Australia’s leading manufacturer and importer of electric bicycles has offered insight into the massive supply challenges currently confronting bike distributors.
TEBCO this week issued an update to its customer retailers on shipping delays as a result of the COVID pandemic and consequent shortfall in containers and shipping services.
The company has more than 1,440 bikes built, paid for and sitting in Chinese ports awaiting shipping. That represents around $2 million in TEBCO funds tied up while transport officials work their way through a backlog of cargo.
TEBCO Managing Director Tony Morgan’s email to retailers thanks them for their patience and understanding.
“We had our production schedule set in concrete months ago and we never anticipated these horrendous shipping delays,” Mr Morgan says.
“TEBCO and its Chinese manufacturing partners have been working as hard as humanly possible to secure these containers and I think the worst is behind us.”
He had some positive news for customers, with three shipping containers loaded and scheduled to depart for Australia on November 1st. They had been booked for loading on September 13th but that was derailed by restrictions on transporting lithium batteries.
“By the end of November we will be fully stocked of all products – and our stock levels will be at an absolute all-time high,” Mr Morgan told The Latz Report.
“We have more stock on the water and waiting in ports at the moment than we would normally sell over a 12-month period.”
TEBCO had another two containers depart China this week, with a third expected to leave yesterday (Thursday).
He said with demand at record highs and with the flow of supply severely restricted, distributors were taking huge gambles and ordering massive amounts of stock.
“We have ordered and paid for products in China that won’t be built until August next year,” he said.
“We work extremely closely with our three manufacturers in China, they are friends as well as colleagues, and they are doing everything they can to supply us with product.
“The huge level of demand at the moment is a dual-edged sword. We are betting that level of demand will continue through 2022 and beyond.
“It’s about being able to maximise supply to fulfil orders while the high demand is there and then being able to minimise your overhand when demand does eventually drop away.
“We know it will happen at some stage and we know we will end up with excess stock. But in the meantime, we need to supply retailers and maximise sales.”
He said distributors always faced the balancing act of supply and sales but it’s “become so much more acute and severe”.
“If you can’t supply customers quickly, you lose the sale,” he said.
“When most people decide they want to make a purchase, they want it now. They’re not prepared to wait a few months.”
Mr Morgan said TEBCO had received backorders from retails for around 200 bikes during the past fortnight.
By the time those three containers arrive in Australia on around November 20th, he expects to have backorders for 400 to 500 bikes.
“It’s possible to shipping delays could get worse for a while, as the shipping industry works its way through the backlog and cities like Melbourne come out of lockdown,” he said.
“In Australia, I don’t think we’ve had a full appreciation of the impacts of COVID around the world. I’ve got a mate who has been trying to get 15 shipping containers out of LA for six months.
“At the same time, we have never seen shipping prices as high as this before.
“We had one container leave Shanghai last week that cost us $10,000. We paid $13,000 for each of the three containers during to leave on November 1st. That’s the highest we’ve ever paid.
“Shipping providers are private companies and, based on current supply and demand, they’re just cashing in while the opportunity is there.”