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Apple's massive 'iPad 3' air freight deal with DHL shaking up shipping rates - Page 2

post #41 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.

You can't just "charter" or "lease" capacity without incurring rising costs to your own price. Overtime, employee's, rentals, etc. all make brief moments in time like these more expensive. If it didn't work this way, everyone would own a freight company. Companies have to get freight capacity from smaller outfits and they may or may not charge more. My guess is they are not as efficient as UPS and FedEx.

The article is just stating since Apple has taken a large chunk of capacity the price of shipping in general has risen in the near term. Prices will stabilize or UPS, FedEx, DHL, and others will expand thus decreasing the price sooner or later.
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post #42 of 74
Quote:
Originally Posted by SolipsismX View Post

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.

Ahh... logistics!

Not to mention the announcement is 10:00-11:00 AM PST -- or 1:00-2:00 PM EST... this doesn't leave much time to form lines (scalpers aside).

Besides, all those SammyShills wi need time to prepare to parade in front of the lines for iPads...
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post #43 of 74
Quote:
Originally Posted by Dickprinter View Post

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.

If they were your regular customers, they would have pre-booked the space they need. If they're not willing to commit, you shouldn't be obligated to hold any space for them. They know they get good rates if you commit ahead of time instead of at the last minute.
post #44 of 74
Quote:
Originally Posted by Dickprinter View Post

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.

I think you are assuming only DHL's rates are going up 20%. The article merely says sources in the shipping industry said "shipping rates" are up this week. We aren't talking about some company booking a couple of planes. Apple has shown a tendency to book up entire industries before, such as NAND. What if Apple is actually booking a significant amount of the actual air freight *capacity* coming out of China? There aren't unlimited planes, DHL or anyone, that fly out of China. When a resource becomes constrained, prices go up.

This isn't like the holidays where carriers know to ramp up capacity for months in advance. This is new, and likely short notice since Apple paid a premium. If this continues every launch, perhaps the carriers will ramp up in advance, and we'll have our own Apple holiday
post #45 of 74
Quote:
Originally Posted by Dickprinter View Post

At the most I'll lose that customer for good. Does what I'm saying make sense or am I missing something?

Lesser of two evils. You might lose a customer, and DHL might have provisions for that, like even meeting the customer half way on inflated costs, but they might think that losing Apple to another vendor because they can't handle their shipment might do more damage to their company. I'm sure DHL did a cost assessment to see which was better for them.

Quote:
Obviously I'm a printer and don't understand how the shipping biz works.

I thought only the first half of your name described you.


PS: I recall there was something about Apple, per Cook, buying up all the space on cargo planes for the original iMacs for the shipping season.

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post #46 of 74
Quote:
Originally Posted by casey4147 View Post

...Maybe they need to get them out of China in a hurry...

That thought actually did cross my mind too. Hopefully that is not the case though.
post #47 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.

The story is confusing, but you can figure it out: Apple is getting the very best rate because they pre-ordered the capacity. They call it a premium rate, which should like a high rate, but it really means the opposite.
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post #48 of 74
Quote:
Originally Posted by Dick Applebaum View Post

And the possibility that the Somali Pirates got my iPad



Yep, them Somalis and their 4G connections...
post #49 of 74
March 10: iPad 3 - shipping 1 - 2 days
March 14: iPad 3 - shipping 2 - 3 weeks
post #50 of 74
Quote:
Originally Posted by jmmx View Post

March 10: iPad 3 - shipping 1 - 2 days
March 14: iPad 3 - shipping 2 - 3 weeks

March 7 1PM EST: iPad 3 shipping in 1-2 days
March 7 5PM EST: iPad 3 shipping in 2-3 weeks
post #51 of 74
Quote:
Originally Posted by walshbj View Post

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.

My humble guess is that it will not be Apple paying the premium, but everybody else who got snookered by Apple taking all the space.
post #52 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.

Sounds like capitalism, if you want space on a plane you have to at least match what the guy who wants ALL the capacity is willing to pay.
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post #53 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".

More of Tim Cook's signature.

Tim will give the presentation. Thoroughly demonstrating and explaining the iPad 3. After an hour or so of this he will come to the part where he says:

"Availability? Now!"

... and several hundred people charge out the auditorium screaming. Filmed in its entirety by Apple, of course, and uploaded to Facebook, Twitter and YouTube immediately which leads to crowds of people running en masse to the closest Apple store!!

"Forget long lines. We want running and screaming masses. New image. New look and feel. I am Tim Cook!"

<said tongue in cheek>
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post #54 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.

Hopefully this keeps the stock from shifting downward on event day... It will be a great "one last thing" ........ "It is available immediately"... cue the frenzy...!!!
post #55 of 74
Quote:
Originally Posted by Dickprinter View Post

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.


Were physical planes the only consideration, this would be easier. DHL is probably the largest foreign air freight operator in China. They have freight loading rights in over 300 cities in China, so moving goods out of that country is less an issue for DHL than for many other carriers. Even most passenger airlines are not allowed to load non-passenger cargo (freight) except in a few Chinese cities. Tim's buying up a large portion of DHL's available capacity even for a short period will force other manufacturers/buyers of good to weigh the costs of delaying shipments, moving them overland to a port where a carrier has rights and capacity, or even paying cancellation fees until a favorable window opens. Then there is the matter of distribution from DHL's U.S. hub. Several incoming planes full of iPads will probably stuff the re-distribution channel to destination cities, leaving less room for other cargo. To ensure all this capacity exists Apple would have to prepay fees ranging from landing slots to to ground handling. They may even pay extra to ensure customs and carrier agents are on hand as soon as the plane arrives at the terminal. Most significantly, they may have paid DHL to have a plane on standby just in case a shipment from Foxconn or wherever is delayed, allowing a partially-full flight to leave to ensure product is delivered. This eats up a landing slot plus crew time, but Apple has the means and desire to pay for it. My bet is with Tim Cook overseeing the process such a plan, if it exists, is never put into effect.
post #56 of 74
Quote:
Originally Posted by island hermit View Post

More of Tim Cook's signature.

Tim will give the presentation. Thoroughly demonstrating and explaining the iPad 3. After an hour or so of this he will come to the part where he says:

"Availability? Now!"

... and several hundred people charge out the auditorium screaming. Filmed in its entirety by Apple, of course, and uploaded to Facebook, Twitter and YouTube immediately which leads to crowds of people running en masse to the closest Apple store!!

"Forget long lines. We want running and screaming masses. New image. New look and feel. I am Tim Cook!"

<said tongue in cheek>

With the original iPad, some of my friends were not booking any meetings for themselves the day of the announcement, just in case Steve said "Available...NOW" so they could drop everything and head to the closest store to buy whatever Apple announced. They considered taking the day off and follow the announcement inside a store so they can be "first!".

If they ever did "available NOW" for any major product release, there will be a mass exodus of people from their jobs during the day just to be first. A sudden onset of some kind of sickness in order to take the afternoon off.

Waiting a month can't be that hard!
post #57 of 74
Quote:
Originally Posted by aplnub View Post

......

Quote:
Originally Posted by OriginalG View Post

.....

Quote:
Originally Posted by Pendergast View Post

....

Thank you all for the explanations, I have a much better understanding of the process. In my case my business is majority retail, more mom/pop, so if I tell one of my customers to pay me more or screw because I have a huge job that'll carry me through for the next month, then I'm screwing myself because they'll go elsewhere. Printing has become a very competitive business and because of digital reproduction technology, printing has become more of a commodity product that anyone can produce rather than the trade/skill/art that it once was.

Quote:
Originally Posted by SolipsismX View Post



I thought only the first half of your name described you.

I've been asked if I print gay porn.
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post #58 of 74
Quote:
Originally Posted by Dickprinter View Post

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.

It is up to you to decide if you are going to eat the extra cost in good faith to your original customer or not. In the case of DHL apparently they are not that generous. I bet that they are negotiable though if a long time customer complained. Almost all large corporations try to charge full price but many times will make sacrifices for customer who complain. I have seen this work several times with AT&T, Time Warner, COX and even Fedex to mention a few. The Fedex one was particularly interesting since it was clearly our fault and they ended up paying $1000 for our mistake.

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post #59 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'm with you. Fuel costs are more logical. Although that picture of a DHL airplane is awfully compelling. I just love the frenzy as it lathers up.
post #60 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.

Nope. They would already be contacting staff to change work schedules and we would have heard it by now. Plus the hubs need to divy up the units and get them to stores.

Apple tv says it is back in stores on march 10. I'm betting that is also launch day

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post #61 of 74
Quote:
Originally Posted by Doctor David View Post

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

Exactly!
post #62 of 74
Quote:
Originally Posted by Dickprinter View Post

I've been asked if I print gay porn.

So don't leave us HANGING, what's the answer?
Actually I was thinking it had something to do with intimate tattoos, ouch!

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post #63 of 74
Quote:
Originally Posted by AppleInsider View Post

When the first iPad debuted in 2010, Apple utilized UPS for Saturday deliveries, even though UPS does not offer standard delivery on weekends.

It costs mere mortals $12 extra to buy Saturday delivery.

Quote:
Originally Posted by alcstarheel View Post

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.

But Apple does seem to plan that far ahead a lot.
post #64 of 74
Argh... regret to have read this, non-news... how else would the iPads get here from China? A catapult?
post #65 of 74
"Apple plans to shoot iPads across the ocean with huge cannon". Now that would be news.

Apple's flying them over... eh... not so much.
post #66 of 74
Quote:
Originally Posted by AppleInsider View Post

that shipping company DHL is prepared to handle massive shipments from Apple.

Prepared for is not the same as contracted for.

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post #67 of 74
Quote:
Originally Posted by diplication View Post

So don't leave us HANGING, what's the answer?
Actually I was thinking it had something to do with intimate tattoos, ouch!

My name is Richard and I'm a third generation printer. Sorry if the answer is anticlimactic.
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post #68 of 74
Quote:
Originally Posted by OriginalG View Post

. 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.

But does Apple really need the headlines or the hype. Are they worth more than cutting off the riot causing line scalpers by not giving then as much time to get ready for the game.

I would say no which is why I think that Apple could put a quick turn around (not same day but perhaps next) with no pre-orders and some kind of by reservation only for the first week or so. Even with that there would still be lines on launch day because folks want that iPad they have reserved NOW so they can maximize their play time

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post #69 of 74
See an iPad HD retina display and touch an iPod touch HD?

Would operations and logistics genius Tim Cook pay a premium for shipping a planned product?

Just asking.
post #70 of 74
Quote:
Originally Posted by orthorim View Post

Argh... regret to have read this, non-news... how else would the iPads get here from China? A catapult?

Of course not, but if it is causing short-term price increases for package shipping, that is interesting, as that doesn't happen often. I've never seen that happen.

Quote:
Originally Posted by charlituna View Post

But does Apple really need the headlines or the hype. Are they worth more than cutting off the riot causing line scalpers by not giving then as much time to get ready for the game.

I don't think they need lines, but the riots are pretty rare.

I'd hope they don't encourage lines, to do that is pretty cynical in my opinion.
post #71 of 74
Quote:
Originally Posted by CityGuide View Post

Were physical planes the only consideration, this would be easier. DHL is probably the largest foreign air freight operator in China. They have freight loading rights in over 300 cities in China, so moving goods out of that country is less an issue for DHL than for many other carriers. Even most passenger airlines are not allowed to load non-passenger cargo (freight) except in a few Chinese cities. Tim's buying up a large portion of DHL's available capacity even for a short period will force other manufacturers/buyers of good to weigh the costs of delaying shipments, moving them overland to a port where a carrier has rights and capacity, or even paying cancellation fees until a favorable window opens. Then there is the matter of distribution from DHL's U.S. hub. Several incoming planes full of iPads will probably stuff the re-distribution channel to destination cities, leaving less room for other cargo. To ensure all this capacity exists Apple would have to prepay fees ranging from landing slots to to ground handling. They may even pay extra to ensure customs and carrier agents are on hand as soon as the plane arrives at the terminal. Most significantly, they may have paid DHL to have a plane on standby just in case a shipment from Foxconn or wherever is delayed, allowing a partially-full flight to leave to ensure product is delivered. This eats up a landing slot plus crew time, but Apple has the means and desire to pay for it. My bet is with Tim Cook overseeing the process such a plan, if it exists, is never put into effect.

Add to this the turn-around of the planes back to China for the next shipments...

IDK if there are enough air shipments going back to China to pay for the flights back...

Certainly Apple and DHL plan on a ramp up (before announce), a peak (for days or weeks of initial backlog) and a ramp-down (as the supply chain is filled).

This is complicated as additional destination countries are brought online.

I suspect that Tim's iPad Numbers spreadsheet is going to get a real workout over the next several months
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post #72 of 74
Quote:
Originally Posted by OriginalG View Post

With the original iPad, some of my friends were not booking any meetings for themselves the day of the announcement, just in case Steve said "Available...NOW" so they could drop everything and head to the closest store to buy whatever Apple announced. They considered taking the day off and follow the announcement inside a store so they can be "first!".

If they ever did "available NOW" for any major product release, there will be a mass exodus of people from their jobs during the day just to be first. A sudden onset of some kind of sickness in order to take the afternoon off.

Waiting a month can't be that hard!

When with IBM, I used to hold/attend meetings in NYC. You could never plan a meeting before 11:00 (10:30 earliest) -- because none of the New Yorkers came to work before 10:00.

On Wednedsay, maybe New Yorkers, will leave work early and stop by the Grand Central Station Apple Store on the way home...

Can you imagine the chaos \
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post #73 of 74
Quote:
Originally Posted by kent909 View Post

I'm with you. Fuel costs are more logical. Although that picture of a DHL airplane is awfully compelling. I just love the frenzy as it lathers up.

Yeah... I wonder about that!

AIR, during the last fuel shortage/price spike -- many airlines removed the hundreds of pounds of paint from each of their planes to conserve fuel costs...

What happened? It will take a lot of iPad flight bags to offset the weight of paint on the planes...
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post #74 of 74
Quote:
Originally Posted by dapple View Post

See an iPad HD retina display and touch an iPod touch HD?

Would operations and logistics genius Tim Cook pay a premium for shipping a planned product?

Just asking.

You betchum Red Rider!

I can think of several reasons:

1) Cash Flow advantage Several $ billions -- several days/weeks early

2) Backup plan to meet a [firm] desired delivery date -- when encountering manufacturing delays

3) Demonstrate Apple's logistics/supply chain capability to resellers/customers/competitors -- massive rollout to multiple destinations -- on time

4) Competitive advantage -- fill the channel (as soon and as much as possible) with the device everybody will be talking about and buying... If you buy an iPad 3 in March, April... you'll be unlikely to consider any competitive offering for at least a year... rinse, repeat...

5) Pre-empt announced competitive tablets (WOA? ICS HD?) planned or in development.

6) iPad 3 available for Tax Refund season


I believe that iPad 3 will come with some deliverables like Siri, HD video streaming, file sharing/management, pro-like apps, iCloud integration, etc. -- that the competition will not be able to match regardless of the "specs" they throw at the wall.

If Apple can build/sell 5-10 million iPad 3s per month, what will the competition do -- how can they catch up... Ever?

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