Comment by alightsoul

High shipping costs are the reason why many countries in the Caribbean and Latin America usually have freight forwarders They locally market themselves as package lockers, po boxes or online shopping companies. It turns out the expensive shipping cost doesn't scale linearly with package size or weight. The expensive shipping cost is a base price, and only rises slowly with package weight and size.

So, these freight forwarders rent a warehouse in the US, an LLC in the US for paying rent, and give away the address of the warehouse to their customers locally. Customers use the address when shopping online and their packages are dropped off at the warehouse. Then they employ people in the US to collect customer packages in the US into large bags, which are then shipped to the destination country via DHL.

DHL does charge the exorbitant shipping to third world country fees of 35 to 60 to 200 dollars that people here complain about. These fees are the base price for shipping, no matter how small or light the package is.

Then, to recover the fees, packages are handed over to customers at a minimum of 2.50 dollars per pound, per package.

For the business to work, income from these packages has to exceed the shipping cost. In Panama, you can probably fit 100 average packages into a 25 pound bag. That bag costs like 75 dollars to ship from the US to Panama. Then you make 250 dollars when people collect the packages. Local customers trade speed for cost, trading the 35 dollar base shipping price for 2.50 dollars and an extra week of lead time to wait for collection to complete in the US. They also don't have to go to the airport to pick up their packages since the business is ideally close to their house.

Businesses like Temu ship directly from china via companies such as PRS logistics and J&T express so their shipping costs to third world countries are lower and can thus bypass freight forwarders entirely so freight forwarders only remain for items sold within the US, where shipping to third world countries has a base price of at least 35 dollars, and whenever shipping to your country costs that much as a base price, even if it ships from China, or when a business only offers shipping to or within the US.

Sometimes, temu is more expensive than a Freight forwarder, but the user is freed from having to handle any logistics like using a particular address and choosing and registering with a package locker and travelling to pick up packages there and the shipping price remains under 10 dollars. However you still have to use a Freight forwarder for items over 120 dollars such as laptops and some car parts because temu doesn't carry those. Freight forwarding is also done in the exact way described above in China instead of the US because websites like taobao rarely offer overseas shipping. Again employing people in china and renting warehouses near airports there. Freight forwarders also offer marine freight instead of the default air freight.

Of course, renting a warehouse and employing people in the US is expensive by local standards. Worker pay alone is around 1600 dollars vs 600 locally. So, there are only a few freight forwarders which often offer b2b, and then package lockers use their sevices. To the end customer there is no distinction between a package locker and freight forwarder. Some freight forwarders also offer B2C package locker services, others are B2B only.

For example nelcon cargo, Uno express, airbox, mail boxes etc are vertically integrated because they are both B2B and B2C, cft cargo is B2B only. most package lockers do not do freight forwarding themselves and use a B2B service for freight forwarding, the package locker only offers proximity and thus convenience to neighborhood customers. Air freight via Miami international airport is the default, and most freight forwarder warehouses are located near this airport. In China, the bottleneck is not price, but speaking Chinese, so it is often run by locals of Chinese descent and is more niche than shipping from the US. This also means that taobao has a lower shipping volume and thus a smaller local market.

Buyee and Zen market, so called proxy services, are very similar to freight forwarders but the service is allowing foreigners overseas to purchase in Japan because most japanese companies do not offer overseas shipping. And there are a few freight forwarders in china as well.