An Update on the State of the Model Train Industry

[MOGUL]

13 minutes ago, DJ Dangerous said:

I don’t think that DDP (Delivery Duty Paid) could really be considered a price adjustment by the seller.

DDP means that the tax / duty / tariff is collected by the seller, and paid to your government on your behalf.

The item price stays the same, the tax stays the same, what the customer pays in total stays the same, it’s just paid in a different way.

 

A change of incoterms in itself isn’t necessarily a price change, but if the customer wanted to still pay the same price regardless of the VAT that had to be paid, then it’s a discount in another form.. 

It’s also very tricky when operating a pre-order model on a product with a 2/3 year production lead time to correctly charge under DDP when you have an administration that changes the tarriff rates more often than their bed sheets.

[DJ Dangerous]

3 minutes ago, MOGUL said:

A change of incoterms in itself isn’t necessarily a price change, but if the customer wanted to still pay the same price regardless of the VAT that had to be paid, then it’s a discount in another form.. 

It’s also very tricky when operating a pre-order model on a product with a 2/3 year production lead time to correctly charge under DDP when you have an administration that changes the tarriff rates more often than their bed sheets.

So in this case, you were looking at paying the taxes on the customer’s behalf, and not collecting the corresponding payment?

If so, Hell yeah, sign me up straight away and you can pay all of my taxes and handling fees without charging me.

[James Regan]

45 minutes ago, DJ Dangerous said:

If so, Hell yeah, sign me up straight away and you can pay all of my taxes and handling fees without charging me.

Still trying to figure it out brother? Thats not what he said. 
 

Under DDP you would agree the total price up front with Accurascale just as you do when VAT is included and then its up to them to pay the tax to DHL or whoever is shipping. Therefore, the price charged inclusive of DDP is for Accurascale to determine, just as they determine the VAT included prices on their website. So I would be paying Accurascale not customs. This is quite common.

Edited 5 hours ago by James Regan

[DJ Dangerous]

4 minutes ago, James Regan said:

Still trying to figure it out brother? Thats not what he said. 
 

Under DDP you would agree the total price up front with Accurascale just as you do when VAT is included and then its up to them to pay the tax to DHL or whoever is shipping. Therefore, the price charged inclusive of DDP is for Accurascale to determine, just as they determine the VAT included prices on their website. So I would be paying Accurascale not customs. This is quite common.

Yup, that’s exactly what I said. You pay the tax to A/S and they hand it over on your behalf, so nothing changes financially.

[James Regan]

5 minutes ago, DJ Dangerous said:

Yup, that’s exactly what I said. You pay the tax to A/S and they hand it over on your behalf, so nothing changes financially.

No, you pay an agreed price to Accurascale, the liability for the taxes is then on them. If the tax then changes they dont get to come back and ask for more. Thats the point of agreeing it up front. Its completely different financially.

Edited 5 hours ago by James Regan

[DJ Dangerous]

1 minute ago, James Regan said:

No, you pay an agreed price to Accurascale, the liability for the taxes is then on them. If the tax then changes they dont get to come back and ask for more. Thats the point of agreeing it up front. Its completely different financially.

It’s the same financially, unless things change.

If you pay 30% tax to A/S today, they hand it over and save you the hassle of paying it.

If taxes go up, they lose out. If taxes go down, you lose out.

Pretty straightforward.

[MOGUL]

3 hours ago, James Regan said:

It’s good to see a well considered response given the amount of nonsense that has been peddled on here about tariffs by people claiming to understand them. 

The reference to DDP for example highlights the scenario where Accurascale would be adjusting the price to include tariffs contrary to some statements here, and some retailers are doing that.

The other part of the tariff that is complicated is that while the 30% rate may apply to shipping with DHL, shipping by royal mail/US mail may be subject to a 54% rate or a $100 flat fee for orders under $800 giving the opportunity for some arbitrage. It is unclear exactly how that would work but potentially an order of two locomotives for $700 could have an effective tariff rate of around 12-15%. We’ll see how that develops. Im not sure Accurascale provide the option to ship by mail but Rails certainly do. Thats one option.

While you may think pricing based on market is unfair to other markets it’s fairly common in business because the main driver is your competitiveness in a particular market. While the US market may not be particularly important to Accurascale’s businesss, these tariffs put your prices significantly above competitors and are likely to impact any sales you do have.  

I’m not suggesting you eat all the tariff but other companies have shown regard for their customers in dealing with this together. It’s something you may want to consider. While many of your models sell out and the issue is moot, you ended up giving major discounts on certain models like the beet wagons where the market is more limited. You could easily do that up front and generate goodwill at little cost. 

 

TBH I doubt any retailers have swallowed the tarriffs entirely, ultimately no business can fully absorb 30-154% increase in costs.. 

We are currently working to improve our shipping, particularly to overseas market and will be able to offer Royal Mail, DHL Express or Fedex for our US customers. We will leave it up to the customers to pick which one they want and which one allows them to best avoid the tarriffs.

Just to state again, we haven't increased our prices, you still pay us the same ex VAT price at the checkout, you now just have to pay 30%(for today anyway) to your government for the privelge of importing it. That ex VAT price is the same anyone outside the EU pays. Any goodwill we would gain from our small US customer base by offering discounts to US customers would be far out weighed by the ill feeling from people in our other markets who don't get the same. After all, we live in an age of VPNs, where you can easily view what customers in another market are paying, and a lot of those services actively promote this as a benefit of their service. 

The discounts on the beet wagons as was outlined at the time, was a special case as we wanted to reduce our stock holding prior to closing the Dublin warehouse. If those discounts were to be front loaded as you suggest, then the barely viable Irish projects, would become not viable and we would see a lot less Irish models on the market

 

 

[Ironroad]

Can we pause the academic debate on what may or may not be and concentrate on a question that is pertinent to the situation as it stands right now.

These are extracts from a CNN news article;-

The Trump administration has cut its tariff on “de minimis” packages, or shipments of goods worth $800 or less, coming in from China from 120% to 54% and slashed the rate from 145% to 30% for packages from commercial carriers. A $100 flat-fee option also won’t surge to $200 per postal item come June 1, as was previously planned, according to an executive order issued Monday and which goes into effect after midnight on Wednesday.

Monday’s executive order eases the 120% tariff on de minimis postal packages down. The new 54% rate only applies to shipments handled by postal services such as USPS. Deliveries from UPS, FedEx and other express courier companies will instead face the baseline tariff on Chinese goods, which the US lowered to 30%, still crippling for many businesses and consumers.

So an order containing goods manufactured in China coming via the mail with a value less than $800 appears to be subject to a tariff of 54%, with an option to pay a flat tariff of $100.

On the other hand the same order shipped via a courier (DHL Fedex) etc. is subject to a 30% tariff.

The logic of 54% on mailed parcels seems to be designed to  target sellers such as TEMU and to push consumers towards the flat $100 option. But that option is also an indication that US Customs don't have the capacity to process the daily through put of two million parcels in this category and are looking for a simple pass through with responsibility for collection resting with the Post Office.(whether the PO can handle this remains to be seen). At the same time there seems to be an assumption that the commercial operators such as DHL already have the capacity to collect the tariff of 30%  on small parcels as they normally would on everything else.

Regardless of the logic behind these decisions, from my perspective as a customer in the US it seems to me that it would be preferable to have any order with a value in excess of $335 but less than $800 sent via the mail and any order with a value less than $335 sent via courier.  Meaning the maximum payable by me on any parcel with a value less than $800 would be $100.

So my question is can IRM/Accurascale facilitate this, without the need for separate conversations with each customer on every shipment, for at least for the next 88 days, when things are likely to change again.  Thank you