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Weak
links in the supply chain David Stennett recently spoke with Australian Energy Systems general manager Jason Didsman about logistics and supply chain difficulties that are currently affecting multiple industries – including the swimming pool and spa industry. This is an edited extract from that podcast. To listen to the full conversation, check out Ready Set SPLASH! at www.splashmagazine.com.au.
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e supply pool heating to trade and retail. These days we’re more heat pump orientated than solar pool heating orientated, and we sell pool covers and rollers as well. Our business consists of locally made solar pool heating, which hasn’t been too bad to get. The whole pandemic in general has been pretty easy as far as getting locally made product – the challenge has been in shipping – importing basically. Three years ago, we would have paid say $3000 for a 40-foot container – and maybe up to $4500 around Christmas because you pay a bit of a premium. The container we have landing on Thursday next week: $16,000! You see it across the whole construction industry. I think all industries are suffering in one fashion or another. And what happened in the Suez Canal – where the ship got stuck and blocked the traffic – compounded what was already starting to happen, where basically there was a shortage of ships and a shortage of containers.
Ships and chips
Then on top of that, for China particularly where most of our imports from the pool industry come from, there’s now a shortage of power, because they won’t buy our coal. You’ve got a worldwide chip shortage. So everything that uses a computer chip, there’s a shortage on that. Some of our manufacturers have said, Hey look, we were really proactive, we knew there was a chip shortage coming, we’ll buy a lot of chips up front, don’t worry, we’ll be good. Then they get massive orders. As everybody’s businesses are growing, the manufacturing orders are growing too. But unfortunately, they didn’t allow for the growth so they’re short on chips. The whole thing together just compounds it and makes it more challenging. A really good example of that is now they’re dragging ships out of retirement and putting containers on them. We recently had a container that was due to arrive here at Australian Energy Systems about seven weeks ago. Typically from Nansha Port in China to Brisbane is between 10 and 16 days depending on the headwinds. And this particular boat went first to drop off in Sydney. Normally it would then zip around to Melbourne, do a bit more, then come back to Brisbane. Generally, that voyage is about 24 days. The ship broke down in the harbour, had to be towed in, got parked up on a breast wharf, and was deemed unsafe to unload. It sat there for two weeks while they figured out what repairs they needed to make. Then we get a notification that says it’s going to be three weeks to make the repairs. So we were five weeks in Sydney, not including the travel time from Nansha, which was about two weeks.
That particular container, now being nine weeks late, means all of the cargo was already sold and backordered. They give us a repair date and say the repair will be done in 14 days. Great 14 days, no problems. We’re telling our customers, hey look, it’s in Sydney, it’s broken down. We’re sharing emails from the shipping company to our customers – to our pool builders – so they can pass it on to their customers to show that it’s all legit, and it’s not just that we haven’t ordered the product and we’ve kept the money. And then it got delayed by another week for the repair. Then they said, Oh, it’s gunna go to Melbourne. We were like, No, no, it needs to come to Brisbane. So they give us the opportunity to put it on a truck and send it to Brisbane. But we’re right in the middle of the pandemic with the lockdowns. The other option was rail, but that’s going to have the same problem. And they said, Okay, we can offer you another ship. We’ll unload it off the Sydney ship, put it on a new ship, send it to Brisbane. We’re like, Great. Should be three, four days to get from Sydney to Brisbane on the cargo ship. Another 10 days, and it's still not here yet. It was supposed to be here yesterday. It’ll port this Friday, unload over the weekend and we’ll get the container Tuesday next week. Nearly 10 weeks.
Price hikes
The previous container was supposed to be about $11,000. The day the container was due to be delivered they email us and say, If you want this container delivered today, it’s going to cost you an extra $3000. You must sign this document and send it back or we don’t deliver the container. The prediction is that it’s not going to get better anytime soon. From what we’re being told by our shipping companies and our logistics people, from manufacturers in China, people we talked to in the US, this is going to run on for another year or two. And people keep saying, Oh, you’ve just got to put your hand in your pocket and buy more. It’s a good concept. But the ordering system for this now is out now till June next year. We recently had one of our manufacturers comment that they got an order for 100,000 heat pumps in a day from Europe. My first question was, Well, who’s ordering 100,000 heat pumps in Europe? The very next question is how does that affect our ordering? We go and talk to pool builders and ask them, how’s your book looking? We’ve heard stories of builders already being out 12 months. And that’s just crazy but the pool builder can’t tell you how many heaters he’s going to need in nine months’ time. December 2021/January 2022 SPLASH! 31