If you've ever been to the docks in a large coastal city, you've undoubtedly seen bulk shipping.
Giant ships that can barely maneuver into the port, laden with thousands of tons of shipping containers. These ships come and go all day and night travelling from country-to-country to deliver goods. It's a time-honored tradition in inventory management and a vital tool for manufacturers to sell through their inventory.
Your products could be on one of those ships if you adopt bulk shipping for your business. We'll help you understand how bulk shipping works, the costs associated with it, and the things to look for when picking a shipper.
What Are Bulk Shipments?
Bulk shipments are a form of mass shipping where large quantities of goods are loaded onto shipping vessels without packaging. These shipments are usually transported in large, metal shipping containers on-deck and in the hold of a ship. They make long journeys across the ocean and must be able to endure a lengthy trip. These shipments certainly aren't a good choice for just in time inventory shipments. They are often a good choice for a B2B business.
How Does Bulk Shipping Work?
Shipping large quantities of goods is similar to normal shipping methods but requires three steps to be done correctly.
- Transportation to port storage. Bulk goods are always stored at the ports where they are shipped from. This means your goods are left in a facility or on the docks in a storage container until shipping. Like dropshipping, the storage areas are owned by the shipping companies who will handle loading and unloading.
- Loading onto a shipping vessel. Your container will be loaded into the hull or onto the deck of a large ship. This is done using a large crane and each ship can hold thousands of twenty-foot containers.
- Unloading at the destination port. The process will be reversed at the destination and your goods will be loaded onto trucks for final mile delivery. They can even be delivered to your own warehouses if you participate in a consignment inventory model.
What Kind of Goods Can I Send with Bulk Shipping?
There are hundreds of types of goods you can send via bulk shipping, but they are generally classified as dry bulk or liquid bulk. These two groups are shipped and loaded in different ways, but both are very common in bulk shipping.
Dry Bulk Shipping
Dry bulk, or solid bulk, shipping involves the use of bulk storage containers that are stacked and stored on large merchant vessels. Dry bulk goods include anything from wheat and grains to raw materials inventory like wood and coal to finished MRO inventory. These goods are generally stowed by way of conveyor belts, cranes, hoppers, or silos. They are shipped on vessels that contain a single deck with multiple hatchways.
Delivery of Liquid and Bulky Goods
Liquid bulk products include any free-flowing liquid material, including chemicals like gasoline and consumables like milk or juice. Liquid bulk products are shipped using specialized deposits or tanks that can be filled with liquids. These tanks are filled via pumping stations and pipelines at ports.
Liquid bulk products are nearly always shipped on the largest vessels available with reinforced hulls. These ships can hold more than 400,000 tons. This is needed because liquid goods tend to take up less space but weigh more than their dry counterparts. Proper storage is a big part of inventory control.
How Much Does Bulk Shipping Cost?
Bulk shipping rates are set by individual shipping companies, but they are fairly standard across the industry. These costs are calculated in US dollars per ton of cargo.
How Much Is Freight Shipping?
Bulk freight shipping rates rose from an average of $18,000 a day for Capesize vessels in 2019 to around $34,000 per day. Capesize vessels hold around 180,000 tons and are the most commonly used dry good shipping vessel. This increase is due to several factors including an increase in consumer demand worldwide and fuel prices.
Factors That Affect Bulk Cargo Freight Rates
Individual costs for bulk cargo shipping rates vary greatly depending on a number of factors. What you are trying to ship will directly impact how much a shipping company charges you.
Here are the four main factors they consider:
Size and Weight
Size and weight are the two main factors taken into consideration when determining shipping costs. You must provide the shipping company with an accurate weight and measurement. Every item you are shipping will also be given a National Motor Freight Classification (NMFC) number that is based on these two metrics. Monitoring this number can help keep costs low and let you hit your target inventory KPI.
Shipping or Freight Class
The shipping or freight class is determined by taking into account a shipment's density, susceptibility to damage, and ease of loading and handling. Expensive and fragile products are given higher freight classes and cost more to ship since they come with more requirements for the shipping company.
Shipping Inventory Distance
The distance you're shipping a product can sometimes affect the rate you pay for shipping. Per-mile calculations aren't commonly used to increase rates. Instead, most shipping companies use a complicated formula to calculate risk based on origin, destination, and shipment type. Freight rates may actually decline with distance depending on haul costs and transport methods.
Dimensional weight is a formula used by shipping companies that determines the density of a given shipment. The rate can be based on dimensional weight or gross weight, usually the larger number. This means that a light, but large package will be charged based on its dimensional weight.
Bulk Shipping Solutions
There are many options for a company seeking to use bulk shipping from small private companies to large conglomerates to federally-own shipping.
Deciding which solution to use for your business should be based on the following factors:
- Shipping rates. This is pretty obvious, but you need to balance the costs of shipping against your sales price. If sending your product to retailers costs so much you lose money, you shouldn't do it. Volume discounts or MOQs (what does MOQ mean?) may also apply, so rates are different for B2B vs. B2C shippers.
- Destinations available. Try to find a ship going to a destination port that is as close to your final destination as possible. Land shipping costs can add up quickly, so minimizing those can help keep total costs down and ensure maximum profit. This can be handled by using route optimization software particularly one with an integrated multi-stop route planner.
- Services offered. Many shipping companies offer additional services like last-mile shipping, container protection equipment, and shipment insurance. Find the one that offers what you need to ensure your shipment gets where it needs to go in the best condition. Speed is also important so you can fulfill any customer backorder (what is backorder?) in a timely manner.
That's the Bulk of Our Knowledge
Bulk shipping is responsible for the movement of millions of goods around the world every day. While it helps many businesses ensure cycle inventory is met, it can also result in a lot of sitting inventory. ABC inventory analysis can help with that, though. If you ship internationally or move large amounts of product regularly, you really should look into bulk shipping options. They can save your business money and increase your product's reach.
Other great ways to lower shipping costs are to combine your products by using kitting or to use a consignment inventory arrangement with a retailer. And always make sure to take a regular physical counts of inventory so your numbers are accurate. We can help you with that too!