2004 InGear

Since January 1st, 2000, Pedals for Progress has shipped 4,903 bicycles to five separate partners in Ghana. Although there are many bicycles in Ghana already (and new bicycles are generally available), the cost of a new or locally resold bicycle is well beyond the economic reach of many Ghanaians. Thus, the ability to import used bicycles from us allows our partners to offer used bicycles to the poorest segments of the population with prices more closely aligned with their economic circumstances.

Additionally, the used bikes we have shipped from the United States have been, more often than not, of a much higher quality and lower priced than the new bikes available in that country.

In order to sustain payment of shipping costs for thousands of bikes per year, Pedals For Progress conceived and implemented (and continually administers) a ‘revolving funds’ process. The basic idea is that Pedals for Progress pre-pays the shipping costs of a new program’s first container, using funds retained and budgeted for this purpose and to grow the enterprise. Thus, once an overseas group is qualified as a viable partner, P4P commits to capitalizing the startup of their operation by this one-time only offsetting of their biggest expense — shipping costs.

Subsequently, through the sale of bikes at low cost, our partner organizations generate the capability to pay their domestic operational expenses and still ‘revolve’ money to Pedals For Progress to pay shipping costs for the next container load of bikes. To date, by employing this method, Pedals For Progress has been able to ship 80,000 bicycles to 28 countries worldwide.

One important benchmark included in the maintenance of the revolving funds process is “cost per unit delivered”. (How much does it cost for one bike to arrive at the destination distribution point?) Shipping costs vary due to a myriad of circumstances over which we have very little control. But, ship we must (!), given our fixed and otherwise constrained warehousing space. During the collection season (and at current collection volume levels), we must ship at least one container of bicycles per week. While it is occasionally possible to get the shipment cost for an NGO donated by a foundation or corporation, it has proven to be easier for us to use commercial carriers to deliver our bikes and to simply find a way to cover those costs when they occasionally exceed ‘revolving funds’ revenue.

Our Central American programs function exceedingly well in that the ‘landed cost per bike’ (same metric noted above) is between $8 and $10 depending on the country. Shipping bikes to Ghana costs approximately $15 to $18 per bike delivered. To Central America we are able to ship in a larger 45 ft. container holding 500 bikes. To Africa we are forced to ship bikes in a 40 ft. container holding 400. For this obvious reason then, our “per unit cost” to Africa is bound to be considerably higher because (due to maritime market conditions and ‘land locked’ receiving destinations) we pay a larger amount of money for a smaller number of bikes. At $10 ‘per bike landed cost’, the revolving funds process functions tremendously well. At $15 ‘per bike landed cost’ the revolving fund system breaks down. Pedals for Progress has been shipping to Ghana for approximately five years. Yet, it is now obvious that a future of successful program operation in West Africa, due to the cost picture there, will require a $1,000 or $2,000 subsidy for each container shipped. That would allow our partners in Africa to be paying the landed cost of the programs in Central America.