How do companies afford to ship internationally?
April 15, 2010 11:27 PM   Subscribe

How do companies ship their products internationally so cheaply?

I run a non-profit in the Philippines and want to launch an online store for fundraising soon. How can we ship our products inexpensively?

In the past, while I've been in America I've shipped care packages to some of our volunteers, and it cost about $100 to ship a package the size of a shoe box (not all that heavy either).

However, I've ordered computers from Apple and had them shipped to the Philippines and the shipping was free.

Now, I imagine that Apple has incredible deals with shipping companies that I could never dream of getting, but how can I save us money on shipping so that we won't go broke trying to ship a t-shirt from the Philippines to the USA (for example).
posted by ferdinandcc to Work & Money (11 answers total) 3 users marked this as a favorite
In the case of a t-shirt, the cheapest thing to do seems to be to print the t-shirts in the US and have them shipped domestically.
posted by JauntyFedora at 12:00 AM on April 16, 2010

Best answer: A friend was moving from N. America to the Indian Sub-Continent, paid $3000 for a 20' container port to port. If you break the shipping down piece by piece, it would be very cheap, though it would take a while to get there.
posted by defcom1 at 12:03 AM on April 16, 2010

Best answer: A lot of the time, it's containerization: there's a highly-automated system for moving 20x8ft standardized boxes by ship, rail and truck. That Apple computer you got may have come to the Phillipines in a container full of computers, you just got sent one of them.

The hitch being, of course, that you have to ship large quantities- but it's ridiculously cheap.
posted by dunkadunc at 12:05 AM on April 16, 2010 [1 favorite]

Logistics consultants specialize in analyzing trade flows, and suggesting lowest cost sourcing and shipping methods. To be fair, you do have to have some defined locus of products, whose sources favor your market, for there to be any economies of scale, or place, or government imposed barrier. If your intention is to sell a few T-Shirts from America, and a few ounces of lavendar essence from France, and many pounds of dried Italian pasta, plus a little Algerian saffron, on a Philippine Web site, you're not going to benefit by consultation with a logistics professional.

You have to be willing to source based on the sum (or mathematical product) of item cost + transport + duty + handling + miscellaneous cost (licensing fees, agent commissions, port costs, etc.) Apple probably just diverts production from its Philippine factories for Philippine orders. Shipping was "free" because you paid in U.S. $, and the goods never left the Philippines. Apple made extra money on your orders, probably.
posted by paulsc at 12:05 AM on April 16, 2010

Response by poster: The iMacs were shipped from Singapore actually (I believe... Don't really remember 100%, but I know it wasn't shipped from the Philippines as I tracked the order ever day and waited for it to go through customs).

So, container shipping it is, huh. Are there any solutions that are between what it would cost to ship via container, and what it would cost an average joe on the street to ship something? I.E. are there any shipping companies that would ship cheaper if you sign up for some business account with them (or similar)?

We might just have to ship a ton of product all to one address in America and then have it handled domestically from there, but I'd like to be aware of whatever options we have.

Thanks guys!
posted by ferdinandcc at 12:17 AM on April 16, 2010

Best answer: Container shipping is great, if you have the volume, or can work with a consolidator to package partial container shipments with others going to your destination ports. Of course, having the proper customs paperwork, and avoiding incorrect customs classifications are vital, too. You can easily spend in customs clearance and duties on incorrect classification what you save on shipment, or vice versa.

You really have to look at the total end-to-end costs, to be sure you're getting the best deal on brokerage, shipping, and customs services. The good news is that in the present market conditions, shippers and customs brokers are looking hard for business, and it is a good a time as any in the last 20 years to be a small international shipper.
posted by paulsc at 12:35 AM on April 16, 2010

For what it's worth, there are definitely companies subsidizing the costs of shipping. HP will typically cover free shipping on custom made PCs, and they're typically overnighted or really-quite-fast forms of Fedex, straight from the factory (since the custom boxes aren't container shipped).

Make absolutely certain you have customs paperwork prepared properly; shipments can be stuck for weeks on account of customs!
posted by disillusioned at 1:47 AM on April 16, 2010

While it is often a case of consolidation and containerisation coupled with a big business just absorbing the cost (making it appear as 'free shipping' to you or I), a lot of the time (e.g. with Amazon or eBay resellers, or similar small operations) it's just a case of being based in a country with a good postal service. For example, it cost (when I lived there, don't know the situation now) less to send a small package (up to 600g?) from Hong Kong to Denmark than it did to send a letter internally in Denmark. Sending the same package back to HK from Denmark would've been over 10 times the cost.
posted by Dysk at 2:23 AM on April 16, 2010

Best answer: Shipping is incredibly cheap when you do it in volume. Apple can generally ship direct from a factory in China or Taiwan by grouping large numbers of computers together into palettes and containers. The entire palette of computers flies out as one unit and clears customs as one unit, which is quite efficient for the shipping companies. Once the palette arrives in the US, FedEx breaks it up into lots of little shipments, which are sorted to individual consumers. This is also fairly cheap, because FedEx is highly tuned to sort packages. Add in the volume discounts a large shipper gets, and Apple is easily paying a tiny fraction of the standard retail shipping rates.

On top of that, say that Apple operated only on a traditional model just like your local furniture store does. That doesn't mean Apple wouldn't have to pay for any shipping expenses; they'd have to pay to ship their products to the US, have them unloaded, trucked to a warehouse, sorted, stored, and eventually, trucked to stores. All that costs money too, but isn't included in any shipping charges; it's just bundled into the cost of the product just like the furniture store only charges you to truck the furniture from the store to your house, but not (usually) to get the furniture from the factory to the store. When Apple offers free express shipping from Asia, they are eating the cost of the shipping, but they also don't have to pay for the standard retail supply chain.

For your store, the secret is two-fold. First, use a t-shirt business located where the majority of your customers are located (or if your customers are in multiple places, use multiple vendors). Second, it's likely in your best interest to use a large established business like Zazzle or CafePress that will print and ship the shirts for you. This way, you get the benefit of these store's volume and ability to ship far cheaper than you possibly could on your own.
posted by zachlipton at 2:25 AM on April 16, 2010

Price breaks also come as a result of contracts to exclusively use specific carriers (ie, UPS/Fedex).

Generally, I have the opposite problem. I'm sick of businesses that will only ship UPS or FedEx, internationally to Europe. They're fast, but too often for smaller things, the shipping is more than the product, and then I pay taxes/duty on both the cost of goods, and the shipping too. I'm having this trouble with a specific vendor from which I need parts. Costs the same to ship parts as an entire unit, and they were unable/unwilling to include the parts in the latest shipment with a unit.
posted by Goofyy at 4:51 AM on April 16, 2010

Response by poster: We have our own in-house screenprinters (and one of our services is teaching the poor how to screenprint), so screen-printing t-shirts, posters, etc. will definitely be something we do ourselves rather than hire CafePress or Zazzle. But thanks. And I believe the postal service in the Philippines is more affordable than mailing from the US, but I've never sent a package from the Philippines, only envelopes.
posted by ferdinandcc at 11:16 AM on April 16, 2010

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