, frequency and volumes, it is also useful to consider expedited delivery and supply-chain service providers with established international infrastructure and specialized services for small and medium-sized businesses.
These licensed experts specialize in clearing products through customs. They have knowledge about entry and exit procedures, documentation needs, duties, tariffs and taxes.
Transportation providers include trucking firms, rail lines, air and ocean freight services, and couriers.
Insurance and financing providers
You can deal with a variety of insurance and financing providers to support your export venture. For example, Export Development Canada offers several insurance products covering such things as non-paying foreign customers, contract cancellations and political risks overseas.
“Find partners who match your strategic goals and lead times,” Lajevardi says. “It’s best if they have experience with your industry, transportation methods and target market.”
1. Don’t look only at cost
Don’t make the mistake of picking a provider based only on lowest rates. Other key considerations include:
- which services are included in the fee (can vary widely by provider)
- the provider’s record providing smooth, delay-free service
- their networks and the doors they can open
- strategic fit with your business
“Look at them as long-term partners,” Lajevardi says. “They’re more than just a service provider who picks up your package here and drops it off there. They can help you identify new or additional value in your target markets.”
2. Get a full picture of regulations and required documents
It’s vital to get a good understanding of the regulations and documentation you’ll need to get your product to the final destination.
“It’s very easy to miss something, especially if complex, food or agricultural products are involved,” Lajevardi says. “Small mistakes can lead to huge delays. You have to understand the regulations of the home and receiving countries and any transit point in between.”
Any delay means additional warehousing and transport, which converts to direct negative impact on your margins and sustainability of international business endeavours.
Needed documentation can include:
- export/import permits and declarations
- packing lists and transport documents
- commercial invoices
- certificates of origin, inspection and insurance
Also be sure to understand the latest version of the Incoterms, which are internationally recognized terms outlining buyer and seller responsibilities during shipping.
“Some entrepreneurs say shipping isn’t important and think about it only post-handshake,” Lajevardi says. “Then they run the numbers and realize they have to go back and change the agreement. It’s best to think about logistics early on. It’s an important part of your export strategy.”