Ken Lousberg, CEO of SRAM
, has revealed in a recent Cycling Tips podcast
that SRAM is holding more stock than ever before due to the supply chain issues created by COVID.
In response to the pandemic bike boom, SRAM doubled its manufacturing capacity in some sectors and increased it by a minimum of 50% across the business, however, a lack of available shipping means this product is unable to reach customers' hands.
Lousberg said, "We have more finished goods on our shelves right now than we’ve ever had in the history of the company during the highest demand ever. That’s because our customers literally can’t get containers to put those finished goods in to ship either completed bikes from Asia to different parts of the world or components to factories in Europe. The supply logistics, whether that’s containers, ship space, intermodal getting things off of trains on to trucks in the US and different parts of Europe, it’s a really significant issue right now."
Lousberg said the biggest problem at the start of the pandemic was sourcing raw materials and increasing capacity, however that has now shifted to shipping. He continued, "The whole world is competing for those containers, there’s not a certain number of containers that are reserved for the bike industry and so that is absolutely global competition for those containers and that space on ships... You fight for your containers and you pay more frankly is what you do. The cost of shipping is unbelievable how much it’s gone up."As we've reported previously
, shipping prices have risen astronomically over the past 18 months as there simply aren't enough containers to fill the current high levels of demand. A review published by Container Xchange
suggests that the current reason for this shortage are delays in ports receiving goods from Asia. Container turnaround times in China were reduced from 61 days in 2020 to 5 days in 2021, however in the UK, where the turnaround was longest, the wait was 51 days, followed by the USA at 50 days, South Africa at 47 and the UAE at 40.
Whatever the reason for the shortage, ultimately this cost is likely to be passed onto the consumer. When asked how it was affecting SRAM's prices, Lousberg said, "We don’t really control the end price like that but we’ve certainly had significant cost increases that we’ve passed onto our customers and I know that our customers have passed those on. In many markets there’s literally a transportation surcharge on a bike. Who would have guessed that would happen? But it’s really significant."
There is some good news to all of this. Lousberg believes that within the next year, supply and demand will start to equalise again. He said, "Over the next year or so those two things are going to come together and you’ll being able to go in to a bike shop and look at your choices and buy what you want." To listen to the full Nerd Alert episode, click here