Stefan Austermühle, General Manager of Gemrock Peru                       September 2021

International shipping is expensive and, yes, we are aware of it: shipping from Peru is among the most expensive shipping there can be.

Many of our clients do complain about the high shipping costs from Peru and argue with us that other countries like Brazil, China or Mexico have much lower shipping costs.

We are sympathetic for such complaints, because our business is the first to suffer loss of clients because of those shipping costs. However Peru is not Brazil, neither China nor Mexico and the cost of shipping lies beyond our influence.

Rather than crying about things we cannot change, we at Gemrock Peru are trying to lower the pain level by helping you to find the cheapest shipping option possible. Read here what you can do to further reduce the shipping cost.

How bad is it and why?

The costs of logistics in international trade from Peru continue to be one of the highest in America and the world, because of lacking capacity of docks and air terminals, as a consequence of lacking investment for their development.

Peruvian international trade has grown rapidly in the last few years, but it is due to the great effort of exporters, who do not receive the support of the government. This results in the prices of our goods not being competitive on international markets. The Peruvian government still does not have a competitive export policy to be able to modernize the port structure and the land and air terminals.

 In Peru and around the world the pandemic has caused unforeseeable problems for international trade, which worsens the situation: imbalances in the production and demand for goods, with countries locking down and opening up at different times, as well as shipping companies cutting the capacity on major routes and shortages of empty containers. As the recovery has progressed, global demand has recovered strongly, especially in the sectors which are most closely linked to international trade in goods. Competition for ocean freight capacity has intensified as economies open up further and inventories are rebuilt across the several links of supply chains.

As the link between cancelled sailings and delays suggests, congestion is part of the problem. Shipping performance in 2021 has carried on where 2020 left off, in terms of lower rates of vessels keeping to schedule, and average delays for late vessels rising. Overall performance remains the lowest it has been in ten years of records.

For the first time, the cost of shipping a container on the world’s busiest shipping routes from China to Europe surpassed $US10,000 ($13,513), a rise of more than 500 per cent.

Peru is no exemption to the rise in shipping costs:

Besides the pandemic, Brexit has caused a lot of cross-border friction, owing to which the cost of shipping goods to and from the country has surged exorbitantly. With Brexit, UK has had to give up on several subsidies it availed under the EU umbrella. With the transfer of goods to and from the UK now being treated as intercontinental shipments, coupled with the pandemic complicating the supply-chains the freight rates for goods to and from the UK have already quadrupled.

What we do to lower your shipping costs:

Given this situation, we at Gemrock Peru, try our best to provide our customers with the cheapest possible shipping options. Here we are focusing especially on start-ups and small companies that have become our main group of customers due to the changes induced globally by the pandemic.

Customers that make small orders suffer an extreme burden of both bank charges for international money transfer and high per kilo shipping costs. In order to reduce your bank charges please review our article “5 tips to reduce bank charges for your orders”.

Shipping costs are charged in USD / kilo. This cost depends on two factors, the commercial value of the products and the weight to be transported. As a general tendency the more weight is transported the lower are the costs / kilo. Start-up companies, who make very small orders are hit hardest by this policy of shipping companies. The following graphic shows at the example of airfreight from Peru to the USA how price/kilo is exorbitantly high for the smallest packages and declines as the total weight increases. This decline of costs however is not lineal. Actually the example shows the strongest decline of cost per kilo happens in the smallest packages up to 3.5 kilos total weight and from then on price reduction is rather marginal.

We work with the best and cheapest shipping company:

Gemrock Peru is in a constant process of searching for shipping companies with more competitive prices. So far, for airfreight, DHL has proven to be the cheapest, fastest and most reliable option. Being a global company that operates their own storages and has their own planes with daily flights, DHL is capable to provide very competitive prices and additionally great speed in transport. By having a commercial account with DHL Gemrock Peru obtains a 60% reduction of price on shipping. We therefore can offer our clients the cheapest shipping possible in Peru.

We negotiated even better conditions for you:

Nevertheless prices are still very high, especially for small orders. Being a constant client of DHL, we therefore took initiative and renegotiated our conditions with the shipping company. We are glad to announce that we managed to get an additional price reduction for packages up to 10 kg of weight, which is lowering cost per kilo in approximately up to 9 USD per kilo. Additionally in this scheme the insurance of your products is already included, while for bigger packages insurance is an additional cost.

We are using recycled packaging material.

By doing so we are not only helping the environment by reducing our ecological footprint. We are also reducing the cost of packaging, which helps to maintain the price of our products lower. So please do not be surprised if you receive your crystals in recycled banana boxes.

We are using light weight packaging material.

By using light weight materials like bubble wrap we are reducing the weight of the package and therewith the cost of the shipment.

5 things you can do to improve shipping costs:

Make huge orders: From half a ton on you can think about ocean shipping. It takes much longer, isn’t as cheap as in the past, but is still much cheaper than airfreight.

Don’t make tiny orders: Avoid packages under 5 kilos of total weight, because in this weight range where you pay the highest price per kilo. Order enough products so that your package is at least in the 5 to 10 kilo range.

Buy more pieces of the same kind: Our product prices are getting lower the more pieces you order. For example, if you buy just a handful of 60 mm pinolite hearts, each would cost you 12.59 USD. If you buy 50 or more of those, each one costs 10.99 USD. You save 13% on each heart. This won’t reduce your shipping cost but it will increase your profits per piece and higher profits will make up in part for the shipping costs.

Buy smaller pieces: If you buy smaller pieces you are make use of several small savings.

1. The weight of products does not increase lineal but exponential. A heart of 40 mm may have a weight of 45 gr, while a heart of 60 mm size weights up to 250 gr. This means you can buy triple the amount of products for half the weight. Your overall shipping costs and your shipping costs per unit will be much lower.
2. You get more pieces for the same money. And additionally the price per unit goes down because you buy more of one kind.
3. In our example (selling the heart for 4 times the cost of the heart (not including shipping costs)) you can increase your total profit in 4.5 percent just by choosing smaller products.

Add some jewelry to your order: We are producing high quality jewelry. By adding a few pieces of jewelry you are practically adding no weight at all to your shipment and you are getting products that you can sell with very high profits. Those profits alone may pay entirely for your shipping cost for the entire order.

Do you know a shipping company that is cheaper?

Do you have any other idea how to reduce shipping?