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Increased Shipping Rates from China


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Did not see this thread before.  Rick mentioned this in another so here is the reply I just posted on the subject:

 

https://www.nytimes.com/2018/10/17/us/politics/trump-china-shipping.html

 

As much as I know that Trump's trade-war policies are wrong-headed and bad for all parties, on this particular issue (the Universal Postal Union treaty) I agree that it should be overhauled.  A package of up to 4.4 pounds can be mailed from China for $5 (and 1 pound or less is about $1.50 converted), yet even with my volume discounted commercial rate a 3 ounce package from California to anyplace overseas costs us $13.40 to mail via First Class Mail.  Oh, and 4 pound package to Asia? Over $50!  

 

Recently I have negotiated us onto a program for amazing rates via FedEx (been automatically upgrading overseas orders to FedEx at no extra charge), but what is troubling us now is that the flow of goods through the Chinese customs offices has slowed WAY down.  We receive a fair number of orders from China each month and lately even FedEx delivery is taking 12 days to deliver.  

 

So far the tariff issue has not impacted my business in either direction, but I know it will soon.  o.O

 
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Oh, and just to put some scale to the importance of freight costs to UpTone's business: Last year we spent a total of $58K on freight and postage.  That was about 7% of total gross revenue.  And we did not charge our customers anywhere near our costs.  Take off another 3% in the PayPal and credit card fees we absorb and one can begin to see some of the basic hidden costs that have to be considered when pricing a product here in the USA. 

Not complaining, just highlighting differences versus business costs elsewhere in the world. :)

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54 minutes ago, oneguy said:

I’d only use USPS for the US (because I had domestic rates there) or Canada because for some reason EMS was more expensive there. 

 

Well FROM the US EMS is only available via the US Postal Service. It is called Express Mail and it is very expensive.  Not quite as expensive as retail rates for FedEx or UPS international, but still about twice the cost of Priority Mail Intl.

 

What is crazy is that with the contracted FedEx rate discount we receive for international (75-86% off), we can ship a 7Kg box to most of Europe and Asia for less than it costs to ship it from California to the east coast of the US (though 2-day Priority Mail in the states is still cheapest here).

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  • 6 months later...
1 hour ago, jtwrace said:

Maybe you'll change your tune if/when your products are totally copied and sold for 1/4 of the price.  And don't think they can't be, if you only knew what they do copy you'd probably shit yourself.  

 

Specialty silicon chips (high performance voltage regulators, FPGAs, high-speed isolators, clocks, DACs, etc.) and better spec'd passives (such as Murata MLCCs, etc.) are not available any cheaper to manufacturers in China than to any US manufacturer.  And I've yet to read of any counterfeit Linear Tech LT3045 or Silicon Labs clock synthesizer.  So it is not as if they can clone and produce for significantly less--though of course they can choose to operate on extremely thin margins.

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1 hour ago, jtwrace said:

You can't please everyone it's nearly impossible.  However, as a small business in the USA you can certainly do your part and that starts by sourcing parts in the USA and not pointing fingers at the White House.  While I don't like Schitt sonically, one has to admire their model and its success.  They have proven that it can be done on US soil and I've said it for years that it can.  

 

Funny that you mention Schiit Audio.  Because I think it was you who back in 2014/15 turned me on to the PCB assembly house in Simi Valley that they use.  Great people.  Really liked working with the owner there.  From Feb. 2015 to September 2017 UpTone spent just under $200K with that firm.

I am not naming them here because of what I am about to say next.  Their prices were competitive, but the quality of their work and the QC was rather poor.  Would find solder splashed everywhere, huge solder bridges--even on big TO-220 size 5-pin regulators--and they got some parts too hot during processing.  They often forgot to clean the excess flux off our boards.

And as a turnkey house (where they order and kit the many parts based on our BoM) they were really weak.  They took way too much time to get parts on order, and then once they did they often fell weeks behind promised dates--and then not even communicate to us about it.  If a part was out of stock, they would just put the order on the back-burner--whereas if they had told me I could easily spec a substitute.  And that was on relatively simple boards (original USB REGEN, MMK, and JS-2).  I declined to even have them bid on our UltraCap product which has 275 parts--some very small.

 

I know you hang out over as ASR Jason.  So I am sure you have seen Amir's Schiit tear-downs and the many examples he has photographed showing splashed bits of solder and uncleaned boards.  I have a whole folder of photos of UpTone boards with solder bridges by this firm if you want to see. 

I have gotten quotes from other PCB assembly houses in the USA, but they were double.  So we stay with our Canadian firm (who has production lines in both Toronto and Shenzhen) as their communication and quality is excellent, and their performance to promised delivery dates is flawless.

 

And speaking of PCBs, the bare/unpopulated boards used in Schiit Audio products are produced in China (I know this since the assembly firm we shared for a while routes all their PCB fab biz through the same rep/coordinator.  

And BTW, those MCI transformers Schiit uses?  China or India... 9_9

 

So while the companies Schiit buys from are located in the USA, not all the parts are made here.

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1 hour ago, Ralf11 said:

why can't we source semi's from India?  Thailand, Vietnam, Mexico, Brazil?  we can help them ramp up production or build new fabs (like TSM in Taiwan)

 

ultimately, the cost of manf. will be determined by who has the latest robots, not the cheapest labor

 

The countries you mention don't really have the expertise and skilled labor for high-tech manufacturing.  Otherwise you would already see phones and other silicon-dense products being made in those places.  

 

And if the US s going to invest in education and production facilities I'd much rather it be here!

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