In international shipping, consultants often tell shippers to consider their Total Landed Cost. The Total Landed Cost (TLC) is a measure of everything that goes into your shipment, including the original price of the product you sell, all of the transportation fees, crating, taxes, customs, insurance, duties, currency conversion and handling fees. Knowing your TLC is not as simple as taking a cursory glance at an invoice. It takes technology to gather sku-level data on each product, manpower to look into it and pull out the information you need, and buy-in from leadership who is willing to spend time and effort to know where and what the costs truly are. Without real information on TLC, a business can make a poor decision when it comes to international shipping and end up hurting its domestic market as well. If you are a major company that handles large numbers of international shipments, you can bet you know your TLC, but smaller companies may lack the resources to prioritize this type of analysis – but that is a big mistake.
What about your domestic shipping? I’ve talked to a lot of shippers around the country, and I almost always ask the same four questions as a starting point:
- What is your average package weight?
- What are the dimensions of your average package?
- Where do you most often send your packages?
- How many packages do you ship out daily?
None of these questions are as complicated as determining demurrage at a warehouse or real cost of returns, but I am often shocked at how little most companies know about their cost to ship. The numbers I am given usually reflect the package that was most recently discussed, or the best or worst day their warehouses had. Numbers are usually far from accurate, and without these basic data points, it’s impossible to know where your money is going on shipping.
The problem is that most business owners and executives assume that the TLC measurements is knowledge their warehouses have, and most warehouse managers assume that the executives are taking care of it. Not having a real, accurate profile of what you ship, and thus remaining ignorant of your true shipping costs, can keep you from making the best decisions on what you sell, whom you sell it to, and how you ship it.
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