#262 – Is This the NEW Normal for Amazon Shipping? A Shipping Expert Tells Us What to Expect
If you’re selling on Amazon (or another e-commerce platform), at some point you need inventory to make money. If your inventory is tied up in shipping, or some other form of transit, it’s hard to fulfill your orders.
Today on the Serious Sellers Podcast, Helium 10’s Director of Training and Chief Evangelist, Bradley Sutton welcomes back Refael Elbaz. Refael is an Israeli entrepreneur, Founder/CEO of Unicargo, and a well-respected advisor and public speaker on e-commerce logistics. His company, Unicargo focuses on creating advanced solutions for e-commerce companies and entrepreneurs.
Refael is here today to speak with Bradley about what Amazon sellers across the globe have all been experiencing; the unprecedented disruptions caused by the pandemic, as well as the spike in demand that the recent explosion of e-commerce has caused.
You know that you need product to make money. Listen in to get a much clearer idea of when it’s going to show up at your (or Amazon’s) doorstep.
In episode 262 of the Serious Sellers Podcast, Bradley and Refael discuss:
- 02:00 – Suez Canal Blockage: Unprecedented Demand
- 05:30 – A Breakdown of Shipping Vessel Delays
- 09:35 – Container Rates Before, and After COVID: By the Numbers
- 12:00 – What About Smaller Businesses?
- 15:30 – Back to Normal? Not So Fast…
- 17:00 – Is This the NEW Normal or are Prices Still Too High?
- 18:30 – The Thing Every Single Seller Needs
- 20:00 – The Amazon Shipping Journey Explained
- 23:30 – Where is the Best Place to Use a 3PL?
- 26:00 – From China to a West Coast 3PL… How Many Days?
- 28:00 – Air Shipping as a Viable Alternative?
- 30:00 – Is There a Magic Number for CBM (cost per cubic meter)?
- 33:30 – Quick Tips to Save More Money on Shipping
- 38:00 – Where to Learn More About Unicargo’s Freight Forwarding Service
Enjoy this episode? Be sure to check out our previous episodes for even more content to propel you to Amazon FBA Seller success! And don’t forget to “Like” our Facebook page and subscribe to the podcast on iTunes, Google Play or wherever you listen to our podcast.
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- Freedom Ticket: Taught by Amazon thought leader Kevin King, get A-Z Amazon strategies and techniques for establishing and solidifying your business.
- Ultimate Resource Guide: Discover the best tools and services to help you dominate on Amazon.
- Helium 10: 20+ software tools to boost your entire sales pipeline from product research to customer communication and Amazon refund automation. Make running a successful Amazon business easier with better data and insights. See what our customers have to say.
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Bradley Sutton: Are shipping costs and transit times through the roof for you? You’re not alone. Today, we bring back a shipping specialist to give us the details on what’s going on right now, as well as strategies that can help you save money. How cool is that? Pretty cool, I think.
Bradley Sutton: Hello everybody, and welcome to another episode of the Serious Sellers Podcast by Helium 10. I am your host Bradley Sutton, and this is the show that’s a completely BS free, unscripted and unrehearsed organic conversation about serious strategies for serious sellers of any level in the Amazon world. And something that I think affects anybody who wants to sell at all on Amazon is when we talk about shipping logistics and for the last few months or a year or so, we have had some of the most unique challenges we have had for shipping products. And so we’re here to bring back an expert on it. Welcome back to the show, Refael,. How’s it going?
Refael: Hey, Bradley, thank you very much for having me. Everything is fine. I just saw a LinkedIn post lately from someone from the industry and he signs it off with, if you see a freight person hug him, he needs it. We need a hug. It’s very interesting times.
Bradley Sutton: Yeah. Yeah. I mean, it’s crazy. And especially, we haven’t talked and I don’t know about a year and a half, I think on this show and the things that have changed are pretty crazy. Obviously, COVID was most of last year and that brought its own challenges, but I don’t know where to begin. Let’s just start right off the bat with actually a side of the world that I am not very familiar with since I have never sold in Europe and things nor Asia, but what exactly is happening in Europe as far as like, are people still feeling the effects of what happened? What was it there? The Suez canal when that container ship got stuck a couple months ago?
Refael: Yeah. So the Suez canal was, I think it was two months ago. So, it’s kind of one of the most important trade lanes of this world, like crazy, crazy important. Everything coming out of Asia to Europe goes through that. And now everything comes from India. Not everything about most of the stuff coming from India to the States coming through that canal. And that’s kind of all got flogged. We all knew that ripple effect. We’re going to feel it many months to come and we’re feeling it now. But if we want to go back to where it all started, it all started with the COVID last year. And when COVID hit us around March last year. Started here in Europe, Israel, and the States got at the bottom a month or two months later. And we all prepared for the worst. We all prepared for people not shopping, people not spending money. We, especially us in the freight forwarding industry. If you remember, the Amazon just shut the doors, they didn’t allow anybody to create new shipping plans. And it was a mess. We actually started to release people home because we were afraid that it was going to be no shipments, but the exact opposite has happened. And it’s very interesting because consumer demand just jumped through the roof. And I’ve spoken to many sellers, many big cosmetics companies and cosmetics, for example, they are reporting triple sales over COVID and you would ask how come, I mean, people are not going out. Women put on less makeup and stuff, and they’re saying, no, it’s because people have more time to spend. People don’t have– they don’t go on vacations. They don’t spend money in restaurants. They don’t go out. So they sit at home and just buy stuff. And I actually saw it a lot with my wife. Last year, my wife wasn’t into e-commerce and all of a sudden, I starting seeing all these delivery guys at my home delivering parcels.
Refael: So, the reputation for e-commerce or got a boost like a kick up it’s butt and shoved us like five years ahead. And we see all across the board, demand is just crazy right now. And that’s what spiked this whole situation we are in right now, because the more demand you have, the more containers coming in LA port. They publish every month, they publish the numbers. LA port is one of the biggest ports in the world. And May was a record high month, April before that was a record one month, a record high month. So every month they are breaking the record by number of containers coming in, like an all time record. And I don’t know if you’re aware of it, but US imports this year, this past six months of 2021, about 50% higher than last year. Last year was about 30 to 40% higher than 2019. So it’s just getting crazier and crazier. People are buying more.
Bradley Sutton: So I think, I mean, with all that happening, what I read is that there’s like a shortage of shipping of vessels. There’s a shortage of containers. There’s a shortage of workers to handle all this. And because of that, it’s like a trickle down effect to the actual shipping prices, right?
Refael: Exactly. Shipping prices and capacity variables, just literally no space to move containers. And what happened is before COVID shipping lines were making very, how should I put it? They were not doing as well as they would like to do there. There was a situation of over capacity. There were too much space going on and their profits were nothing. Containers were going for $1,500 a container from China to LA for example. And just before COVID, they started scraping a lot of vessels, putting them out of service because they were old and there was no need. And all of a sudden, all of these demand comes in. And as you just mentioned, less operational manpower, less people to work on the docks, less truck drivers to move these containers, less people at 3PLs to accept these containers. And the biggest hit was the delays at the ports. Containers were sitting on the water. So even as we speak right now in LA, there are about, I would say, 10 to 15 vessels outside the port, just anchored on the water, just waiting for their attempt to get into the port. So what happens is a vessel can look at it as a bus, the vessel staff, for example, it’s Shenzhen in China. Then it goes to the Ningbo. Then it goes to Shanghai. Then it goes to [inaudible] up north, and then it goes to Korea. And then to the US. After it hits LA, it goes to Oakland and up north to Seattle. And then once it’s finished its route, it goes back to these ports again. So from Seattle, go back to Oakland, to LA, to Korea, and then to [inaudible], Shanghai, Ningbo, Shenzhen, and goes on and on and on just like the bus does a round trip.
Refael: And when the vessel delays in LA for two weeks, and then another five days in Oakland and another three days in Oakland, it doesn’t get back on time to China to continue its routes. So what happens, what we call in the professional language is blank sailing. So the shipping line is saying, Hey, you know what, for this month, we are going to skip based on that port, because the vessel is still in LA, it’s still in the US, it didn’t come back to China. So now you have all these containers piling up in China waiting to be exported, but the vessels are not coming back because they are stuck for two, three and four weeks in the states, which usually would have been three days, four days, five days delay. Now you’re looking at three weeks, sometimes four weeks. So, it just don’t get back in time. And then you get into a situation where you just don’t have vessels in China. Like in these months, we’re looking at 30% sailing. 30% of all vessels outside of China were just canceled. They didn’t show up. So there were somewhere around the world trying to get into ports and unload containers.
Bradley Sutton: Well, let’s put it into like numbers, for example. So, so can you talk about, I don’t know, I mean, unless you have a written down somewhere, you can just guess, but like, maybe the average price to ship a 20 or 40 foot container from China to California maybe last year or when things were “normal”. And then what happened maybe towards the end of last year, and then what is it now here in July of 2021?
Refael: Yeah, that’s a great question. I live those numbers. I deal with that everyday. So I know them by heart. Before COVID, again, Shanghai to LA, Ningbo to LA, Shenzhen to LA, these major ports, their prices are all almost the same 50 bucks here. 50 bucks there per container. So pre COVID you’re looking at 1600, $700 a container 40 high cube. Nobody’s shifts 20 foot containers because it’s just too expensive. Usually you’re looking at about $400 difference between a 20 foot 40 foot that’s usual time. So nobody really ships a 20 foot container on the e-commerce side, from the e-commerce seller that I’ve known. But that’s pretty cool with, so we’re talking about January, December, November 2019, COVID hits. And we started, we started seeing prices hike up every single week and by quarter four 2020, when we were looking at, if I’m not mistaken, we were looking at eight, $9,000 a container, something like that. Today, we’re looking at about between 13 to $15,000 a container, Shanghai to LA, which is the cheapest and fastest route, right? So, everything– there is not LA or west coast would be much more expensive than 15k a container. And these numbers are just nuts. Nobody’s ever seen these numbers in the freight forwarding industry ever. Never.
Bradley Sutton: Even if somebody is not shipping full containers, a lot of Amazon sellers out there, you know, they’re making their first order. They’re making just a little bit of orders. It’s only 500 units, a thousand units, 2000 units. There are smaller. They’re also going to see, I mean, they’re obviously also going to see a raise then of what, 50 and 75% of what it was before?
Refael: Much more. Because again, if they would ship LCL, less than container load, but less than container, it’s actually a container that has been shared with multiple sellers. But the price of the container is the price of the container. No matter if you’re shipping a full container or less than a container, the price of that container will cost 13 to 15K. So even if you will take 13k and you split it into 65 CBM, that’s the volume you can feel a 40 foot container. You’ll divide 30K by 60, 65 CBM, you’ll get a very high number per CBM. And that number just correlates to the, to the market rate. So we’re looking at around 400, 500% increase and the trend from what I’ve seen from the medium size and big size. So the trend is going for high value products. So for example, if you have a, I don’t know, 50 bucks profit margin, a hundred dollars profit margin, $3, $4, $10 a unit on your shipping price doesn’t really make that different than lower selling products.
Bradley Sutton: Yeah. I mean, I think also too, I see a lot of people are wondering like, wait, man, I don’t see big increases for my competitors yet. Well, a lot of this inventory probably got there to Amazon months ago. But I think that this trickle down effect again, is going to be happy in the future where the prices are going to just have to increase. I mean, if most Amazon sellers, profit margins, at the end of the days, maybe 20, maybe 30%, if they’re really good and you have shipping prices increased by so much, guess what? That’s coming directly from your profit margins. And unless you want to lose money, you are going to have to start raising your prices. Now somebody might be sitting here saying, wait a minute, at least in America and in China. And we hear all these stories about how many people are vaccinated and infection rates are going down. Like, why are there still delays and why is this even happening? Why is shipping prices increasing? I thought the world is getting back to normal, and now I can start to travel and this and that. So, yeah. So what’s the reason for these recent spikes?
Refael: Increased demand is just crazy. The demand is just increased like crazy. And again, things are not back to normal. We are getting there, right? We are much better than what we were six months ago or eight months ago, we are much better. We are much better with getting back to normal, about things are not there yet. And with as long as ports, we will have these delays, different various rules still remain high. And now industry experts are talking about at least mid next year that the prices are still going to climb and not going to get back to normal levels or somewhat stop. And that’s a year from now. And I’ve just read a couple of days ago that this year was a record deal for building new container ships, like 208. I have it. I have this in front of 208 new container ship just got into into production this year, but it’ll get swapped. These will be ready when in 23. And that was so with consumer demand, increasing and increasing, there are more and more containers to ship and vessels, new vessels takes time to get into the flow of vessels operating around the world. So the business model, the business, as we know it got to change. But unfortunately what I’ve seen and all of us know it becomes harder for a new setup to begin with, two or three, four years ago, you could start with $3,000, $4,000 and you can start the product and even too, but I think it just gets harder. The medium size and bigger size will benefit from it. If you have deeper pockets to invest in inventory to be less reliant on international shipping to keep stock in the U S or in the marketplace, whether you’re selling in the US or Europe, you just got to pre-fill for bigger orders. Put bigger orders, move more units per shipment, and just keep them in a 3PL and just move products from within the market, into the marketplace.
Bradley Sutton: Let’s talk about three PL and just a little bit, I actually, I’m glad you reminded me about that, but just, we’ve been talking about bad news here and there, but are there signs, or is there a timeline that things are going to get better where supply will catch up with demand as far as on the container side, or is this the new normal, or are we going to have 13, $14,000, 40 foot container prices for the time being, or what’s your progress? I mean, I know we’re not going to keep you to this estimation. We’re just guessing here, but you’re a professional, I’m sure you can read the signs of what’s happening. What do you think?
Refael: I think container prices cannot stay these high. It’s just unreasonable. It doesn’t make sense. It’s too expensive. And from what I’ve seen, and what I see, I think prices will start to calm down again after Chinese new year, next year. And that’s kind of a hopeful thinking and wishful thinking. If you had asked us back in COVID during COVID, like, let’s say, may June last year, if you ask us what will happen, we all thought that by– after the Chinese new year in 2021, everything will get back to normal. And guess what, we are worse right now. We are actually in a worst situation that we were in this spike of COVID. During the COVID was actually better as we are now. And it’s crazy. Again, I think rates will stay here until at least after Chinese new year, next year, which is February, March next year. And hopefully, hopefully, hopefully we’ll start seeing prices slow down. Right now, prices are still going up. It’s not even stays the same. It just goes up every single week.
Bradley Sutton: I was hoping for some better news, but Hey, it is what it is. People need to know the truth of what’s happening out there. And then the other thing is it’s not like people’s competitors will have their own container ship, and then they can bypass these spikes. I mean, it’s affecting everybody equally, even if somebody is shipping a lot and maybe they’re paying less because of their volume shipping, I mean, still the percentage that their prices have increased is the same as you are regardless of your size. So guys just, nobody’s having an unfair advantage.
Bradley Sutton: All right, guys, quick break from this episode for my BTS. Bradley’s 30-second tip. Here is my 30-second tip for this episode. This is coming from a blog that we had a while back that something that just got released a few weeks ago on Amazon is the ability to contact customers who left you a negative review in the past. Amazon didn’t really want you even knowing who left the reviews, but now you can not only see who left the reviews, but you can use a form that Amazon has to actually contact them to maybe refund the money or to see how you can help them, et cetera. So before this is something that maybe it was frowned upon by Amazon to do, but now they’re actually encouraging it and providing you the means to do that. So in order to do that, you have to have brand registry. Then you go to your Seller central, you hit brands, and then you hit customer reviews, and then all your customer reviews will show up there. And then what you’ll see is a listing of all the reviews. And then if it is a one or two star, you’re going to be able to go ahead and hit a button in order to contact them, to try and make the situation better. So guys make sure, take advantage of this. If you’re one of those ones who thinks that maybe by refunding or by fixing a problem, who knows maybe the customer on their own might change their review to a positive.
Bradley Sutton: One thing I think that in my opinion, I’m sure you can tell me, but has skyrocketed in the last year. And it’s not necessarily completely about shipping prices. As a matter of fact, it almost has a very little to do with shipping prices, but it’s because of that Amazon inventory regulations last year, that 200 max limit for new items this year. Now it’s the inventory tier regulations that everybody, especially for oversize seems to be maxing out is more and more people, more than ever before. Like probably exponentially more people are utilizing third-party logistics warehouses instead of shipping their entirety of inventory to Amazon. Is that what you see in the industry as well?
Refael: Exactly, I see that every single seller now needs a 3PL. Every single seller needs to hold stock and better manage and better plan is logistics. I don’t think I know of any seller that doesn’t utilize the 3PL. Maybe if you’re new and you’re sending a hundred units or 200 units, I don’t think any seller can live without utilizing a 3PL wherever it is. You just need it. You can’t grow without the 3PL and without a place to hold your products, because again, you can’t rely on international shipping anymore.
Bradley Sutton: Yeah. I mean, I always talked about using them before, years before this happened. Now, we were just talking right before we got on this call. I obviously have my own warehouse here in the back of my house. And so that was why I did it because it was just convenient and it wasn’t like I had to pay for it, but I always saw the value in trickling inventory in, I didn’t like paying Amazon for storage fees, but now it’s not convenience, like it was for me, it’s necessity. On one of my accounts, it’s mostly– or a lot of oversized products. And despite my sell through rate being pretty good, like I’m constantly maxed out of what my new limitation is under oversize. And so sometimes I can only send in 50, a hundred units at a time and I have to do that, or else I’ll run out of some SKUs. So, this guys is, guess what? This is another cost now of why you or your competitors are going to have to probably raise your prices. Because in the past you would send over a big container maybe, or a bunch of pallets directly to Amazon. And yeah, maybe it’s more than you needed until you’re paying Amazon a little bit of storage charges, but it’s that storage charge, you’d probably still have chosen to do as opposed to what you’re having to pay now or now receiving product at a certain facility. And now you’ve got a store there and now they’ve got to handle it and charge you for the handling of it when you do shipments. And now you’ve got to pay from your 3PL warehouse to go to Amazon. So there’s all these new costs that you guys need to start budgeting for it. And I don’t want to scare people like, oh no, you can’t sell on Amazon anymore. It’s too expensive. Remember guys, this is what is affecting everybody. So everybody’s prices and things are going to start if they haven’t already increasing as well. So let’s just talk about, let’s say there’s a brand new seller out there. I want to give you a scenario, walk us through the steps, like, Hey, I’m making my first order. It’s a thousand units. I found a factory in China and now I contacted a company like you guys are freight forwarding company. And let’s talk about how long it takes now. How far in advance shipping has to be booked, like what you guys do in the past, I’ve handled most of my things through my sourcing agent. And so I, and soon as I got to try and use a unit cargo shipment, we’ve been talking about that for a while, because I need to get, I need to have the full effect here. But if somebody who’s brand new haven’t shipped a walk us through the timeline and how far in advance before the product is ready, they should contact a shipping company and transit times and where the product goes, et cetera, et cetera.
Refael: Oh, so it is always a journey. Here’s all the journey work. So, a new seller or somebody who’s just checking products will contact the freight forwarding company and will ask for a price estimation. You need to know your landed costs before you even commit to an order or you’ve installed production because you want to budget your product, see if it’s viable or not. So you’ll contact shipping companies and you’ll get an estimation on what’s it going to cost you to move that product with duties and everything, and why an estimation, because shipping prices are constantly changing. They’re fluctuating, they’re going up, they’re going down. Right now, they are going only up, but they paint, they tend to change a lot. So you’ll get an estimation. Right now, these days emissions are, they change every single day. So it’s also very important to take that extra 10, even 20% buffer on top of your shipping costs. Because again, if your products is going to be ready in a month, prices might be 20% higher, 10% higher, and we’ve seen it happen month over month in the past six months. So, you’ll get an estimation, you’ll stop production. And then I would say about seven, 10 days before your cargo is ready, you would need to contact the freight forwarding company and start giving them all shipping details. Your packing list, how many boxes you have, their size, their weight. Where do they need to be picked up from, and where they are going, and where they’re going is the big question now, because that will affect your transit time. So if you place your 3PL or or you send it to your house and you live in the west coast around Los Angeles, Oakland, Dao, you’re looking at around 16 days transit time on water, or that’s verbally itself is not really enough because before it gets on the water, you have about two to three weeks to get it out of China right now.
Refael: Again, it used to be a week, right? Pre COVID, but with space situations and how vessels are being canceled and spaces maxed out, you just need to take another two to three weeks as a [inaudible] just to get it on the water. So we’re looking at around two to three weeks, you’re looking at around 16 days to get up on the water. And then once it arrives, you’re looking at around another seven to 10 days just to wait for the cargo to be available at the port. Sometimes even more. So now you’re looking at 20 days they get out of China and other 16 days beyond the water, we’re looking at 36 days, and then another 10, even 12 days, just to get your products out of the port and ready for final mile delivery to your 3PLs. So what do we have in 20, 16 and the 36 and 12, you’ll get around 40, 48 days from the time your cargo is ready to move until it’s actually landed in your 3PL in LA and that’s best case scenario. Yeah. And this brings it back to your mentioning 3PLs. And as I mentioned, Amazon is telling us that they are not in the warehousing business. Amazon does not want to be aware of anything else. Amazon makes money when you move products and they want fast moving products. They won’t turn over and you got to use a 3PL. Now, where do you place your 3PL. If you know sellers that place their 3PLs in Dallas and Chicago, Midwest, south, east coast, if you feel we’re talking about 45, 48 days in LA, which is the fastest route, you placed your products.
Refael: If you place your 3PL in Dallas, Chicago, Kansas, anywhere inland, you’re looking at around 60 days to get your product. And again, these were 30 days and now they’re all doubled. So again, that brings us back to if you want to help new sellers, the geographic location. You pick your 3PL nowadays makes a very big change on your transit time. So I would stay away from inland. We call it dry ports. Dallas, it’s a rail ramp, not really a sea port, Dallas, Chicago, Kansas, Cincinnati, all of these places. You might want to voice them as a new seller because it’ll just be really old transit time. Now, bigger sellers and higher volume stores. They utilize more than one 3PLs. So they distribute their products between west LA or Seattle or San Francisco and Midwest that would be around Chicago or down south in Dallas and the east in New Jersey. Once you have a bigger distribution, you can start doing what we call zone skipping instead of, if your products are only in LA, in the west coast, and now you need to move products to Amazon. I don’t know, in Juliet, Illinois, around Chicago. Yeah. You don’t need to move it halfway across the country. You have your products sitting there in the Midwest. But again, if we go back to the smallest sellers, the newest sellers choosing your 3PL could be very, very, dramatic now, as far as compared to last year. And what I’ve seen is that a lot of 3PLs are not accepting smaller sellers anymore. So that’s become a novel challenge as well. Just finding a 3PL with capacity with room, which accepts new clients. And not only who accepts new clients, who accepts more clients, because what happens with Amazon and we’ve seen it last year. And we, it was a disaster.
Refael: We know three people were ready for what happened last year with Amazon news stations, all of a sudden, instead of usual times when you place an order two or 3PL, Hey, I need three pallets out. I need five pallets out. I need a thousand units out. All of a sudden you can send a big order. You send very small orders. We had clients who were asking us to send one box and now multiply that by tens of clients a day, you’re getting yourself moving single boxes, hundreds of these for many, many different clients. And you’re just losing money because moving two boxes out of a 3PL, it’s a nightmare. You got to invoice someone for moving two boxes. You got to send a guy to the thirds, the box, the pallets, to take it out, to put the labels on it, have it on the dock for UPS. And that’s full just two boxes. And according to your price list, you should charge the client for $10, $15. It just doesn’t work. Just sending the email with the invoice, doesn’t work the transactional cost. And I’m trying to say, so a lot of 3PLs understood that they’re actually losing money with all these small orders. And again, that’s not the sellers fault. That’s what the reality now with Amazon station. So now what I’ve seen, and I know that we, in our 3PLs, we started doing it. We put a higher minimum at transactional minimum, a monthly transactional minimums that kind of feels the smaller seller that we are not the right fit for them. And I’ve seen a lot of 3PLs do that because they understood they really lost money. And you did right. You did smart. You placed your 3PL at your garage at your home. But I guess not every seller could do that. Right. We deal with foreign sellers, the non US based, so find it in 3PLs could be a challenge as well. But that would be the journey or the challenging journey for a new seller.
Bradley Sutton: So, then, like right now in what you have seen, I know a while back there was like an outbreak of COVID and the Shenzhen poured in that slowed things down, but just like under nothing is normal right now. But under barring outbreaks at ports and things like that, from the moment a product is ready to ship in China, let’s just say Shenzhen area Guangzhou, or whatever, just to pick a place. It’s ready to pick up. What are we looking at until the time it gets into the doors of a 3PL in the US? Correct me if I’m wrong. But one other thing that seems to be longer than normal, the last, I don’t know, six months is it gets to the port. And like back in the day like I’ve been importing from China and Korea for like 20 years. And back in the day, like 10 years ago, it hit the port. And like three days later, I’m picking it up. Nowadays, it seems like things are sitting in the long beach port. I mean, it’s already here. I’m not saying we’re waiting in the water. I’m saying like it already cleared customs. And I can’t even get a truck to bring it to my warehouse for like one week or two weeks. So anyways, what’s the full length of time from ready to pick up in your factory in Guangzhou to the time you can get it inside the doors of your 3PL.
Refael: If you’re looking at LA, LA based 3PL, the average, again, it depends if it’s a less than container load, less than container. Because you got the colder is unloading those and breaking the container is palletizing it and making different orders for different importers, or if you’re looking at the full container load we see around 40 days, and if you’re looking at less than container load, I would say 50, sometimes 55 days for less than container load. Again, that’s from the time the cargo is ready in China, ready to be picked up until it lands at your door around 12 in California. We’re looking at around, I would say again, 50, 55 days for an LCL shipping, less than a container load and around 40 days for a container load.
Bradley Sutton: Okay. All right. Good to know. Good to know. We’ve been talking all about ocean shipping. What has been happening with air shipping lately?
Refael: Air shipping. Air is a very interesting deal. Three weeks ago, prices were kind of back to normal, not back to normal, normal pre COVID but back to normal, like six months ago, I’m talking about $5 a kilo, $4.50 a kilo for biggest shipping, more shipments that are over 1000 kilos over a ton. Right now, we’re looking at another spike and they’ve jumped 30% in the past week. And that’s just been– that’s how it’s been in the past year. They are going back to normal and all of a sudden, two weeks later, they’re jumping through the roof again and it goes, keeps on going, and they are going down. They’re going up, they’re going down. They’re going up. And when shipping by sea by ocean is not as reliable as it used to be, people are moving more products by air. It’s expensive, ocean becomes much more expensive, much more. It’s much slower. It’s less reliable than it used to be. So a lot of people are moving to air because you have this deal. You have prime day, you have all, you know how it is in e-commerce. Every time you have something that is very, very urgent, and you need your products at the marketplace right now, and people are moving more price by air. With commercial flights, regular flights, not there yet. People, we are flying around the world, right? We are moving. It’s not like it used to be a year ago, but it’s not back to normal as far as capacity, as far as number of flights and number of people traveling. Just remember 80% and even more of all cargo that it’s moved by air around the world is moving on passenger flights and not on a cargo plane. Right? Most of the cargo around the world moves on passenger flights and the belly of the airplane has a lot of space for cargo. So until people get back on flying, like they used to, things, prices will remain high as well.
Bradley Sutton: People use the Helium 10 Profitability Calculator, and this is something that’s on every Amazon page. And what it does is it just imports the details about whatever listing you’re on, as far as size and weight and things like that. And then it allows you to put in, Hey, like what would your cost be if you were to fulfill this product? And we have a field in there for shipping, and we just put at least at the time that we’re recording is we put just a standard per cubic meter of 200, which is very low, but it’s just, we just put a random number in there. And so like me, I have, I have been like when I do things, or where I have my, my shipping agent just handles everything that the shipping charges and the custom fees and all that stuff to my door, it seems like per cubic meter. I forgot the lot. I mean, this is months ago, so this is maybe before the price increases, but I would use like maybe four 50 or 500 per cubic meter. Is there like a number that people should be using?
Refael: Wow, that’s a lot Bradley, $500 per CBM. That’s a lot. Now, if you have two CBM orders, that would be fine. But if you go over five CBM, you go over to five CBM on your orders. I would use 350, 400 bucks.
Bradley Sutton: And that’s including custom duties and things like that?
Refael: That’s not including custom duties now.
Bradley Sutton: Okay. I was including that. That’s probably why I was higher because I was, but now we have a new profitability calculator coming out. Well, it actually will split up the tariffs and custom duties.
Refael: Custom duties depends on the value of the goods, the [inaudible] called glufosiphication. If it’s coming from China, it might have trumped duties. So, that’s a very small movie. You got a separate input duties than freight costs. Because freight costs is, it’s not relevant to your product type or value and stuff like that. Input duties might be zero. And it might be 50% of your product costs because it comes from China and bags that is very high. So really commodity dependent, valid dependent, country of origin dependent, it’s much more complicated. Okay.
Bradley Sutton: All right. So about 350. So guys, you heard it, so about 350, 300, 350, if it’s just the freight costs per cubic meter is what you can put in the profitability calculator.
Refael: If it’s over five CBM.
Bradley Sutton: Over five CBM?
Refael: Yeah. Over five CBM.
Bradley Sutton: Okay. Over five CBM. And then there right now, actually, guys, you can even do that before our new version comes out in the other costs, there’s a percentage fees, and then you can put like the other fees right there, but actually in the next edition of the profitability calculator, we actually have it broken down into tariffs and different things that you can actually get a little bit more, a little bit more detailed in there. Now, just in general, we’ve had a lot of bad news and things here, but Hey, people need to understand what the situation is, but let’s just talk some strategy for the last five minutes or so of this instead of just we do the 30-second tip that’s here, let’s just do multiple ones. Now more than ever, it seems important to try and save a little bits of money here or there, whether we’re talking about which port to use to get into, or how far away to choose your Amazon warehouse or how, where to choose your third-party warehouse. Like, do you make it close to you? Do you make it close to a port? So like little things may not make a humongous impact, but all of these things add up to try and save money on all this extra that people are charging. So like, what are some ways that your clients are saving money here and there with some of these decisions? And hopefully our listeners can utilize this to save them some money.
Refael: I’ve seen, and we are building a tool for that as well. We actually hired mathematics, and really small people to build that algorithm for us. I’ve seen a lot of people understanding that their product size, the actual unit size and their unit box has a lot of air or gaps. Amazon courses, they all talk about how to brand your products and how to make that nice packaging. But all of a sudden people realize that if they minimize their packaging sizes and make it smaller, they can actually ship more products per container. So their price won’t go down, but you’ll actually be able to fit 200, 300, 400 units more inside a container. And that would drive your shipping unit costs down because the total cost would be divided by more units. So I’ve seen a lot of people do that actually goes into their unit sizes and sorry, you can’t modify your unit size,, but you can stop modifying your product unit box. And that would actually allow you to keep the same amount of units in there in that master box. But that master box would actually be shorter or slimmer. And then you can actually put more master boxes inside a container on a pallet. Doesn’t matter, it’s the same logic. So I’ve seen a lot of sellers do that right now. We’ve discussed this briefly placing all 3PLs, placing your destination delivery addresses around seaports became very, very important and trying to avoid inland ports or dry ports would actually save you 20, 30 days now. And that’s a lot of time. Let’s see what else we’ve seen. I don’t know if you can avoid it, but right now, the hardest place in China to find capacity is Northern China in Dow, Beijing, everything Beijing, and everything up north is just massively, massively overcrowded, and just out of capacity. So if we thought things are worse in Shenzhen, Ningbo, Shanghai up north is a nightmare. There’s just no containers and no vessel going out of there. And Shanghai, Ningbo, these days would be the easiest ports in China to get cargo out of. What else? What else? What else, what else? Try, again, if you can, if full container loads and the rule of thumb when shipping it is the whole has been the rule of thumb. The bigger your order will be the bigger the shipment, the, the, you know, the more volume you’ll have in that shipment, the less you’ll pay per unit on your shipping price.
Refael: So the smaller your shipment is the higher price you’ll pay. And the bigger shipping is the less you’ll pay on your shipping per unit, basically. So, if you have an order of 25 CBM, try and see if it’s viable, just adding more volume to it, just to ship full container load. And that would actually save you a lot of money. Again, not everybody can do it, budget and where you are in your Amazon journey, but that will save you a lot. And remember that the rule of thumb is the bigger your order is, the more volume you’ll have on that shipment, the less you’ll pay per unit. And that’s always been the case and it will always be the case. So that’s another thing to keep in mind.
Bradley Sutton: All right. Cool. Well, this has been helpful. Obviously I bet you wish you could have been the bearer of better news, but we got to keep it real here on the show. No BS, as we always say. So it’s important to know. Yeah. It’s important to know these things for our listeners out there and guys, again, we’re not trying to discourage you from selling on Amazon or things. We’re just trying to keep it real, but everybody’s going through the same thing. So, the only thing you can do is maybe use some of these tips to try and lessen your costs here or there, but it’s an equal playing field of what’s happening right now in the shipping world out there. So it’s not like you’re going to have competitors with a big, unfair advantage on it. Everybody’s in the same boat, no pun intended here. All right. Well, if people want to find you on the inter webs and maybe get a quote from you for shipping or get some help on the things that you help sellers with, how can they find you out there?
Refael: On Facebook, I’m pretty active on Facebook, so you can just search my name or you can search Unicargo on Google, Facebook. We’re pretty active online. So just look up Unicargo.
Bradley Sutton: Well, thank you so much Rafael for joining us. And when you come on the show sometime in 2022, hopefully it’d be with better news for everybody.
Refael: Yeah, I hope so too. I hope so.
Bradley Sutton: We’ll see you later.
Refael: Thank you.
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