It's not about delivering products in the US, but rather to the US. It's the only way to ship products because it's all a matter of cost, simply stated. Just to give you an idea of the cost, ocean freight is sold by CBM (cubic meter) not weight and t's also sold by the container. A standard 48 x 48 pallet can hold a ton (literally) of weight, but it doesn't take up that much room physically. So, if the price is $2 USD per CMB you can see that paying 2 bucks per cubic meter is extremely cheap for shipping something like that. That's good for smaller sized shipments of high density.GaryH wrote: ↑Sun Apr 18, 2021 11:19 am I don't doubt that it's true. My thought was why is that the ONLY way to deliver new products in the US (or anywhere), esp smaller ones like add on cards. I know it's not that simple but getting products to market like this can't be great for generating sales and is so very slow. And mostly I am not a patient guy
Consoles and other packaged finished goods are not that dense (i.e. lots of air in the package) but still, ocean freight on a per-container basis is the only way to go. A standard 40' container costs a flat rate of $2,000 USD to ship from Asia to North America. How many consoles and expansion cards can you stuff into a 40' container? Lots! But, how many consoles could you ship via air freight for $2,000? Probably 2.
When I was sourcing an X32 to buy and ship to Taiwan, I ran across a Midas M32 on sale, right at the transition to the M32-Live version. The console was about 50% off the regular price. After I did the math, including the taxes and import fees, the shipping is what killed that transaction. The only available shipping method was air freight (unless I wanted a freight forwarder to handle it going ocean freight) but the math didn't line up no matter what. Ocean freight on a CBM basis was good, but the fixed costs are what they are. Fixed costs aren't a problem when you spread it over several pallets or a container. But for a single carton it doesn't make sense. At the end of the day it was actually cheaper for me to buy a landed X32 in Taiwan for $3,000 USD than to buy a 1/2 off M32 and ship it here.
Remember, this all applies to shipping from the manufacturer to the distributor. There is no routing from the manufacturer directly to the end customer. You cannot buy from the China factory directly.
All these manufacturers use ocean freight for cost analysis. Any time a product is shipped by any other method, it cuts into the profit. Sometimes, the cut is deep. Whenever you see one of those situations where the shipping costs more than the product, you are witnessing that in action.
One of my customers sometimes has a situation where he needs me to ship some of his products via air freight. Normally we ship several tons via ocean freight, 4 times/year. But if he has a customer order a large number of things and his stock is depleted, I send him some via DHL. He makes virtually no money on those transactions, but he does them simply to keep his customer. If he tells his customer that the parts are coming and will be available 60 days from now, the customer will source them from someone else. So he tells the customer he'll ship in less than a week, and I get a phone call in Taiwan. If his prices reflected air freight, no one would buy from him. Air freight is $/KM verses $/CBM. He loses his profit on those parts but keeps the customer.
We all do the same thing. We call/email various places and we buy from who has them in stock. But there is no motivation for any of those suppliers to have something shipped to them via air freight just so we can get it faster. Once they have it in their possession, we can pay air freight if we want. But we have no choice when it comes to having the manufacturer ship to the distributor.
