The rising cost of freight has pushed many small businesses to the wall, and prices aren’t expected to return to normal anytime soon. Here are some ideas to free up your cashflow and reduce freight costs to get through the global supply chain crisis.
If you source products and materials from overseas, you’ve probably noticed that the cost of shipping has skyrocketed. According to Drewry’s World Container index, the average price of a 40-foot shipping container at the end of November was nearly US$10,000, more than five times what it was in November 2019.
Wooden pallet prices are also higher than they used to be, and no matter what aspect of the global supply chain you’re talking about – cargo ships, containers, pallets, or capacity at ports – there’s a severe shortage.
It’s not hard to understand what’s driving this. COVID-19 has created a mismatch of supply and demand. While demand for goods is at an all-time high – global e-commerce sales grew 27% in 2020 – suppliers are struggling to keep up due to ongoing outbreaks and pandemic restrictions.
Everyone is experiencing the flow-on effects, but while big businesses can either absorb the increased costs or come up with creative workarounds – Walmart has started chartering its own ships – many small businesses don’t have the cash to do so.
Operating on razor-thin margins already, small businesses are seeing freight costs eat up their profits, and those with a lot of fixed costs are being pushed to the wall. This is where hummpro can help.
How hummpro can help
As an interest-free payment option, hummpro can help free up your cashflow so you can continue to order the stock you need.
With access to up to $30,000 in finance and a virtual card that’s accepted anywhere Mastercard is, you can use hummpro to pay for petrol to get to and from jobs, marketing to grow your business, and even your monthly utilities bills, and you don’t have to make a repayment for at least 30 days.
This gives you a buffer to handle fluctuating prices in the global supply chain, which may not stabilise until 2023. In the meantime, here are some other ways to keep your freight costs under control:
- Opt for slower deliveries: Unless you’re buying perishable products, you can choose a slower freight speed to reduce your costs. Of course, this will require you to place orders earlier and will make it hard to react quickly to changes in the market, so you should think carefully about which products and materials you order in advance.
- Consolidate your shipments: If your shipments don’t take up a full truckload, you could be paying a premium. Delaying shipments until you have a full truckload, or teaming up with other businesses to consolidate your orders, will help you get the best price.
- Source locally: The more products and materials you source locally, the less you need to worry about fluctuating freight costs. While the cost of goods made locally might be higher, lead times are generally shorter, which can also ease cashflow concerns.
While you can’t control global freight costs, you can control your cashflow with hummpro.