How can you reduce logistics costs by splitting orders in import/export operations?

1 Benefits of splitting orders

Splitting orders can offer several advantages for your import/export operations, such as reducing customs duties and taxes, improving cash flow and inventory management, and enhancing customer satisfaction and loyalty. Splitting orders into smaller units may help you avoid or lower some of the fees and charges that apply to larger shipments, particularly when importing from countries with high tariffs or complex regulations. Additionally, splitting orders into smaller batches can reduce the amount of capital tied up in your inventory and improve your cash flow, allowing you to respond faster to changes in demand. Furthermore, splitting orders into smaller parcels can offer customers more flexibility and convenience in terms of delivery options, tracking, and returns. This can also reduce the risk of damage, loss, or theft of your goods during transit and improve your customer service.

2 Factors to consider before splitting orders

Splitting orders can also have some drawbacks and challenges for your import/export operations. For instance, it may lead to increased logistics complexity and coordination, such as more paperwork, documentation, communication, shipments, and deliveries. This can potentially increase operational costs and workload. Furthermore, it may affect product quality and consistency due to exposure to different environmental conditions, handling practices, and quality standards. This can consequently impact your reputation and customer satisfaction. Additionally, splitting orders may depend on the availability and reliability of different transportation options, such as air, sea, road, or rail. This can create fluctuations in freight rates, transit times, and capacity constraints that may affect your logistics planning and budgeting.

3 How to split orders effectively

To split orders effectively, you need to analyze your products, markets, customers, and logistics network and find the optimal balance between cost, speed, and quality. Start by segmenting your products based on their characteristics such as size, weight, value, perishability, fragility or special requirements. Then segment your markets based on their geographic location, demand patterns, customs regulations or competitive landscape. Additionally, segment your customers based on their preferences, expectations, needs or behavior. Furthermore, evaluate your logistics network based on the availability, cost, speed, reliability and quality of different transportation modes, routes and carriers. Compare the benefits and drawbacks of splitting orders for each product-market-customer segment and decide on the best combination of shipment size, frequency and mode. Finally, monitor and measure the performance and outcomes of your splitting orders strategy and make adjustments as needed. Splitting orders can be a powerful tool to reduce logistics costs and improve import/export operations. With careful planning, analysis and execution you can gain a competitive edge in your market.

4 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?