Transport costs: Limited logistics capacity
We have been offering our customers unique price stability for almost ten years; sustainable, even in turbulent markets. At the same time, we focus on quality in every price segment. The logistics costs this year are forcing us, among other things, to increase the prices for our lights from September 1st, 2022. We would like to make the change as transparent as possible for you. And explain the background to you in three articles. We started with the increased raw material costs. In the second part we explain what transport costs have to do with the price increase.
Increase in freight prices
perdix mainly produces in Shenzhen, China. Only five percent of our goods are delivered by air freight. So we rely on cargo ships to deliver goods. Our lights come in containers to Rotterdam or Hamburg and from there they travel to Switzerland by train or truck. Depending on the product contents, unloading is completed within two to four hours. Due to the currently limited freight volume, due to the Corona pandemic and the Ukraine crisis, among other things, there are sometimes massively longer delivery times. The average air freight is one to two tons. Until two years ago, this was sent within four to seven days. Today we already have to allow for seven to ten days. With sea freight, the goods were usually with us four to six weeks after loading. Now we have to expect ten to 14 weeks.
The air freight price has risen from 2.50 – 3.50 CHF per kilogram to 12.50 – 15.50 CHF per kilogram. When it comes to sea freight, the container with a 40-foot standard high cube used to cost 4,500 – 6,000 CHF per container, but today the same container costs 15,500 – 25,000 CHF. Nevertheless, we optimistically hoped that the situation would ease. After two years, the forecasts regarding transport volumes and costs have deteriorated further.
Transport costs in the calculation example
For example, more than 8’200 LIBRE CIRCLE 2.0® lights with a diameter of 300 mm fit in a 40-foot container. Since shipping the container now costs four to five times more, this means a price increase of at least CHF 1.70 per lamp, just due to the transport costs.
The CHEEKY® with a length of 1200 mm fits more than 4,380 lights in the same container. By passing on the increased shipping costs, this means a price adjustment of at least CHF 3.20 per light.
This is what the change means for you
The good news: The usual perdix quality of our products suffers neither from the increased raw material prices nor from the increased transport costs. However, we can no longer maintain the current prices and are adjusting them to a moderate extent to the current market situation. Our promise to you: If costs go down, we will adjust the prices downwards again.
In the third and final post we explain what product availability has to do with adjusted prices.
Here’s where to go: