Demand for e-bikes in early 2021 higher than quantity produced

Mine? Mine? None? – Shops and stores are running out of e-bikes

“The Far East just can’t keep up with the orders.” “We can’t deliver many bikes because we are waiting for missing components.” These two quotes from the latest issue of the magazine “Bike” in themselves fully describe what is currently happening around the bicycle trade in Germany. The statements were made by Jürgen Schlender, owner of Alutech Bikes, and Anatol Sostmann, Director Product & Brand at the online retailer Rose Bikes. Bicycles for the 2021 season are in short supply, and Schlender, Sostmann and the entire industry can tell you a sorry tale. Not to mention you, who have perhaps also searched in vain for parts or bikes.

Why are there shortages now?
What are the consequences?
When will the situation improve?
What can be done?

These shortages started to develop months ago. The first wave of the Corona pandemic did not bring the industry to a standstill in Europe in spring and summer. In China, for example, the situation was quite different. There, the government ordered a full stop to get the virus under control. For weeks, nothing was produced or only at a low level. Since a large part of the bicycle manufacturers have considerable production in China, worldwide effects were inevitable.

The consequences of this became apparent during a webinar of the two trade associations World Bicycle Industry Association (WBIA) and World Federation of the Sporting Goods Industry (WFSGI) at the beginning of December 2020. Among others, the component manufacturer KMC from Taiwan described its situation there. Robert Wu and Kevin Chen showed an overview of the parts on a bicycle. They had written the “lead time” on each part, i.e., the time from order to provision of the items. None of the figures was less than 180 days. For saddles, brakes and wheels, KMC calculated more than one year.

Summary of lead times for bicycle parts at the manufacturer KMC in December 2020

This is how the manufacturer KMC estimated the lead times for bicycle parts in December 2020.

Why are there shortages now?

There are several reasons why the local bicycle shops and online shops are so empty at the moment:

1. Early start of the 2021 cycling season

Some bicycle manufacturers presented their first models for the 2021 season as early as June 2020. Some of them were available immediately. Accordingly, the sign “sold out” dangled from the first model series very quickly. The calendar year 2021 was still a long way ahead.

2. Changed behaviour of many people worldwide in response to the Corona pandemic

The request to avoid public transport. Less car traffic accompanied by pop-up bike lanes sprouting up at short notice. The realisation that cycling not only reduces the risk of infection, but is also generally a good investment for one’s own personal health management. These and other reasons made the bicycle suddenly climb high up the list of our favourite consumer goods. The world kept spinning, but somehow differently than before.

3. Manufacturers unprepared

Every company probably quite likes to calculate growth into its own annual outlook. And bicycle manufacturers had plenty of reason to be optimistic even before the pandemic. Sales of e-bikes in Europe, for example, have been increasing for years. However, continuously and not by leaps and bounds. So, the companies were simply overwhelmed by the scale of the rush for their products.

Bicycle parts produced in different parts of the world

Bicycle parts are manufactured all over the world. However, the focus is on Asia.

4. No season noticeable

Usually, the graph of sales figures in the bicycle industry shows a wave form. Towards spring and summer, the trend is upwards. As winter approaches, interest ebbs and the curve points downwards. Not so last year. Demand rose to a very high level in a very short time and levelled off. There was no respite from November to January.

5. Industry measures not yet effective

To the companies’ credit, one should add: … to the full extent. Raw materials and other goods urgently needed for production are still in short supply. Added to this are personnel shortages. Illnesses, quarantine regulations, mandatory daily tests and other restrictions around Covid-19 mean that many factories are struggling with understaffing. The bottom line is that they cannot fully meet their potential. The brand new assembly line or factory floor is of little use as long as it remains deserted.

6. Increasing freight costs

On a container ship, bicycles are just one commodity among many. In the wake of the pandemic, however, demand for other items has also risen. Household goods and electronics, for example, are also in high demand. Unfortunately, a large part of these are also manufactured in Asia. That’s why the demand for ship transport from there to Europe currently exceeds the shipping companies’ supply of freight space, reports the daily newspaper “Welt”. As a result, transport takes longer and becomes more expensive. Much more expensive. Price jumps of 100 percent within a week were not uncommon in December 2020. According to the online portal “Internetworld”, the price for a standard 40-foot container exploded from a good USD 1,000 in October to over USD 6,000 in January.

Large corporations have concluded long-term agreements with the shipping companies. They bring the necessary volume into the negotiations. The smaller the company and the lower the transport volume, the more complicated this undertaking becomes. Those who do not constantly keep in touch with their suppliers quickly fall behind. Waiting times of up to three months for free slots on a container ship result quite quickly.

Fully loaded container ship

There is currently no space left unused on the container ships from Asia to Europe.

Of course, this shortage is also a great way to earn money. After all, cargoes often have to be “rolled” for several weeks at China’s largest ports, meaning that their export date is constantly pushed back. The trade expert “German Trade & Invest” reported that the responsible institutions are now only granting guaranteed slots on very specific departures to those who buy additional services in return.

A look at the Chinese calendar brings the situation to a head. In China, the traditional New Year is just around the corner. This is when migrant workers travel home to their families. For one week, the country comes to a virtual standstill. Short-term relief looks different.

Then maybe bring the bicycles here by air? Not likely. Until now, cargo holds of passenger planes were mostly used for air freight. Now that passenger air traffic has almost come to a complete standstill, this option has also been eliminated. The number of cargo aircraft worldwide is nowhere near enough to fill this gap.

What are the consequences?

1. Models for 2021 rapidly sold out

The calculation is simple: more people want a good for which, however, demand was expected to be lower. So, the 2021 bikes will be over the counter or in the shopping basket in no time at all. Faster than in previous years.

E-bikes almost completely sold out in shops and stores at the beginning of 2021

If global logistics come to a standstill, shops and bicycle stores in Germany feel the consequences relatively quickly.

2. Replenishment the exception

Especially with regard to complete bikes, the bicycle industry sees itself trapped to a certain extent in its own routines. It has become the rule that a new version of every model is launched on the market every year. Even if the only change is a new paint job. The factories necessarily have to prepare for a new range – in this case, for the 2022 season. That will probably be the focus for most of them. This leaves little time to possibly produce supplies for an item that is still in demand.

3. Increasing prices

In the section on freight costs, some of you may already have become suspicious. Increased prices for transport? Who is going to pay for that? From an economic point of view, it is a natural reaction if this increase is partly passed on to the end consumer, meaning you. The interesting question is: Which manufacturer has the right sense of proportion? Here are the conditions of a few selected brands:

  • Flyer: 100 euros per e-bike, valid since 01.01.2021
  • Giant: on average by four percent, valid since 01.02.2021
  • KTM: per e-bike 100 Euro, valid from 15.02.2021
  • Tern: per e-bike 100 Euro, valid since 01.02.2021
  • Trek: different margins, on average less than five percent, valid from 15.01.2021

When will the situation improve?

The answer to this depends on which bike, which component we are talking about. It is not possible to make a general statement. In some cases, the beginning of spring may already bring a first light at the end of the tunnel, in others it will remain pretty gloomy throughout the year.

What can be done?

Option 1: Find a replacement

“There are plenty of other fish in the sea!” A nonsensical saying that probably doesn’t help anyone who has to listen to it after a disappointed romance. For us, however, it fits quite well, at least in a figurative sense. Does the search for your desired article come up empty? Then perhaps there is an article that comes very close and is still available. To exaggerate, you could say: the trend in 2021 tends towards substitute products.

Option 2: Widen the hunting ground

The fact that a bike is sold out does not mean that it is sold out. How so? “While one retailer is sold out, there may be shops in the neighbouring town that still offer the bike you want,” Cube product manager Frank Greifzu aptly explains in Bike. What applies to traditional shops also applies to online shops. The wider the search radius, the greater the chance of success.

Option 3 – Exercise patience

Much of the drama of supply bottlenecks takes place in Asia. Fortunately, suitable solutions also come from the region. Time-honoured wisdom that enlightens us in deceleration. Would you like a sample? “He who loses his patience is already half lost.” I’m not Chinese, but that makes sense even to me. But somehow it still doesn’t sound spiritual enough. “The key to everything is patience. It is not by breaking, but by hatching that the egg becomes a chick.” Hatching chicks. That’s much better. That’s going in the right direction. I’m sure the Chinese can do better than that, though. “The word patience is a treasure in the house.” Yaaaaaaa. That could work. Who’s coming along on the treasure hunt?

Woom explains the whole thing to you via video

 

Images: woom GmbH; KMC; Julius Silver on Pexels

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