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Thread: Economic Conundrums

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  1. #1
    Join Date
    Jun 2010
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    Default Economic Conundrums

    Greenspan loved to talk about conundrums.

    Let's hope we can do better than he did.

    Here's mine:

    I can order printed circuit boards ("printed wire boards" for our UK readers) from Advanced Circuits in Aurora Colorado. Shipping by UPS ground from Colorado to South Carolina costs $20 and takes 5 days.

    If I order from "Silver Circuits" in Malaysia, the shipping from Malaysia to South Carolina takes 3 days and costs $18.00.

    So why is it cheaper to ship from Malaysia than Colorado?

    1) The labor costs are lower in Malaysia. -----Wrong, at least in the usual way of thinking.

    The only labor intensive part is the big truck driving up my street and the driver waiting at my front door for me to sign the delivery receipt.
    That is the same for both Advanced and Silver. At the PCB fabs, the packages are loaded en masse onto the truck, making the labor component
    zilch at the senders end.


    2) Advanced Circuits is price gouging. ----- possibly correct.

    I have not found any good explanation why it costs more to send something 1200 miles than 12,000 miles, so it may be that Advanced charges me $20, pockets $12.00, and pays UPS $8 to carry a small box to me.

    I don't see the logic of it. If they wanted higher margins, it would make more sense to raise the price of making the PCB's. Most of the business is repeat customers, who decide based on total costs.

    3) Air travel is cheaper when it starts in Malaysia. ---- possibly correct--

    Perhaps Malaysian jet mechanics get paid less than USA truck mechanics. Airport fees, insurance, etc. might also be lower in Malaysia.
    But there is still the problem that the package still get's to my house by truck, so that #%!!! american worker is still in the picture!

  2. #2
    Join Date
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    Default Re: Economic Conundrums

    Quote Originally Posted by Polish_Silver View Post
    .....have not found any good explanation why it costs more to send something 1200 miles than 12,000 miles, so it may be that Advanced charges me $20, pockets $12.00, and pays UPS $8 to carry a small box to me....
    ...
    Perhaps Malaysian jet mechanics get paid less than USA truck mechanics. Airport fees, insurance, etc. might also be lower in Malaysia.
    But there is still the problem that the package still get's to my house by truck, so that #%!!! american worker is still in the picture!
    would offer that all 3 of these are the likely culprit, with #1 THE most likely case.

    have seen a number of vendors i buy stuff from do this - they quote/charge the UPS 'list price'
    but actually pay a much lower, heavily discounted 'volume based' price.

    just be glad/happy that you dont have to deal with ocean freight, like tween the west coast and that place i'm OH so familiar with - when the shipping monopoly + the longshoreman's ransom + the jones act all jam it into ya - have heard that while it costs something on the order of $3000 to ship a 40ft can from the coast westbound to the afore mentioned, if that same can is going elsewhere westbound?

    it can go - on any other random boat - not jones'n - all the way to the far-west (asia) for appx 300.

  3. #3
    Join Date
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    Default Re: Economic Conundrums

    Quote Originally Posted by lektrode View Post
    would offer that all 3 of these are the likely culprit, with #1 THE most likely case.

    . . .

    just be glad/happy that you dont have to deal with ocean freight, . . . that while it costs something on the order of $3000 to ship a 40ft can from the coast westbound to the afore mentioned,

    it can go - on any other random boat - not jones'n - all the way to the far-west (asia) for appx 300.

    That certainly is a conundrum, probably comprehensible only to shipping industry insiders. I have heard that many of the US port facilities are actually owned by Aramco and other faceless multinational entities, not that that explains anything. I do remember my parents commented that one of my high school class mates (who probably finished in the lower 1/3 of the class) inherited her father's longshoreman position, operating the crane that puts the containers on the ship, bringing home $120k/year at age 19.

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