Even Heroin Smugglers Need Freight Optimization
According to this article on Yahoo! News, Tajik police have arrested a woman for trying to smuggle heroin in a refrigerator through express delivery firm DHL. Apparently, the DHL office in the Tajik capital Dushanbe grew suspicious after noticing that its transportation cost to Moscow exceeded the actual cost of the fridge by several times. Upon a search, they found 17.4kg of heroin hidden in the innver cover plate.
What was she thinking? Or more importantly, what was she not thinking? "Let's see ... $200 fridge ... $500 shipping ... makes sense to me!" What isn't wrong with this picture. First of all, as a consumer, you should never pay more to ship a commodity than you pay to buy it. Secondly, you should never import something you can buy locally. (Who wants to deal with customs and import duties when someone else can do it for you?) Furthermore, if you have approximately 2.2M* worth of heroin, certainly you could afford to buy and ship a small car, which would cost roughly 1% to 2% of the total value and have a shipping fee only one tenth of its value - which would surely not be as suspicious since shipping would be much less than the value and people import cars significantly more often than they import fridges.
So, I guess there are two lessons here:
- If you're going to smuggle drugs, make sure you smuggle them in an item where the shipping cost doesn't (significantly) exceed the item value.
- If you're going to buy and ship internationally, make sure you're not paying too much for freight, or risk getting your shipments stopped and search by ambitious agents looking for the next bust.
* Based on an estimated street value of roughly $125/gram, which appears to be the median value returned from various sources in a Google search.
Consumers shouldn't import something they can buy locally? Awww, c'mon, it's not hard. It's also a good defense against high priced local subsidiaries and distributors.
Actually I only did it once. About 10 years ago (through some fluke of rapid exchange rate changes) made-in-UK marine electronics were something like 40% cheaper (landed) than buying them in the US. I spotted that by reading a UK sailing magazine.
I ordered an autopilot on line through a major UK retailer, who Parcel Posted it to my mailing address. When it arrived the post office notified me to come down and pay duty. I did that, they handed me the package and viola!I had my autopilot. (It was larger than a breadbox but much smaller than a refrigerator.)
The only thing I lost was part of the warranty. The UK warranty would cover only parts and not labor in the US. However, I saved so much I could have afforded to ship it back twice and still come out ahead.
A few industrial lessons:
1. Read trade magazines from other countries.
2. Know what the duty rates are for stuff you plan to import (or let others import).
3. Don't pay more to an importer than it would cost you to do it yourself.
4. Do a risk analysis on the expected cost savings to see how much has to go wrong before you're not saving money.