Shipping Outlook for the Bike Industry

As we enter the last quarter of 2021, the disruption of global logistics and shipping continues as shipping availability remains severely limited and costs for seaborne and land freight still growing destructively sky-high. The bicycle manufacturing industry, spurred by the huge global market demand for bicycles and electric bikes, has been maxed out in production capacity since the first quarter of the year. Bike brands and companies need to find the delicate balance between production and shipping schedules as a means to keep cash flow positive. The extraordinary lead times for bicycles and e-bikes and shipping quagmire will continue well into the first half of 2022. 

2021 Q4 Expectations

The holiday season in Q4 will always see substantial increases in demand for consumer products. Seaborne container shipping from China to the United States has already seen this building up, as ships prefer to haul container loads one-way only, so that time can be saved for maximum profit margins. This trend will inevitably expand in the coming weeks as the holidays draw closer, with all major consumer goods will compete for shipping capacity and services. Expect to have costs for shipping further skyrocket well into Christmas and New Years.

E-bikes are Dangerous Goods

The lithium batteries used by all e-bikes are considered Dangerous Goods (DG) and require separate cargo classification and additional fees for all methods of transport. As such, there has been a severe limitation of availability in DG cargo shipments because shipping companies can profit nearly just as much with the markups seen on regular non-DG cargo, which require less time to process and are not prone to fire hazards. E-bike brands and companies will need to work with forwarding companies ahead of time to secure shipping availability for DG cargo in sync with electric bicycle production schedules at the factory.

Covid-19 Uncertainties

Covid-19 continues to linger throughout the bicycle manufacturing industry in Asia. Taiwan saw local outbreak for the first time in recent months, while China saw sporadic clusters throughout the country that was quickly extinguished, but caused significant shipping problems in the major ports of Yantian and Ningbo. Meanwhile, Southeast Asian producers in Vietnam, Indonesia, Thailand, Cambodia, Malaysia, and the Philippines continue to deal with Covid-19 lockdowns that has crippled bicycle and components manufacturing. These unforeseen issues related to Covid-19 has a massive effect on shipping availability in producer countries and will continue to be a major factor well into 2022 as vaccination rates in these countries lag far behind.

Alternative Shipping Methods

Bicycle and e-bike brands are constantly seeking alternative shipping methods, but the matter of fact is that expensive costs are still the limiting factor. A wide range of major bike brands producing in Taiwan have opted to ship by air freight their high demand units, but at overly unsustainable rates. With lithium batteries being a major factor on limitations of air freight and costs, there are very few alternative shipping methods in Taiwan being that it is an island. With China however, bike brands have taken advantage of inland rail shipping to Europe as a feasible alternative to seaborne freight, although the same issues of cost and capacity are beginning to become apparent as well. As capacity continues to be scarce in the next few months, expect to see consumer products from Taiwan and China to be shipped using chartered freight ships at equally expensive rates for moving stuck cargo from Asia to the United States and Europe. 

2022 Expectations

The outlook for shipping in 2022 does not bode well given that there are so many factors at play that can very easily cause further disruption of the current overloaded system. The players in the bike manufacturing industry will need factor in their cash flow and margins when planning production, shipping, and overhead in 2022. Prior to the onset of 2022 Chinese New Years, officially beginning the first week of February will see a huge demand for shipping immediately following the holiday season of 2021. This will no doubt further exacerbate the situation and take many months into the 2022 year for the shipping industry to return to normalcy.