Stefan Austermühle, General Manager of Gemrock Peru December 2022
Shipping costs are a major concern for many of our clients. And high shipping costs do negatively impact our business too. That is why we are undertaking constant efforts to reduce the shipping costs for our clients. In this article, we are providing you with information about 5 ways how we help you reduce shipping costs and 5 things you can do to tackle expensive shipping.
Learn more about the author:
10 ways to save shipping costs
How bad is it and why?
The costs of logistics in international trade from Peru continue to be one of the highest in America and the world, because of lacking capacity of docks and air terminals, as a consequence of lacking investment for their development.
Peruvian international trade has grown rapidly in the last few years, but it is due to the great effort of exporters, who do not receive the support of the government. This results in the prices of our goods not being competitive on international markets. The Peruvian government still does not have a competitive export policy to be able to modernize the port structure and the land and air terminals.
Additionally, in Peru and around the world the pandemic has caused unforeseeable problems for international trade, which worsened the situation in 2020 and 2021:
- imbalances in the production and demand for goods,
- countries locking down and opening up at different times, as well as,
- shipping companies cutting the capacity on major routes, and,
- shortages of empty containers.
As a result of these problems, the cost of shipping a container on the world’s busiest shipping routes from China to Europe surpassed 10,000 U.S Dollars in 2021, a rise of more than 500 percent. As the recovery has progressed, luckily shipping prices in 2022 came down again. In October 2022, the global freight rate index stood at 3,100 U.S dollars
Gemrocks´ Startup Support
Starting a crystalshop (online or physical) is not easy – we know. But we believe in you and we have your back, because your success is ours.
We support startup companies with lower shipping prices. You can order without minimum amounts. We offer dropshipping and “Buy now, Pay later” agreements, as well as intensive business coaching.
5 things we do, to lower your shipping costs:
1. Special discounts on shipping:
We are working all our airfreight exports with one service provider only, DHL. This way we can negotiate special shipping discounts for our clients. If you want to learn more details about the discounts we can offer you, please have a look at our video “all about shipping costs”.
2. Intelligent packaging:
Often we can reduce shipping costs by distributing your products over several small packages. It’s a complicated pricing system, but we have mastered the game. If you want to learn more about how different ways of packing can reduce total shipping costs, please have a look at our video “all about shipping costs”.
3. Free Trade Agreements.
We are continuously working to take advantage of existing free trade agreements, in order to help our clients save importation tax. However, to become an eligible export company for such trade agreements is a complex procedure that takes a while and has to be done for each of the agreements separately.
As of the publishing date of this article, we are able to offer companies from the United States of America shipping with cero importation tax to be paid.
And Australian clients can enjoy a 30% reduction on their regular importation taxes.
For 2023 we are aiming to become recognized exporters under an additional number of existing free trade agreements and help reduce importation taxes for our clients in:
- Japan, as well as
- the European Union.
Please follow our YouTube channel, in order to stay updated on those opportunities.
4.) Reused and recycled packaging
We are using recycled packaging material. By doing so we are not only helping the environment by reducing our ecological footprint. We are also reducing the cost of packaging, which helps to maintain the price of our products lower. So please, do not be surprised, if you receive your crystals in recycled banana boxes.
5.) Lightweight packaging material
We are using lightweight packaging material. By using lightweight materials like bubble wrap we are reducing the weight of the package and therewith the cost of the shipment. We are aware of the fact that bubble wrap is not necessarily environmentally friendly.
Sadly, in Peru, we are lacking access to alternative and more ecologically sound materials. Therefore, we are making an effort to at least re-use bubble wrap and to inform our clients about recycling options for bubble wrap in their countries.
Things we CANNOT do:
As you are seeing over the course of this video we are doing a number of things to help you save money. However, there are also a few things we cannot do.
Sometimes clients are asking us to reduce the price of our products on the export bills so they pay less importation tax. Even though this was a common practice by exporters in the past, those times are over, and such actions could result in heavy fines. If you require more information about this topic, please have a look at our video: Why faking bills is not a good idea.
A frequent question of our clients is, why shipping from Peru is so much more expensive than shipping from China or Brasil. We do understand this concern. The answer has to do with the size of the economies. Companies located in countries with huge economies normally benefit from better export conditions, than small economies like the Peruvian one. If you need more information on this topic please review our video on shipping from Peru versus Brasil
5 things you can do to improve shipping costs:
Make huge orders: From half a ton on you can think about ocean shipping. It takes much longer, isn’t as cheap as in the past, but is still much cheaper than airfreight.
Don’t make tiny orders: Avoid packages under 5 kilos of total weight, because in this weight range where you pay the highest price per kilo. Order enough products so that your package is at least in the 5 to 10 kilo range.
Buy more pieces of the same kind: Our product prices are getting lower the more pieces you order. For example, if you buy just a handful of 60 mm pinolite hearts, each would cost you 12.59 USD. If you buy 50 or more of those, each one costs 10.99 USD. You save 13% on each heart. This won’t reduce your shipping cost but it will increase your profits per piece and higher profits will make up in part for the shipping costs.
Buy smaller pieces: If you buy smaller pieces you are make use of several small savings.
- The weight of products does not increase lineal but exponential. A heart of 40 mm may have a weight of 45 gr, while a heart of 60 mm size weights up to 250 gr. This means you can buy triple the amount of products for half the weight. Your overall shipping costs and your shipping costs per unit will be much lower.
- You get more pieces for the same money. And additionally the price per unit goes down because you buy more of one kind.
- In our example (selling the heart for 4 times the cost of the heart (not including shipping costs)) you can increase your total profit in 4.5 percent just by choosing smaller products.
Add some jewelry to your order: We are producing high quality jewelry. By adding a few pieces of jewelry you are practically adding no weight at all to your shipment and you are getting products that you can sell with very high profits. Those profits alone may pay entirely for your shipping cost for the entire order.