Since starting in 2016 we’ve faced many challenges, and like many, one of the biggest faced throughout the COVID pandemic has been the effects on our supply chain. Not just limited supply of product due to intermittent factory closures and ongoing component shortages, shipping costs have increased to a level that nobody could ever have anticipated. Sure there have been supply shortages before, but with household spending up, due to people being at home more, while lockdowns and travel restrictions were in place, demand is at an all-time high for the products we produce.
It is now more than ever that we appreciate the time spent on developing solid relationships with reliable local and global logistics partners. This has been a key factor in Ayonz meeting demand at a time when supply has never been so important. All the work done in establishing and maintaining a robust supply chain, paid off significantly when this unexpected event occurred. It can't be emphasised enough just how important these 'links in the chain' have been to both meet increased demand and stay competitive. A couple of weeks ago the AFR ran a story on the COVID supply chain crisis titled “Ocean freight costs keep import prices up” that referenced the Freightos Baltic Index. It stated, “While global spot rates for 40-foot containers – the fees charged to move goods on ships – have declined from their peak in September, they are still running at US$9,604 more than double the price of a year earlier”. As you will see from the chart below, the average price of shipping a 40-foot container has not doubled, but actually increased five-fold since April 2020.
A major contributing factor to this apart from the increased volume of product has been the availability of containers. On the shores of our many global markets, Europe, the UK, the Middle East and the Asia Pacific are countless empty containers waiting to be sent back to Asia to fulfil the needs of this increased demand. To put this in perspective a 40’ container of 65” Smart TVs can hold 216 units. The cost to ship each one of these TVs at the peak of the crisis went from $9 to $46 representing an increase of $37 per unit. Obviously, this cost ultimately flows through to the consumer which is why it was critical for us to work closely with not just our logistics partners but the factories as well to ensure the product can still not only be affordable but still competitive for our retail partners.
Despite this, and it is a testament to the relationships we have with our supply chain partners, all of the hard work we did initially did, and continue to do, in establishing this paid off substantially when the unexpected happened. I can’t emphasise enough how important this has been to us and was a core strength we focused on when starting this business 6 years ago. As was then, and is now, we are driven to continue to meet the expectations and demands of our customers and wish to thank everyone involved for their tireless efforts in assisting Ayonz to become the success it has become across the globe now and well into the future.
Group CEO, Ayonz