Freight costs, shipment delays weigh on consumer durable manufacturers
Consumer durables manufacturers are beginning to face mounting pressure as freight costs have more than doubled over the past 30-60 days, while shipment delays have stretched beyond 15 days.
Successive typhoons in Southeast Asia have disrupted component shipments originating from China and Taiwan. These disruptions, along with ongoing issues at Red Sea ports, have pushed up overall transit times.
While the festival season is expected to sail through smoothly, manufacturers anticipate prices could rise after Diwali as new stocks reach the market. For now, companies have sufficient inventory to meet the initial demand, having stocked up ahead of the festival season.
“Television (TV) panel prices have already been increasing as circuit board prices rise; apart from that, shipments are seeing a delay of 15-20 days,” said Avneet Marwah, chief executive officer of Super Plastronics, a contract manufacturer of TV panels for brands such as Kodak, Thomson, and Blaupunkt.
The delays have also affected production planning and could disrupt inventory flow into the market around Diwali, Marwah said. Shipments could face further strain as China enters its week-long Golden Week holiday, a period when factories and logistics operations typically slow or shut.
Arjun Bajaj, director of Videotex International, another contract manufacturer of TV panels, said shipment delays had stretched to as much as three weeks over the past month. “As a manufacturer, we are seeing recent escalations in freight costs and supply disruptions that could push television prices up by up to 20 per cent for smaller screen sizes and up to 10 per cent for larger screen sizes, depending on the screen size. However, these increases are unlikely to be fully reflected during the festive season, with consumers likely to see a new base price for consumer electronics emerge after Diwali,” Bajaj said.
Packaging material prices have also risen, adding to the cost of printed circuit boards, which continue to move higher, he added.
Despite higher costs, Godrej Appliances expects consumer demand to remain buoyant during the festival season. “The festival period is an important purchase window for home appliance categories such as refrigerator, washing machine, and air conditioner. Despite the inflationary environment, we saw sales momentum during Onam, and we are optimistic about festival demand picking up across other regions as well,” said Kamal Nandi, business head and executive vice-president, appliances business, Godrej Enterprises Group.
Nandi said improving consumer sentiment, premiumisation, and a growing desire to upgrade would drive festival purchases. “Backed by our value-driven product portfolio, our Godrej Promise of transparent five-year comprehensive warranty with no hidden costs, applicable across almost our entire business-to-consumer portfolio, and the rapid expansion of our retail footprint, we are targeting over 40 per cent growth for the festival season,” he said.
Nilesh Gupta, managing director of Vijay Sales, said sales volumes could grow by 5-7 per cent this festival season despite higher price points. “We don’t expect a shortfall in stocks until Diwali. If there is a supply disruption, it will only come after the festival season ends, as brands prepare in advance for the season,” Gupta said.
