Booming Bicycle Sales Effect on Supply Chain
Global bicycle and ebike sales are skyrocketing and its straining effect on the supply chain are now being felt. COVID-19 has caused significant delays in the bike manufacturing industry due to limited raw materials, production shutdowns, and increased demand. OEM bike manufacturing is centered several Asian countries – China, Taiwan, Indonesia, Vietnam, Cambodia, Myanmar, Philippines, and Thailand. Brands typically choose their manufacturer based their export market, price point of the bike, quality, and manufacturing price.
For the United States market, which has a diverse range from very cheap entry-level bikes all the way up to the most expensive varieties, the large quantity of cheap bikes will always see that the percentage of bikes from China remain at about 50 percent. Recent threats of tariffs from the Trump administration saw brands shift production out of China, but as tariff exemptions were later granted, China continues to produce about 50 percent of all bikes imported by the USA. The price point of these bikes vary substantially, as Chinese manufacturers are capable of producing very cheap kids bikes that retail for US$50-100 to electric bike varieties that retail for US$1000-5000. This is a stark difference from the European Union, which has a standing anti-dumping tariff on all China made bicycles, electric bikes, and some components; as a result the EU percentage of bikes from China has been single digit for over ten years. The other half of bikes that the USA imports are from Taiwan and Southeast Asian countries, which either have preferential duties when exporting to the USA or have the infrastructure and experience to produce bikes that require higher quality standards.
The onset of COVID-19 in China saw the shutdown of many sources for raw materials such as steel and alloy tubing, manufacturers that produce steel, alloy, and carbon fiber bicycle frames, manufacturers of bicycle components, and the logistics industry that facilities transport of goods. As COVID-19 spread to other countries, the shutdown of manufacturers in those countries followed. Naturally, there were limited raw materials for production, fewer personnel available to work, and disrupted supply chain. This basically meant longer waiting times to gather the essentials for building a bike. Even though Taiwan managed to ward off COVID-19, Taiwanese bike manufacturers still needed to import raw materials and components needed for building a complete bicycle.
With the increased global demand for bikes during COVID-19 crisis, not only from the United States, bike manufacturers saw lead times from key supply chain vendors increase dramatically. Current forecasts for 2021 have lead times for certain components over 12 months as more brands are beginning to place orders a year in advance. Meanwhile, bike manufacturers are experiencing a boom and almost all of them are operating overcapacity in view of orders for 2020-2021.
