Letter from the CEO – What the heck is going on with Imports?
When the pandemic first arrived in February of 2020 and the government began to force closure of private businesses, we knew something different was amiss. Little did we know the sequence of events to follow over the next 14 months would bring us to our current extremely difficult situation. We have not raised pricing since October of 2019. That option going forward is not in play. Regrettably, price increases are coming. There is no getting around it.
In the past 14 months as an importer, we have faced the following barriers:
1. Ports were slowed to a crawl due to labor shortages in USA, Taiwan, and China. We saw the beginning of these effects are far back as October 2020, and they have gotten progressively worse each month. We expect container delivery delays to extend into the 3rd Quarter of 2022.
2. Due to lack of traffic, shipping companies in March of 2020 placed many vessels in drydock to perform long-needed maintenance and repairs. This made perfect sense back then; no containers had left Taiwan or China in March 2020 as importers stopped all inbound releases while they evaluated the impact of the pandemic and business closures.
3. In the same 14-month time shipping costs from overseas have gone up over 350%. These costs have not subsided and must be passed on in the form of a price increase.
4. Meanwhile although material costs were relatively stable during 2020. Now we are seeing increases coming for the balance of 2021 mainly caused by raw material costs rising and other inputs like increased costs of cartons, labels, bags, increased labor cost to perform functions such as build tooling, bending angles iron, welding labor inputs has gone up approximately 4% in the past 14 months. To make matters more complicated demand is now exceeding supply.
5. We have multiple Manufacturer relationships which we have maintained for 12 plus years. Our partners are very worried about the instability of the shipping market combined with pending material shortages which always lead to material cost increases. Combine this with freight overseas time lengthening from a standard of 22 days to the painful time of over 60 days. We are expecting increases between the 4-9% range, which will not come into effect fully until the newly ordered product begins to ship and arrive. We take all of this into account when determining the price increase required.
In closing, this has been a painful experience for all of us. We appreciate your patience and understanding as we walk through this path together. We are readying our price increase which we will announce on June 1, 2021. To be effective August 1, 2021. This price increase will be valid until Feb 1, 2022. We will have a better handle on the impact of the cost increases to understand what we need to do going forward. We are going to minimize the increases as much as possible, but as stated above, some of those are directly related to costs which we have been paying for over 12 months. Those costs will be the major driver of the upcoming announcement.
Respectfully and Humbly Submitted,
Gregory M. Wiener
Quickscrews International Corporation