Thursday, August 28, 2014
Following is an excerpt of my communication with a customer regarding the cost of shipping by air. Customer claimed that our quoted price is about 80% higher than what he received from a air cargo company; however, after he added up all the hidden charges, our price turned out to be 5% lower!
Let me share with you about our pricing for shipping…
We make a very meek percentage on printing; that’s our core strength. Shipping is always done as a “service” to our customers. Many times, we’d be okay if customer wants to handle their own shipping just because it is so much hassle with virtually no profit. We mark-up our shipping cost, not to make money, but to cover for “eventualities.” And there seems to be quite a bit of these in the logistics world. One day, pricing might be this, but when you are ready to book, price went up again. Sure there are times when prices stay the same or went down a little. But as I’m sure you know, most of the times, prices always go up. So the little mark-up we do is always used to cover for the cost increase when customer’s job is ready to go. For instance, when we sign an order with a customer, it’ll take a month or so to get the shipment ready to go. But when we quoted the job, sometimes it is a month before the order is actually signed. So, from quote to ready to ship may be two months or so. During that time, shipping costs change, and they have a tendency to go upward. Also bear in mind that all shipping companies in China takes only USD, so there’s also the exchange rate that’ll make the cost go up as well. So, two months after the quote we found ourselves facing a higher shipping cost, there’s no way our customers are going to pay for the difference. The only way to pay for that is from the little mark-up that we had built in. In other words, our mark up is almost based on a running average of the differences that we had to pay over a decade of handling customer’s freight. So, please do not feel that we are trying to make a killing on shipping.
In this instance… There may be some additional fees that you may not have been quoted, or offered.
- If you are going to handle your own freight, there would be truck delivery charge from us. From factory to the customs warehouse. I believe Elyn had quoted this separately. Our “air” price does include this, and I’m 100% certain your quote does not include this.
- Make sure that your quote includes customs clearance fee on both ends as our price covers both.
- Our price is DDU, we’ll deliver this to your facility. I know your price does not include this.
- I’m not sure if your freight quote is based from Shandong…? Sometimes, people mistake this for Shanghai. There’s no direct flight from Shandong to D.R. There is also no direct flight from Shanghai to D.R. Everything must be routed through the U.S. However, there’s one more hop from Shandong to D.R. as the flight must stop over in Shanghai to pick up more load. If your quote is from Shanghai to D.R., it is naturally less costly. But this will not work…
- Does your freight cost includes insurance? Even if you provided a value to your freight company, it doesn’t mean they’ve put insurance on this. Better check on this as our price does include insurance.
If after everything is added up, our price is still that much more, then I must urge you to do what’s right for you – save money. Why pay more to get the same thing. However, if our price is marginally higher, and that you do see the value in having us handling the shipping so you can save the hassle, I’d really appreciate the opportunity to be of service.