RECORD SALES - BUT WHERE NEXT?
Bicycle retailers and manufacturers recorded record turnover in May and June. Does this mean it’s a good year for the industry after all? It’s too early to tell just yet. As they say, it ain’t over till it’s over. Despite Corona, sales figures were very positive this spring, but this could now lead to problems as many retailers are short of stock.
E-Bikes in particular are in high demand for a number of reasons. At system supplier Bosch, the management team predict that many e-bikes will be unavailable from July. To ensure supply, Bosch has reorganized production so that bike manufacturers can reckon with new drives in August. It is hoped that this will minimize delivery delays in late summer. Delivery problems in the bike industry due to missing parts are, in all honestly, not the exception but the norm. The difference now with Corona though, is that it is not just one manufacturer that is affected, but entire international production lines, including the transport network. Resurrecting supply chains is extremely important says Jörg Müsse from trade association Bico & Co. Procurement of raw materials is also starting to experience problems. In addition, important parts such as tyres, inner tubes and saddles are becoming scare at certain suppliers. And then there are issues with supplying electric components. “Resurrecting the supply chain is going to be decisive to serve the increase in demand,” comments Jörg Müsse.
“Resurrecting the supply chain is going to be decisive to serve the increase in demand.”
Many bike manufacturers are currently not making statements about delivery times. Nobody wants to venture a prediction – especially as the situation is changing on a daily basis. However, there is room for optimism, as shown by figures from Taiwanese bike manufacturer Merida – one of the world’s biggest frame builders. The e-bike sector is booming internationally. This year, the company has already exceeded its targets. Next year, the Taiwanese frame builders might produce and export up to 400,000 e-bikes by the end of 2021. Originally, approximately 340,000 bikes are planned for this period. “Bike orders have increased and run well into next year,” say investment strategy analysts Angus Chuang and Jenny Liu in the Taipei Times.
“Bike orders have increased and run well into next year.”
The problem is more down to the harbours and the, in places, very limited supply chains. Due to the international standstill, there is a shortage of shipping containers in the Asiatic harbours to transport the finished goods. Rail freight is now becoming a real alternative. The “New Silk Road” initiative by China is starting to take shape. “This saves time and allows us to maintain availability,” says Markus Krill, managing director at trailer specialists Croozer, commenting on the move from sea to rail. Nevertheless, the resulting higher transport costs also have to be taken into account. “We might see price increases in the coming years due to rising transport costs and shortage of materials,” concludes Alexander Kraft from recumbent bike specialist HP Velotechnik.
While production in Asia is, for the main part, back to normal, there is less positive news from over the pond. In the United States, many smaller bike companies, who often build high-quality components by hand, are still at a standstill. These parts are in high demand in Germany, in particular with riders looking to upgrade their bikes. “There’s gonna be delivery delays” says Daniel Gareus from wholesaler Cosmic Sports, who works with many US brands. In some cases, this might last some three to four months.
"There’s gonna be delivery delays"
Might production closer to home with short delivery times and faster procurement provide a competitive advantage in the Corona era? Yes, say Peter Wöstmann from bike bags and packs specialist Ortlieb. The company has its manufacturing facilities in Heilsbronn in Middle Franconia, Germany. Ortlieb says that it currently has nearly full supply capacity, is able respond quickly should a product go out of stock and has used the period in March and April to replenish stock levels. However, production made in Germany has is not without its complications. In order to comply with hygiene regulations and maintaining safe distances, many manufacturers having to operate shift systems that a cause a drop in production. More seriously, German companies sometimes work with sheltered workshops for people with disabilities who see to the assembly and packing. In normal times, this is standard corporate social practise. In Corona times, this is causing a problem. It is expected to take months before the sheltered workshops can reopen to operate normally with the required hygiene measures. This means it is difficult to respond to the growing demand in the meantime. “Made in Germany is currently causing us a headache,” says one affected manufacturer.