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Apple's massive 'iPad 3' air freight deal with DHL shaking up shipping rates

post #1 of 74
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In another sign that Apple plans to make its third-generation iPad available for purchase very soon after it is announced this week, AppleInsider has been told that shipping company DHL is prepared to handle massive shipments from Apple.

One person who contacted AppleInsider said that changes to the price of air cargo through DHL have signaled a major planned Apple shipment from China to the U.S. Evidence of this can be seen in a "big change" in shipping costs, as Apple has taken up freight capacity on flights from the Far East to America.

The massive importation of goods is said to be taking up valuable space on the courier's international flights, which has driven shipping rates up this week considerably.

The information was corroborated on Monday by MacRumors, who also spoke with sources in the shipping industry. They indicated that shipping rates rose as much as 20 percent in one week as Apple has taken up available capacity at "premium rates."

Given the millions of iPads that Apple will undoubtedly have available at launch, it's likely that DHL is just one of the couriers Apple will use to ship its new iPad. When the first iPad debuted in 2010, Apple utilized UPS for Saturday deliveries, even though UPS does not offer standard delivery on weekends.

Indications first arose more than a week ago that Apple's assembly partner, Foxconn, was already gearing up to ship Apple's third-generation iPad to the U.S. for an impending product launch. One shipping manifest that surfaced on a Chinese microblogging site showed major international charter flights originating from Chengdu International Airport carrying "Apple's latest products."

All of Apple's rumored shipping activity suggests that the company is gearing up for a near-immediate launch of its third-generation iPad. The so-called "iPad 3" is expected to be unveiled at a media event this Wednesday in San Francisco.




Last year Apple announced the iPad 2 on March 2, and the device became publicly available in the U.S. just over a week later on March 11. If Apple were to follow the same release pattern this year, the next iPad could go on sale on Friday, March 16.

But there have been some indications that Apple could debut its next iPad even faster after this year's official unveiling. One report from last month suggested the "iPad 3" would go on sale in Germany on March 23, a full week earlier than the international launch would be if Apple followed last year's launch schedule.

[ View article on AppleInsider ]
post #2 of 74
Has 'hiking up the shipping rates' become the new 'put in an order for x.x" LCD panels'?

Because I guess I'm fine with that. Still doesn't match the grandeur of elevator shots, though.

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post #3 of 74
Perhaps that explains why Germany is getting their iPads a week earlier. DHL International GmbH

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post #4 of 74
There are always other ways to ship products...

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post #5 of 74
I need more clarification. Are they starting to ship them this week or next? If they start shipping tomorrow, they could be in country on Wednesday. At that timeframe, they would no longer have to worry about leaked pictures or information. If they have sufficient stock built up, could Apple even be planning to have them in the stores by Friday?

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post #6 of 74
the words "We have something you really have to see. And touch. " are important here. iPad 3 will be unveiled and available at launch on Wednesday.
post #7 of 74
It'll be available friday probably.
post #8 of 74
It does seem like they will be available for sale on the 7th. No pre-order period then? Tim Cook showing off his organisational skills.
post #9 of 74
I wonder if it will be compelling enough to make me get off my fat ass and wait in line... or just order online and play with the new iOS SDK.
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post #10 of 74
I'm impressed that if they are imminently about to ship, that the Vietnam guys haven't gotten their hands on one already. Maybe they only have iPhone connections. The security must be amazingly tight though.

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post #11 of 74
I don't understand why shipping rates would increase because Apple has taken capacity away from DSL. Why wouldn't DSL charter/lease special planes just for Apple's shipments if they don't have enough available? When FedEx or UPS has increased demand around the holidays they don't raise their rates because they need more capacity, they just pull additional planes out of the hangars and blow the dust off or increase flight frequency. It's the nature of the shipping beast, so to speak.

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post #12 of 74
Quote:
Originally Posted by DWells View Post

the words "We have something you really have to see. And touch. " are important here. iPad 3 will be unveiled and available at launch on Wednesday.

Or it has a touchscreen. It's very doubtful it will be available on announcement day.

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post #13 of 74
Quote:
Originally Posted by Dickprinter View Post

I don't understand why shipping rates would increase because Apple has taken capacity away from DSL. Why wouldn't DSL charter/lease special planes just for Apple's shipments if they don't have enough available? When FedEx or UPS has increased demand around the holidays they don't raise their rates because they need more capacity, they just pull additional planes out of the hangars and blow the dust off or increase flight frequency. It's the nature of the shipping beast, so to speak.

If any freight company ran their business the way you are suggesting, they would be out of business in very short order.
post #14 of 74
Quote:
Originally Posted by Dickprinter View Post

I don't understand why shipping rates would increase because Apple has taken capacity away from DSL. Why wouldn't DSL charter/lease special planes just for Apple's shipments if they don't have enough available? When FedEx or UPS has increased demand around the holidays they don't raise their rates because they need more capacity, they just pull additional planes out of the hangars and blow the dust off or increase flight frequency. It's the nature of the shipping beast, so to speak.

DHL might be doing just that, hiring out more planes, but they will only hire what they need. Thusly any additional cargo space would be at a premium because there is so little to around.

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post #15 of 74
Quote:
Originally Posted by Dickprinter View Post

I don't understand why shipping rates would increase because Apple has taken capacity away from DSL. Why wouldn't DSL charter/lease special planes just for Apple's shipments if they don't have enough available? When FedEx or UPS has increased demand around the holidays they don't raise their rates because they need more capacity, they just pull additional planes out of the hangars and blow the dust off or increase flight frequency. It's the nature of the shipping beast, so to speak.

What are you saying? That there are no circumstances where there are increased charges for shipping? That makes no sense.

Like anything else, there is capacity. When it's exceeded the price goes up. Joe Blow shipping something back to Amazon doesn't pay more at Christmas. But Apple ordering entire plane loads to ship iPads certainly will.

It's a business driven by bids, not fixed pricing.
post #16 of 74
Quote:
Originally Posted by walshbj View Post

What are you saying? That there are no circumstances where there are increased charges for shipping? That makes no sense.

Like anything else, there is capacity. When it's exceeded the price goes up. Joe Blow shipping something back to Amazon doesn't pay more at Christmas. But Apple ordering entire plane loads to ship iPads certainly will.

It's a business driven by bids, not fixed pricing.

Much better response than mine ... but same point.
post #17 of 74
How do they know these shipping rates weren't affected by skyrocketing fuel costs? This seems quite speculative even if they called someone at DHL who may not be authorized to comment.

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post #18 of 74
Quote:
Originally Posted by SolipsismX View Post

DHL might be doing just that, hiring out more planes, but they will only hire what they need. Thusly any additional cargo space would be at a premium because there is so little to around.

Quote:
Originally Posted by walshbj View Post

What are you saying? That there are no circumstances where there are increased charges for shipping? That makes no sense.

Like anything else, there is capacity. When it's exceeded the price goes up. Joe Blow shipping something back to Amazon doesn't pay more at Christmas. But Apple ordering entire plane loads to ship iPads certainly will.

It's a business driven by bids, not fixed pricing.

But the way I read the article it says that Apple is paying a premium for the shipping of their goods plus DHL customers saw their rates raised by 20%. Why should the regular DHL customers pay more if DHL is already making a premium on Apple's shipments? Sounds like socialistic shipping to me.

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post #19 of 74
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post #20 of 74
Quote:
Originally Posted by Dickprinter View Post

But the way I read the article it says that Apple is paying a premium for the shipping of their goods plus DHL customers saw their rates raised by 20%. Why should the regular DHL customers pay more if DHL is already making a premium on Apple's shipments? Sounds like socialistic shipping to me.

It sounds like you don't know what socialism is. Or capitalism.
post #21 of 74
Quote:
Originally Posted by Dickprinter View Post

I don't understand why shipping rates would increase because Apple has taken capacity away from DSL. Why wouldn't DSL charter/lease special planes just for Apple's shipments if they don't have enough available? When FedEx or UPS has increased demand around the holidays they don't raise their rates because they need more capacity, they just pull additional planes out of the hangars and blow the dust off or increase flight frequency. It's the nature of the shipping beast, so to speak.

The reason it doesn't cost more around Christmas for FedEx and UPS is because they have planned for the extra capacity needs. They know that around those holiday times they will need to "dust off" their freight. I doubt Apple gave DHL a heads up two-three months in advance that they are going to be shipping a lot of goods this week. They probably told them last Friday.
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post #22 of 74
Quote:
Originally Posted by Dickprinter View Post

But the way I read the article it says that Apple is paying a premium for the shipping of their goods plus DHL customers saw their rates raised by 20%. Why should the regular DHL customers pay more if DHL is already making a premium on Apple's shipments? Sounds like socialistic shipping to me.

Apple paid for the extra capacity, not others, so if the others want to get in on some of the space Apple could use they'd have to pay more,

Or more likely, there is additional space but that space comes at a premium because it was procured at a premium. They might be factoring in the cost of others into what they have to charge Apple so they can still make themselves look as attractive as possible even when needing to charge more to get more equipment and personal.

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post #23 of 74
Quote:
Originally Posted by SpamSandwich View Post

How do they know these shipping rates weren't affected by skyrocketing fuel costs? This seems quite speculative even if they called someone at DHL who may not be authorized to comment.

I think it's likely that if Apple it hiring out dedicated space and requesting more shipments that the rates did go up but fuel is also concern.

PS: One day when you buy your iPad you'll be charged a fuel fee at the counter.

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"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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post #24 of 74
Quote:
Originally Posted by Doctor David View Post

It sounds like you don't know what socialism is. Or capitalism.

It was a joke, lighten up.

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post #25 of 74
So, in addition to the well known BDI (Baltic Dry Index), the iDI (iProducts Dry Index) is to be published on the Stock Exchange ...
post #26 of 74
Quote:
Originally Posted by ascii View Post

It does seem like they will be available for sale on the 7th. No pre-order period then? Tim Cook showing off his organisational skills.

Could be, my thoughts exactly.

J.
post #27 of 74
Quote:
Originally Posted by Dickprinter View Post

But the way I read the article it says that Apple is paying a premium for the shipping of their goods plus DHL customers saw their rates raised by 20%. Why should the regular DHL customers pay more if DHL is already making a premium on Apple's shipments? Sounds like socialistic shipping to me.


Let me make an analogy. Let's say you are a printer and you scored a big job that tied up your presses for a month and you are being paid a premium for it. When one of your regular customers comes in and has a rush job, you don't stop the presses. You instead take the job to one of your friendly competitors and farm it out at retail price. You can then either eat the additional cost or pass the expense on to your customer.

If you are up front with the customer about the reason for the increase and they decide to do the job anyway instead of waiting for the huge job to finish up, it is their decision. They could just as easily go directly to that friendly competitor and sign up for a new account themselves or they could just let you handle it for them.

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post #28 of 74
Quote:
Originally Posted by Tallest Skil View Post

Or it has a touchscreen. It's very doubtful it will be available on announcement day.

There isn't any hard info one way or the other but I would argue that "very doubtful" goes too far.

Apple products have been available on the day of release/announcement before, they could be again. I see nothing to indicate this is an unusual or weird expectation to have.
post #29 of 74
This is really a story about how Apple is doing what is right by the customer to rush product to Apple Stores instead of putting product on a month long boat trip.

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post #30 of 74
Shipping rates around the holidays are more stable because the shippers build their infrastructure-hire more temp employees etc., this is a different situation than a mid year bump, plus outfitting the planes to carry wheat back to china is difficult.

Rub your funny bones.
post #31 of 74
Quote:
Originally Posted by SpamSandwich View Post

This is really a story about how Apple is doing what is right by the customer to rush product to Apple Stores instead of putting product on a month long boat trip.


Part of that is the efficiencies of JIT. Putting 50 million iPads on one ship is also a larger risk. With JIT there are no warehousing costs and less chance of theft. Also it affords them the opportunity of making small adjustments to the assembly line such as ramping up or down certain models as sales trends develop over the first few weeks or if there is an unfortunate issue that needs amending immediately.

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post #32 of 74
Damn, how many can they get on one of these planes any ways? Safe bet it's more then a dozen

Skip
post #33 of 74
Quote:
Originally Posted by ncee View Post

Damn, how many can they get on one of these planes any ways? Safe bet it's more then a dozen

Skip

Certainly not as many as a series of shipping containers on a large boat, but I believe time is of the essence in this case.

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post #34 of 74
Quote:
Originally Posted by DWells View Post

the words "We have something you really have to see. And touch. " are important here. iPad 3 will be unveiled and available at launch on Wednesday.

This is exactly what I've been thinking (and hoping). ...and touch, meaning, you can get one in your hands immediately.
post #35 of 74
Quote:
Originally Posted by mstone View Post

Part of that is the efficiencies of JIT. Putting 50 million iPads on one ship is also a larger risk. With JIT there are no warehousing costs and less chance of theft. Also it affords them the opportunity of making small adjustments to the assembly line such as ramping up or down certain models as sales trends develop over the first few weeks or if there is an unfortunate issue that needs amending immediately.

Add to that cash flow -- payments == 2 days, rather than 1 month...

And the possibility that the Somali Pirates got my iPad
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post #36 of 74
Quote:
Originally Posted by Prof. Peabody View Post

There isn't any hard info one way or the other but I would argue that "very doubtful" goes too far.

Apple products have been available on the day of release/announcement before, they could be again. I see nothing to indicate this is an unusual or weird expectation to have.

I agree.

This could be Tim Cook's personal stamp... products available on the day of announcement.
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post #37 of 74
Quote:
Originally Posted by island hermit View Post

I agree.

This could be Tim Cook's personal stamp... products available on the day of announcement.

A 'problem' I see with making it available on the day of the announcement is that there won't be time for hype to build up and people to generate massive lines. Though the lines are problematic, they do generate headlines in newspapers everywhere, drawing more attention to the product and brand (free advertising!) and generating even more hype (perpetual hype machine) and hopefully driving more sales. Maybe they won't be able to catch up with the demand for a long time again so they don't need the hype, but it also gives them bragging numbers like "10 million devices sold on the first day".
post #38 of 74
Quote:
Originally Posted by OriginalG View Post

A 'problem' I see with making it available on the day of the announcement is that there won't be time for hype to build up and people to generate massive lines. Though the lines are problematic, they do generate headlines in newspapers everywhere, drawing more attention to the product and brand (free advertising!) and generating even more hype (perpetual hype machine) and hopefully driving more sales. Maybe they won't be able to catch up with the demand for a long time again so they don't need the hype, but it also gives them bragging numbers like "10 million devices sold on the first day".

I think the biggest issue with same day sales of this product is that you'd have to deliver to stores the day before. As soon as you get outside their guarded warehouse for store delivers you are limit your control over the product. From China to the US it's very large shipments are surely guarded but from store to store that security drops off considerably.

Based on the iPhone 4S launch and iPad HD news I would expect pre-orders on Friday, the 9th, deliveries starting the following Wednesday, the 14th, even though are scheduled for the following Friday, the 16th, and in store sales starting on the 16th.


PS: The products that did launch the same day had less mindshare and unit sales.

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post #39 of 74
Quote:
Originally Posted by mstone View Post

Let me make an analogy. Let's say you are a printer and you scored a big job that tied up your presses for a month and you are being paid a premium for it. When one of your regular customers comes in and has a rush job, you don't stop the presses. You instead take the job to one of your friendly competitors and farm it out at retail price. You can then either eat the additional cost or pass the expense on to your customer.

If you are up front with the customer about the reason for the increase and they decide to do the job anyway instead of waiting for the huge job to finish up, it is their decision. They could just as easily go directly to that friendly competitor and sign up for a new account themselves or they could just let you handle it for them.

That's a good analogy, thanks, but I feel that is a little short-sighted move, business wise. I risk losing a customer if he knows the reason why I'm charging him more than usual is because I'm putting all of my "Apples" in one basket for a month, which prevents me from servicing my usual customers. It's like I'm punishing my regular customers just because I got a mother lode order from a new customer. At the least I'm only pissing them off by charging them more this one time but they're still getting their job and I can only hope to retain that customer. At the most I'll lose that customer for good. Does what I'm saying make sense or am I missing something?

That's why I said earlier that if DHL doesn't have the current plane capacity to make this special shipment for Apple, why wouldn't they just lease or charter extra planes for the Apple shipments, since they ARE getting a premium from Apple, and then it wouldn't disrupt or affect their normal/regular business customers. Obviously I'm a printer and don't understand how the shipping biz works.

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post #40 of 74
...Maybe they thought it best to get them out of China in a hurry...
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