Unexpected demand for your product? The key is a short, close supply chain.
The photo from the Journal of Commerce shows ships anchored off Longbeach during the 2014-2015 dock workers strike.
The third installment post regarding the US Commerce Department's “Assess Costs Everywhere” website (http://acetool.commerce.gov/shipping) examines all the shipping related costs associated with long supply chains and importing product.
There are a number of costs associated with importing products - the most obvious one is the actual cost of shipping the goods (container load or otherwise), including container fees, packaging, terminal handling, and broker fees.
In the last 3-4 years, an interesting development has made what was a long transit time even longer. During the economic downturn, many shipping lines have switched to what they call, “slow steaming.” This is basically driving the ships slower to save on fuel costs - but the result is an increase in anywhere from 1 to 5 days depending on the origination. The most recent data suggests that travel time for container vessels from Asia to the U.S. is between 2 and 4 weeks and before it leaves the source country, customs clearance, handling and inland shipping can add 17 to 33 days.
The only other option to shipping product from overseas is air freight, which very quickly can eliminate any possible savings projected from overseas sourcing. Air freighting product does happen - particularly when there is an urgent need to re-supply or if a received shipment has to urgently get returned for reworking but it is typically 12 to 16 times more expensive than ocean freight.
Finally, one of the biggest challenge associated with the shipping aspect of overseas sourcing is time. In order to get product when needed, often times orders have to be placed 6-9 months prior to delivery in order to give the factory time to manufacture the product and time for shipment. Predicting demand that far in advance can be very challenging and typically the answer is to order more than is needed so that there is a buffer stock in inventory.
Aside from shipping, there are also Regulatory costs and delays associated with getting the container out of the country of origin. The chart below shows some comparative data that illustrates some of the costs and time delays involved with various regions of the world. It is important to remember that the documentation preparation is often done by an employee of the importing company - a tedious and time-consuming task that if not done correctly results in significant delays at the boarder.
|
|
Documents to export(number)
|
Time to export(days)
|
Cost to export (US$ per container)
|
|
United States
|
3
|
6
|
$1,090
|
|
East Asia & Pacific
|
6
|
21
|
$856
|
|
Eastern Europe & Central Asia
|
7
|
25
|
$2,109
|
|
Latin America & Caribbean
|
6
|
17
|
$1,283
|
|
Middle East & North Africa
|
6
|
30
|
$1,127
|
|
OECD High Income Countries
|
4
|
12
|
$1,070
|
|
South Asia
|
8
|
33
|
$1,787
|
|
Sub-Saharan Africa
|
8
|
31
|
$2,108
|
Source: Economics and Statistics Administration analysis using data from the World Bank, Doing Business project.
Custom Rubber offers the ease and simplicity of arranging transportation from Northern Ohio to your location. Shipping within the United States is easy to do - no brokers, no duty, no headaches. Call Custom Rubber today to discuss sourcing your molded rubber product needs from a domestic company. Piece price is only one piece of the equation.