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10 Ways in Which SMEs Can Cut Their Logistics Costs and Increase Margins Tips for SMEs to cut costs on logistics and increase margins.

By Samir Lambay

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Logistics plays a vital role in the success of any business. For SMEs, who are already dealing with in profit margins, efficient logistics planning is crucial to keep costs down. However, this is challenging due to several complications in freight rate procurement and operations such as non-standardized quotes from different vendors, hidden costs, and lack of accurate tracking and shipment updates. These issues result in shipment delays that increase costs and also cause loss of sales due to inventory stock-outs or penalties due to delayed deliveries to end customers.

Listed below are 10 simple ways in which online logistics marketplaces can help SMEs cut costs and boost profits:

1. Standardised and All-Inclusive Rates

Businesses procure quotes from multiple freight forwarders and receive segmented rates, with multiple cost items and variable charges. This results in a tedious process of calculation and comparisons that take up several man hours in computing a total freight cost which often differs from final invoice value due to hidden charges. Online logistics marketplaces assist with hassle free, transparent and standardised online freight quotes that eliminate hidden costs, provide an all-inclusive international freight rate and reduce the stress on resources and time.

2. Informed Choices

When making a freight booking, SMEs need to compare international freight rates and delivery times between several air or sea freight forwarders. However, they do not have access to vital information like multiple career choices, shipping schedules and exact delivery dates that they would need to pick the most suitable option. An online logistics marketplace provides detailed information on a single dashboard to assist SMEs make more informed and cost-effective decisions.

3. Increase Resource Productivity
Managing logistics requirements can be a time consuming and expensive exercise for SMEs especially since they are strained for resources. Having employees spend valuable man hours in procuring freight quotes, managing multiple freight forwarders and co-ordinating shipments, can impact productivity in the core business area. Online logistics marketplaces help streamline the process and cut cost by helping SMEs effectively manage their human resources.

4. Order Management

Managing multiple orders can be another gruelling task that can eat into the productive man-hours of your human resources, adding further pressure to margins. Online logistics marketplaces offer simplified, single window dashboards that optimise technology and data driven processes to help manage multiple orders in a hassle free and efficient manner.

5. Shipping Updates

Timely and regular updates regarding the progress of the shipment is a major factor impacting businesses. Delay in shipment could mean loss in revenue and might also mean additional costs in terms of penalties– a risk that can prove expensive especially for SMEs. Most un-organised freight forwarders have little or no means to track and share regular updates on the shipment with client. Online logistics marketplaces are tech enabled to provide automated and regular updates on shipment status and estimated delivery times.

6. Forecasting

Often businesses, especially SMEs lack insightful data to chalk vital details of past shipments like frequent destinations, frequently used sea or air freight forwarders, average delivery time, average weight/ volume of shipments, quantity, type of material, preferred mode of transport and average costs per shipment. Thus, they pay higher prices and also face more discrepancies in quoted versus final invoice cost. An online logistics marketplace can help address this issue through a data driven approach, enabling businesses to acquire customised costs and eliminate variability, with little to no scope of additional/ hidden charges.

7. Consolidation

Frequent and unplanned air or sea freight shipments can prove expensive, especially for SMEs who are already operating in price sensitive markets. Here, SME's can dramatically cut costs by consolidating shipments from several countries and ship them via a centralized hub port. Customers can gain volume discounts, reduced documentation and custom fees and better order management. Online logistic marketplaces can use shipment data and unique algorithms to help assess past shipments and provide consolidated shipping solutions.

8. Cargo Insurance

Businesses often forget to insure their cargo even though the cost is negligible compared to product and freight cost. It is highly recommended to avoid massive losses and counter risks like loss or damage to goods during transportation by sea, rail, road or air, or while in storage, anywhere in the world between the points of origin and final destination.

9. Shipping Documentation

A major challenge faced by businesses that use multiple vendors for freight services is in ensuring that shipping instructions are correctly implemented and documentation is correctly prepared. Issues in documentation can cause customs delays and penalties. Online marketplaces are acting as end-to end logistics service providers to ensure all shipping instructions, supplier information and documentation is managed through a centralized dashboard and a single point of contact.

10. Contract Rates

In case of frequent and multiple logistics requirements, going through the entire process of procuring rates and short-listing vendors can be expensive and time consuming. Based on prior experience, SME's can enter into contract rates with select vendors for frequent freight requirements. Online logistic marketplaces can assist in data backed information to select a viable partner. Contract rates can be for a month, a quarter or a year and can help ensure a fixed freight forwarding rate with agreed service level agreement. This can help reduce expenses while facilitating a reliable vendor partnership.


SMEs are in a vital incubation state of growing and expanding their business and thus need to focus attention, time and resources on their core competencies. Logistics can prove to be expensive in terms of time, monetary and human resources. Streamlining the process through the help of experienced online logistic marketplaces can not only ease the burden of planning and supervision but also help dramatically control costs, increase customer satisfaction and boost revenues.

Samir Lambay

CEO and Director, Freightcrate Technologies Pvt. Ltd

Samir Lambay is a CEO and Director of Frieghtcrate Technologies Pvt Ltd. 
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