Importing goods can be an excellent business opportunity. But transportation costs can significantly reduce your profitability. Beginners greatly focus on the weight of the goods they import. Frequent mistakes occur because of this. Your cargo size might be more important than your weight. As far as shipping goes, it’s measured by size in Cubic Meters, or CBM. So if you’re shipping boxes that are too large, you have to pay for shipping “air.” That’s because you’re paying for shipping space that doesn’t have anything inside. By learning ways to lower your own CBM, you would be able to save money. Below is a guide on how it should be done.
What is CBM?
CBM stands for Cubic Meter. It is a universal measurement for volume that is commonly used in international freight. A CBM can be conceptualized as a unit block of space. It measures one meter wide, one meter long, and one meter high. When you transport goods by air or ship, what you are buying from the shipping line is space. The shipping line has to know how much space your cargo occupies in the container. The more space you use, the more you pay.
It becomes even more important if you are shipping “LCL” (Less than Container Load). You are sharing a container with other people. You pay directly for every cubic meter you use.
Connection Between CBM and Cost
Shipping carriers have a specific formula they use to calculate your price. They check two things:
- Actual Weight: The weight of the cargo.
- Volumetric Weight: The weight based on occupied space (CBM).
They will always charge you for either number, whichever is higher. This charge is known as “Chargeable Weight.” For instance, let us assume you are shipping pillows. Pillows are very light, but they are large and puffy. A pillow occupies a large amount of space. The ship captain will not be interested, that your pillows are light. The ship captain will be concerned about your pillows taking up space in his container. He will charge you on a volume basis (CBM), and not on weight.
So, if you can force your pillows into a smaller box, your CBM will reduce. So, your freight cost will reduce immediately.
Calculating Cost per Cubic Meter
It should be remembered that to be able to control your costs, it is necessary that you learn how to measure your merchandise. You should do so even before you make an order.
Now, here is a simple formula to calculate CBM (Cubic Meter) for shipping:
Length x Width x Height = CBM
(Note: You must use meters for this calculation, not centimeters or inches.)
Step-by-Step Calculation Example
Let’s say you are importing 100 cartons of shoes.
One carton has these dimensions:
Length: 50 cm (0.5 meters)
Width: 40 cm (0.4 meters)
Height: 20 cm (0.2 meters)
Step 1: Calculate CBM for one carton.
0.5 x 0.4 x 0.2 = 0.04 CBM
Step 2: Calculate total CBM for the shipment.
You have 100 cartons.
0.04 CBM x 100 cartons = 4 total CBM
Now you know you need to pay for 4 cubic meters of space. If you can lower this number, you can save money.
Practical Strategies to Reduce CBM
Reducing CBM is not magic; it calls for planning and smart packaging. The following are some of the best ways to lower your CBM:
1. Vacuum Packing
This works out great for soft goods. Items like clothing, bedding, and plush toys have a lot of air in them.
You can utilize those vacuum-sealed bags to suck the air out. It compresses the product. A fluffy jacket may actually go down to half its size. This can reduce your overall CBM by up to 50% or more. You are no longer paying to ship air.
2. Nesting Products
“Nesting” refers to putting one thing inside another. Consider Russian nesting dolls or plastic cups. If you import chairs, do not ship them fully assembled. Stack the seats on top of each other. If you import luggage, put the small suitcase inside the medium one. Then put the medium one inside the large one.
This method makes use of the space available within the product itself. It reduces the volume drastically without changing the count of the product.
3. Knock-Down Design
Most of the time, the furniture is the biggest culprit for high CBM. Shipping a fully assembled table is expensive. The space under the table is wasted.
Ask your supplier for “Knock-Down” designs. This simply means the item comes in pieces. Legs are removed and laid flat against the table top. The customer assembles it at home.
Flat boxes stack easily. They take up much less room than assembled furniture. IKEA is famous for this because it saves them millions in shipping.
4. Enhancing the Design of Carton
Sometimes the product is small, and the box is huge. Many suppliers use a standard box they may have lying around, and that box could be too big for your particular item.
Ask your supplier to use “tight-fitting” packaging. There should not be any empty gaps inside the master carton.
Also, avoid oddly shaped boxes. Perfect squares or rectangles stack the best. Odd shapes create “dead space” that you cannot use, but you still pay for.
5. Repackaging Before Shipping
Sometimes suppliers will package 10 items in a box that could hold 20. This doubles the number of boxes you need. Review the “packing list” before the goods leave the factory. Ask the supplier to optimize the packing. If they can safely fit more items into one master carton, your total CBM will drop.
Pallets and Their Effects on CBM
Importers make use of pallets for packaging. Pallets are very useful for safety. Pallets increase loading and unloading times. But they also increase your CBM.
A standard pallet will take up floor space. It will also increase your height. All these volumes will be chargeable.
You might be shipping Loose-Cube-Cartons (LCL). In that case, ask yourself if you need pallets.
- Loose Cartons: You will be charged for the volume occupied by the boxes. It costs the least.
- Palletized: Cost of boxes and volume on pallet.
It should be a tough product. Consider floor loading (packing boxes on the container floor). It will eliminate the volume occupied by pallets. Also, if you have no alternative but to use pallets, your boxes should fit perfectly inside the pallet without any gaps.
A Real-World Savings Example
A sample will be given so we can examine and calculate savings.
Option A (Poor Packaging):
You import 500 plastic chairs. The chairs have been assembled.
- A chair requires 0.4 CBM.
- Total Volume: 200 CBM.
- You will need approximately three 40-foot containers.
- Cost: Expensive ($$$)
Option B (Optimized Packaging):
You would like the supplier to stack the chairs. You can then stack 10 chairs on top of each other.
A stack of 10 chairs occupies 1.0 CBM.
- Total stacks required: 50.
- Total Volume: 50 CBM.
- You can squeeze everything into a single 40-foot container.
- Cost: LOW ($).
By stacking your product, you were able to reduce shipping costs by more than 60%.
Conclusion
Transport cost constitutes a large percentage of your expenditure. You cannot control the price of fuel and transport rates, but you have control over CBM for shipping. Reducing the cost and burden of CBM is one of the brightest ways to cut down on your import costs. It doesn’t need any expertise. It just needs your detail orientation. Always size before you buy. Talk it over with your packaging source. Ask if it can be broken down, nested, or compacted. Every cubic centimeter you eliminate puts more money in your pocket. Begin today using the equation to determine your CBM value for shipping. You will be amazed at the savings you will make on your next shipping.
