Understand the outbound freight process and discover how strategic shipping can streamline your entire supply chain.
According to a Deloitte supply chain report, 79% of businesses with optimally performing supply chains experience significant above-average revenue growth.
What does this mean for your business in the context of outbound freight? How can you become one of the successful businesses with above-average revenue growth due to optimal supply chains?
In this article, we’ll discuss the fundamentals and role of outbound freight in the supply chain, its key stages, and the challenges it presents. We’ll also explore some tips to optimize the process and discuss the best partner for outbound logistics solutions.
If you’re already looking for a partner to help you, Ship4wd stands out, given our wide range of services for simplifying your outbound logistics.
You can streamline your shipping process through our simplified air and ocean shipping services and complementary value-added services like cargo insurance, credit facilities, and pre-shipment inspections. We also guarantee container allocation (the only forwarder to do so).
Register on our all-in-one digital platform today to optimize all your outbound shipping processes.
What Is Outbound Freight?
Outbound freight is the transportation of finished goods from a business’s warehouse, production facility, or premises to its individual customers (B2C) or business customers (B2B).
Sometimes, the goods can come directly from the supplier without passing through the business’s warehouse or premises.
Also called freight out, outbound freight aims to deliver goods to retailers, wholesalers, or directly to the end consumers. The destinations can be business addresses, distribution centers, retail and wholesale stores, or the end customer’s doorstep.
Outbound freight is part of outbound logistics, a broader term for the entire process of moving goods from a business or its suppliers to its customers. The process includes transportation, storage, and delivery.
Note: In many cases, outbound freight also refers to the cargo being shipped.
Outbound Freight’s Role in Supply Chain Flow
Outbound freight plays an essential role in the supply chain as described below:
- Timely and Efficient Delivery of Goods: Businesses can deliver goods to end consumers, ensuring they receive the correct goods at the right time and in the right condition. Outbound freight shipping and logistics help optimize deliveries by saving time and reducing shipping errors, such as cargo delays, loss, theft, or damage.
- Enabling Supply Chain Visibility: The advanced cargo tracing and tracking systems used by stakeholders such as outbound freight forwarders provide real-time updates. You and your customers can monitor outbound shipments and plan accordingly.
- Driving Competition and Securing Competitive Advantage: Businesses with efficient outbound freight operations can offer faster delivery, better overall services, and flexible shipping options. Their optimized processes give them a competitive edge, which can significantly promote revenue growth.
Essential Steps in the Outbound Shipping Process
You can expect the typical outbound shipping process to have the following major components, stages, or steps:
1. Order Receipt and Processing
First, a customer buys a specific single item or multiple products. Your team confirms the goods are available through your inventory management software.
The order is then forwarded to the warehouse or production facility team.
2. Inventory Management
Running a successful outbound freight process requires managing your inventory properly. You need to know what’s available in real-time to replenish stock and update it when you ship items.
3. Selection, Packaging, and Inspection
After your outbound freight handler selects the right products, they inspect them before and during packaging.
They replace defective items and ensure the package is complete according to the order before sealing it.
4. Outbound Freight Consolidation
Then, you need to consolidate goods and packages into shipping units.
Those that need to share the same transportation asset are brought together for shipment.
5. Creating Accompanying Documents
Your outbound shipping team prepares the necessary documents to ensure compliance.
These can include delivery notes, international commercial invoices, packing lists, hazmat bills of lading, and more.
6. Transportation Preparation
Your team provides detailed instructions for handling the goods during transit to ensure cargo security. These instructions usually apply to temperature-controlled goods, high-value cargo, and dangerous goods.
The carrier also needs to see the details of the consignee or recipient and the preferred mode of transport.
7. Submission to Transporter
The outbound goods are handed over to the transportation service provider. Depending on the arrangement, this can be a carrier or a freight forwarder.
8. Customs Clearance
If the goods are being exported and require customs clearance, you need to complete this step.
Your freight forwarder can help you avoid customs clearance delays by submitting the necessary documents and paying the related fees on time.
9. Transportation and Last-Mile Delivery
The goods are transported to various locations, including the final user’s door.
10. Review and Optimization
The final step is to measure the overall operational efficiency of your outbound process and supply chain. The main metrics to consider include on-time delivery rate, order accuracy, freight costs, return rate, and customer satisfaction scores.
Measuring and analyzing these is important for optimizing your operations.
Factors Affecting Outbound Freight Costs
Outbound freight costs depend on several factors, including:
- Mode of Transport: Air shipping services are the most expensive, but they’re the fastest. Ocean freight is the slowest, but it’s typically the cheapest. Ground freight balances between cost and speed.
- Type and the Nature of Cargo: Dangerous or perishable goods that require special equipment and handling can cost more to ship. Bulky, large-sized, and heavy cargo also costs more to transport.
- Distance and Route: Goods traveling long distances cost more to ship due to increased fuel usage and longer transit times. Some routes may have more tolls or higher fuel consumption, leading to higher costs.
- Fuel Price Changes: Shipping rates can fluctuate dramatically to reflect changes in fuel prices.
- Demand and Supply for Shipping Services: An increase in demand for shipping services can result in higher prices. Shipping rates are often higher in busy seasons, such as holidays, than in low or off-peak seasons.
- Prevailing Events and Economic Conditions: Natural or human-made events like tsunamis and trade wars can disrupt supply chains, leading to higher shipping costs. Freight rates can also increase or decrease based on economic situations such as booms, recessions, or depressions.
- Additional Services Needed: Complementary services, such as cargo insurance, pre-shipment inspections, and special handling, can increase freight costs.
Challenges in Outbound Freight Management
Outbound freight management isn’t always a smooth sailing experience. You may encounter difficulties such as:
- Inefficient Transport Management: Poor route planning or the wrong shipping mode can increase costs and cause cargo delays, which can result in financial losses.
- Limited Visibility into Operations: A lack of real-time data on shipment location and status may lead to customer unrest and slow, poor decision-making.
- Compliance Hurdles: Adhering to strict regulations and laws on product safety, transportation, and environmental preservation in different regions and countries can be difficult.
- Finding the Right Service Providers: It can be hard to find the best freight forwarder, carrier, supplier, or sourcing agent.
- Coordinating Multiple Stakeholders: You may find it challenging to work and coordinate properly with product sourcing agents, suppliers, carriers, and outbound freight staff.
How to Optimize Outbound Freight Operations
Despite these challenges, you can still enjoy successful operations.
Here’s how to improve outbound logistics:
- Optimize Packaging: Proper packaging helps protect goods from physical damage during transit and also reduces the space required, which in turn minimizes shipping costs. Use boxes of the right size, protective materials, and sustainable packaging options, such as recycled cardboard, to reduce your environmental impact.
- Adopt Demand Forecasting: You can project the demand for your goods and the corresponding shipping needs so you can deliver shipments promptly when customers order. Use outbound freight metrics and forecasting analytics to adjust accordingly. For example, if you can predict when demand projections will be low, you can reduce wastage and shipping to create a lean outbound system.
- Embrace Technology: Whether it’s your own software or a third party’s, technology can help improve end-to-end visibility and increase savings by automating manual tasks or processes.
- Review Shipping Methods: Revisit and revise your transportation and delivery methods to reduce costs, enhance operations, and improve service. For example, you can adopt multi-modal shipping to lower freight costs, especially when using air shipping.
- Partner with a Digital Freight Forwarder: Work with a reputable and trusted digital freight forwarder to simplify and optimize the entire shipping process. They can help you overcome challenges and implement these optimization strategies.
Why Ship4wd Is a Smart Choice for Outbound Freight
When it comes to partnering with a digital freight forwarder, Ship4wd is the best option for all your shipping needs, whether for outbound or inbound freight.
Here’s why you should work with us:
- Proprietary Technology: Our in-house digital dashboard is an all-in-one platform for all outbound shipping needs. From scheduling shipments to delivery, you can enjoy everything and some more. The platform even has visibility and analytics capacities.
- International Coverage and Networks: We have connections with suppliers and carriers at the national, international, and global levels. These relationships make it easy for us to coordinate with them on your behalf. We can also work with your preferred suppliers once you connect us with them.
- Wide Range of Exceptional Services: In addition to air and ocean shipping, we provide complementary solutions. You can enjoy digital customs clearance, credit facilities, pre-shipment inspections, human-led customer support, and dangerous goods shipping.
- Expertise and Experience: Our logistics and shipping experts have years of knowledge and experience handling outbound freight operations. They can optimize route planning and shipping methods to lower costs and avoid delivery delays.
- Guaranteed Container Space Allocation: We are the only freight forwarding company that guarantees shippers cargo space in ocean shipping, regardless of the size of their shipments.
Join us today to simplify and streamline all your outbound freight operations.
Frequently Asked Questions (FAQs)
Let’s wrap things up with answers to common questions regarding outbound shipping:
Is Outbound Freight Part of COGS?
No. Outbound freight isn’t part of COGS (Costs of Goods Sold). COGS includes direct costs related to producing or acquiring goods, such as labor and raw materials.
Outbound freight costs are typically considered under SG&A (Selling, General, and Administrative) expenses.
Inbound vs. Outbound Freight – What Are the Key Differences?
Inbound freight occurs at the start or early part of the supply chain and involves bringing raw materials (and sometimes finished products for further processing) to a business.
The inbound process includes sourcing, buying, receiving, transporting, and storing raw materials.
On the other hand, outbound freight occurs at the end or in the second half of the supply chain and is the process of getting final products to end customers.
Outbound freight involves sourcing, buying, transporting, receiving, storing, delivering goods, and handling return or reverse logistics.
What Is the Best Shipping Method for Outbound Freight?
The best shipping method for outbound freight depends on the nature and types of goods, urgency, budget, and other factors.
For example, air shipping is the best for perishable goods, high-value products, or time-sensitive deliveries. Ocean freight is the best for large, bulky cargo with flexible shipping timelines.
What Are Common Outbound Freight Mistakes to Avoid?
You’ll want to avoid common mistakes such as:
- Improper packaging, which may expose goods to physical damage and can increase costs.
- Freight invisibility, which disrupts peace of mind and leads to poor customer service.
- Using the wrong shipping routes and modes, which can lead to high costs and cargo delays.
- Hiring the wrong shipping partner, which will usually lead to delays, poor compliance, and increased costs.
Conclusion
Outbound freight is central to your business. Without it, you can’t get your products to distributors, retailers, or end consumers.
However, mastering the process requires expertise, experience, time, and proactive technology. However, you may not have all these resources.
As such, it’s best to work with a shipping partner, such as a digital freight forwarding company – Ship4wd.
We are a digital freight forwarder with an intuitive online platform for multiple shipping needs, a wide range of shipping services, and years of experience and expertise in outbound shipping.
Let us transform your outbound shipping and logistics processes now — create a free Ship4wd account today.