5 Ways to Audit Costs and Boost Profitability
Tariffs are increasing costs, and businesses are looking for cost-savings opportunities. When was the last time you reviewed your freight, customs, and other logistics-related invoices? If you're not actively auditing your supply chain costs, you could be leaving money on the table. At Supply Chain Shark, we specialize in uncovering hidden savings and optimizing your import operations. Here are five crucial areas where you can cut costs now:
1. Check Your Incoterms
Your Incoterms dictate who is responsible for various costs in the shipping process. Misalignment between your agreed Incoterms and your actual charges can result in unnecessary expenses. One business we worked with saved $300,000 annually after an Incoterm audit revealed that their supplier should have been covering certain fees.
2. Optimize Cargo Insurance
If you're paying for cargo insurance on a shipment-by-shipment basis, you may be overpaying. Switching to an annual cargo insurance plan can significantly reduce costs. A client who made this transition now saves hundreds of dollars per shipment, adding up to substantial yearly savings.
3. Adjust Your Duties Payment Method
Many businesses unknowingly pay hefty disbursement fees when their freight forwarder advances duties on their behalf. The recent increase in tariffs will also increase the service fee that you are paying to your freight forwarder / customs broker that is paying the duties on your behalf. By paying duties directly to customs, you can eliminate 2-5% in service fees—a simple switch that can lead to thousands in annual savings.
4. Review Your HTS Classifications
Incorrect Harmonized Tariff Schedule (HTS) classifications can mean overpaying on import duties. With the increase in tariffs, you want to make sure you using the correct HTS classification and paying the correct duty amount (see: The Importance of Using Correct HTSUS Codes). One company we assisted cut their annual expenses by 30% simply by ensuring their HTS codes were accurate. A classification review could lead to similar savings for your business. If you are uncertain what your HTS classifications are, make sure to book an HTS Review as soon as possible.
5. Identify Additional Cost-Saving Opportunities
Beyond these key areas, other cost-saving strategies include:
Customs Bonds: Ensuring the right bond type for your import volume.
Transportation Mode: Evaluating ocean vs. air vs. rail options for cost efficiency.
First Sale Rule: Lowering declared customs value by leveraging manufacturer invoices.
3PL & Broker Audits: Checking service provider fees for overcharges.
Negotiating Unit Prices & Incoterms Scenarios: Finding the most cost-effective agreement with suppliers
At Supply Chain Shark, we make cost audits affordable and effective.
Find out how much you could be saving today: Supply Chain Shark Cost Audit.
