Christmas sales in Brazil last year were a disaster for many brands. An eight-week customs strike marooned goods at the border. At the Foz do Iguaçu border point 1,500 lorries sat motionless. Another 1,200 sat trapped on the border with Argentina. Any company hoping to hit the Brazilian market at the liveliest time of the year faced a nightmare scenario.
The hold up at customs was far from a one-off.
Shipping goods is a risky business. In August, shipments to the Indian city of Pune were held up as a new sales tax was introduced. “Shipments delayed, exporters dismayed”, ran the headline in the Times of India. In fact, anyone sending goods was in trouble, as perishables rotted and time-bound shipments missed their deadlines. The whole of Maharashtra province was affected.
“Sending goods across borders is a big business risk and costly as well,” says Kelli Fairbrother, COO at Gelato. “Companies just aren’t aware of the risks and find it difficult to avoid getting their products stuck in customs.”
Experienced exporters can recite the long list of dangers, which include transport breakdowns, logjams, and political flare-ups. Exports of printed materials to Russia in 2014 were hit by international sanctions following the political crisis in Crimea and Ukraine. Businesses were left scrambling to interpret new rules covering almost 100 categories of goods.
Companies can be at the mercy of customs agents. Sending printed goods to certain markets can be a game of chance, as customs inspectors decide what is, and is not, contraband. Shipments can be returned or destroyed. Definition of what constitutes such contraband is notoriously indistinct. The same is true for politically sensitive material: again the definition is down to the inspectors, who may not even read the language they are impounding.
Corruption is also a danger in many countries around the world. Officials may demand payment to release goods. Many countries enforce bribery laws on directors which punish infringements no matter where the bribes took place. Directors can be held personally liable for crimes at customs overseas.
Any company involved in printing materials for international use have needed to get to grips with this minefield. Customs being just the start.
“Companies find it difficult to fully understand the total cost of print” says Fairbrother, “they often focus on the headline cost of a print run, but are unable to link-in these additional hidden costs.”
The true total cost of printing must include all costs. These include: shipping costs, customs fees, the cost of delays, administration time, design work, translations, and the issue of excess printing – the frequent situation when brands buy far more materials than they'll need.
The consultancy Infotrends calculates that around only 20% of a 1,000 print run is the actual print cost. The rest of the 80% is other factors.
Import duties alone are a huge extra cost. China for example, imposes a standard import VAT of 17% on goods, and 13% on books, newspapers, and magazines. A further import duty hikes the cost. Nations with “favoured partner” status incur preferential tariff rates varying from 0%, 1% to 121.6% with over 50 different rates. Non-favoured nations are billed in a range from 0%, 8% to 270% with over 20 different rates. Expensive, and complex.
The issue of excess printing is perhaps the biggest area of ignorance. Excess printing, or overprint, is habitual. The industry has six times over-capacity. This means printers can offer larger volumes for a discount. So clients are convinced to print so much they never run out. They end up with more than they can use. Worse, if there is a typo or prices change the whole stock is obsolete.
Fairbrother marvels, “In the last four years we've talked to close to 1000 companies, and not one has been able to tell us how much excess they throw away even though they spend millions. Based on our experience we estimate the waste at 30 to 50%.”
“If you use a mobile phone you are tech savvy enough to move into a global cloud solution for your print orders – and there is a solution”, says Fairbrother.
Smaller print runs located in the right geographic region means waste is slashed. Customs issues evaporate, as there are no borders to cross. And materials can be updated when needed.
The total cost of printing equation changes radically. The elevated unit cost is outweighed by far lower costs elsewhere. By how much? Printing locally on demand can reduce shipping distances by up to 90%, potentially reduce print volumes by 50%, and cut costs by up to 50%. This requires that the company is willing to change behavior from how they work today.
That's print costs halved, whilst logistics improves. Printing costs is 0.22-0.27% of top line for many companies, so this is a significant issue for the entire enterprise.
A switch to local printing through a cloud platform like Gelato can halve costs, cut risk, cut lead times, help the environment, and even give local marketing teams more autonomy over the materials they work with.
Printing is a critical part of marketing. Just making a small change, from centralised to local printing, can upgrade your entire company's performance.
About the author
Charles is a former editor of EuroBusiness magazine, PPA Business Writer of the Year and a prolific contributor to many business magazines, websites, blogs and newspapers including The Times and The Guardian.
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