Since this time last year, we have seen a 30% increase in shipping costs and a 40% increase in transit times across all international shipping methods. First, I’ll address ocean freight. Most everyone heard about the blockage in the Suez Canal. Although our product does not travel through that passage, it is important to note how easily a single event can impact worldwide shipping.
Our product out of China, moves through the Panama Canal, and right now, as happens often in spring, the canal water levels are low. What this means is that the max weight of containers we use, has been reduced drastically. Batteries are heavy therefore we always seek to ship the maximum weight in every container. This keeps the cost per pound down as low as possible. That is the latest challenge.
When the Corona Virus hit, shipping out of China dropped like a stone. Carriers that were operating a heavy sailing schedule of full container ships were now facing the prospects of empty vessels or trans-oceanic runs that lost money. To counter this, they simply deleted large number of scheduled sailings to fill the remaining sailings to capacity. Makes perfect sense. They both dock vessels and stockpile containers.
As shipping started to increase, space on the available sailings became sparse. High volume shippers were getting the space, and smaller shippers like PH2 were getting rolled. (That is the term for a container that was promised space being bumped to a future sailing.) Then, only shippers that were willing to pay a premium on top of steadily increasing costs were getting space. Today, everyone is experiencing container rolling and premium pricing.
What does this mean for you? If it takes us 30 days to build the product at the factory, and 30 days to ship it on the ocean, we now may have to wait another 30 days to get space on a ship! As if that was not bad enough, there is a shortage of truckers and equipment needed to pick up the freight and drive it from the port to the warehouse destination. To add insult to injury, the yards charge storage fees, or drayage, if your freight is not picked up and trucked out in three days.
So, to summarize ocean freight now, once we build the product, fill a container, and deliver it to port, we may have to wait up to a month to get space. Once we have a sailing committed, we may have an issue with the weight unless we try to take the freight into the USWC and put it on a train to cross country, then on a truck to us, or you. You guessed it, rail space is an issue, and we already know truckers are hard to get. Add backups at the ports due to a reduced COVID workforce, and in the end, what used to take us 60 days to build and ship, can now take 120 days.
Air freight is even worse. That has increased by 200% and space is a huge issue. Much of what gets shipped in the air freight world rides on passenger aircraft. With the massive reductions in air travel, there is far less space. Ever tightening regulations on shipping batteries puts even higher pressure on cargo only aircraft. What used to take 3 days, now takes 15 days and costs twice as much or more. Planning is now more important than ever. Here are our suggestions.
Order 6 – 8 months out.
- Try to anticipate a 6-month supply and order it.
- Where possible, provide us a blanket order for a 12-month period with release dates specified.
- If your product uses a singular certified cell, pack, or adapter, allow the Powerhouse Two team to develop multiple sources that can be approved in advance of product issues.