Bargains abroad

Nov 01, 1998 10:30 PM  By

Catalogers in the U.S. are enjoying at least one beneficial side effect from Asia’s economic ills: better prices on imports. But even as product costs slide, the cost and complexity of shipping them to the States are rising.

“The currency devaluations have meant fewer purchase orders overseas, which is bringing prices down and giving us better service, because the manufacturers are more anxious to please,” says David Hochberg, spokesman for Rye, NY-based gift cataloger Lillian Vernon. Hochberg won’t elaborate on the price breaks his company is receiving, but he describes the savings as “meaningful.”

Home furnishings cataloger/ retailer The Bombay Co. is benefiting as well. “We’ve been getting pretty significant price reductions in certain regions of Asia, from 5% to 20%,” says Dan Lawrence, senior vice president of sourcing for the Ft. Worth, TX-based company.

But as more U.S. marketers go bargain-shopping in Asia, they increase demand for shipping containers to move products from Asia to the U.S. “We used to just call and order a container with a few days notice, and it was there when we needed it,” Lawrence says. “Now it requires a lot of extra paperwork to set up accounts with additional carriers, and we have to project out months ahead to ensure availability of the containers.”

What’s more, the higher demand is increasing the cost of containers, says Ed Law, operations manager for freight forwarder Schenker International. A container used to cost $1,500-$2,500; now Asian shippers are raising prices $400-$750 a container, Law says.

But the manufacturing savings and favorable currency rates can more than offset the price increases in containers. “If you’re transporting $100,000 worth of product, with the currency flux you may be paying only $63,000 for that merchandise,” Law explains. “In that case, it’s worth the extra container charge.”

Companies shipping into Asia are receiving another sort of discount. “You can save $1,000-$1,500 right now on a 40-foot steel container” headed from the U.S. to the Far East, Law says, since U.S. shippers are desperate to fill the containers they’re sending to Asia to handle the extra demand for imports.

On Sept. 29, cataloger Global Motorsports, which sells Harley-Davidson parts to motorcycle stores and repair shops, terminated its agreement to be acquired by San Francisco investment group Fremont Partners. Joseph Keenan, chairman of $122.7 million Global Motorsports, says its board of directors was not satisfied with Fremont’s reduction in price, calling it “unjustified.” In June, Fremont offered $110 million, or $23.00 per share, but after due diligence it lowered the offer to $18.25 per share. Fremont Partners could not be reached for comment.

Morgan Hill, CA-based Global intends to explore other alternatives, including a sale to another party. Wynnewood, PA-based rival parts supplier Golden Cycle, which lost its $90 million hostile takeover attempt to acquire Global in May and still owns about 10% of the cataloger, is one of the parties in talks with Global Motorsports, confirms Global spokesman James J. Kelly Jr.