I defined “Import Friction” as the cost of moving goods into a country from outside. A friction of 0% means there is no cost. 100% means I pay the value of the goods in various taxes and levies just to transfer the product across a border (often simply crossing a line).
In this case, I decided that I needed a dehumidifier for my home. Using the power of the internet I researched what I needed and decided upon the RYDZ-26A. I found two sources – a local source (Moisture Cure Commercial) wanted $2,755 for the unit. Alternatively I could go via Alibaba and pay $650 but I would have to get the dehumidifier imported myself.
Hangzhou Ruiya Electrical Appliance manufactures the unit and kindly offered to arrange delivery to my home address if I didn’t want to use their local distributer. Preliminary import cost estimates suggested I would be paying around $500 so I elected to ask them to arrange delivery to my home. Even if I was 100% out, I would still be ahead of the game!
Here is a table of all the charges that were made for a single unit of $650 (the last column is all AUD):
|Sea freight Handzhou to Sydney (including insurance)||15.00||USD||16.05|
|Money transfer charge||50.00||GBP||89.00|
|AQIS processing charge||15.00||AUD||15.00|
|Declaration processing charge||50.00||AUD||50.00|
|AQIS Container charge||8.00||AUD||8.00|
|Destination Port Charges||95.00||AUD||95.00|
|Destination Terminal Handling Charges||25.00||AUD||25.00|
|Delivery Order Fee||75.00||AUD||75.00|
|Destination Cargo Automation Fee||20.00||AUD||20.00|
|Destination Docs & Handling Fee||20.00||AUD||20.00|
|Delivery Fuel surcharge||5.00||AUD||5.00|
|Origin CFS Charges||27.96||AUD||27.96|
|Customs Clearance Fees||200.00||AUD||200.00|
|Delivery Fuel surcharge||12.35||AUD||12.35|
And the total was $1,542.43.
Think about this for a moment. It cost $652 to make the complex unit, $16 to transport it by ship from China to Sydney and $873 to get it from the dock in Sydney to my home (15km). I’ve no idea what half of these charges are except that I have to pay them all.
It cost $90 to send some binary bits (weight 0g) and $16 to send 60Kg of hardware around the world.
The import friction is 133%. That is, it cost me more than the value of the goods to cross the border into Australia.
Even with an additional cost of $873 to a $650 unit, I’m still saving $1,213. While I understand that companies in Australia need to make a profit, this seems to be an incredible mark up.
Just a minute, if I ordered two units, then the only thing that changes is the import duty and GST. In this case I’d save a whopping $3254… anyone need a dehumidifier? I’m thinking of ordering ten!