As negotiations for West Coast port workers drag on, and productivity at those ports continues at a crawl, companies are being forced to use alternative, and costly, shipping methods. Ensuring holiday orders are delivered? Forget about it. One company we spoke to recently - Wahoo Fitness - gave up hope it would be able to fulfill all orders by Christmas.
No End in Sight
It doesn’t appear the situation at West Coast ports will change anytime soon. Port workers and operators continue to struggle to come to an agreement over worker contracts, and the delay in finalizing any sort of deal has led to a decrease in productivity at the docks. This means delayed shipments, delayed deliveries and a major dent in companies revenue and reputations.
Faced with this grim reality, Wahoo Fitness, a small Atlanta-based company that makes workout devices that can connect to smartphones, had to take drastic measures. The company sources its product from Asia, and shipments are sent to the West Coast before being transported via rail to Georgia.
Mike Stashak, the company’s vice president of sales and marketing, said for the first time, Wahoo used airfreight to send a container of its product from Taiwan to Atlanta. Wahoo is a young company – it has been around for about 5 years. Still, the airfreight was a major hit to company profits. Sending this one container by air cost the company more than $60,000. By comparison, the company spends $3,000-$5,000 sending a container by sea.
Mike said spending that money to ship product by air was a tough decision, but Wahoo needed to do it to keep its customers happy.
Wahoo has lost business over the port slowdown, however. The company still has containers sitting at a West Coast port. (By the way, one container for Wahoo holds more than $500,000 in revenue.) Sourcing their product from Taiwan, Wahoo sees shipments take 4 to 4 ½ weeks to make it to Atlanta. It is now going on week 7 for this one container stuck at the West Coast port. On Dec. 11, the company faced reality: the container would not make it to Atlanta and to Wahoo’s retailer customers by Christmas.
What’s in the container? Wahoo’s KICKR - an indoor bike training device. Cyclists mount their bike to the device, link it to their smartphone and are able to train indoors. During the winter, it’s obvious the demand for such a machine rises, especially around Christmas. Mike called it the “ultimate Christmas present” for any cyclist.
But, many won’t be getting the KICKR for Christmas this year. When I spoke with Mike last week, he explained that once the equipment is loaded off the container at the West Coast dock, it still takes 5 days to transport it by rail to Atlanta. Wahoo has to receive the delivery and then send it to its customers. There was just no way, Mike said, that every retailer that ordered the KICKR would have it by the holidays.
Some of Wahoo’s customers were understanding – others, not so much. Wahoo did lose some business over the delayed shipments.
“That’s why we made the decision to air freight, we were starting to feel the pain,” Mike said. ”We were basically left with no choice.”
Alternative Shipping Routes
Since airfreight is not a sustainable solution, due to the cost, Wahoo had to find another way to ship its products. Containers coming from Taiwan will now travel through the Panama Canal and end at East Coast ports instead of heading to the West Coast.
While the new route adds some time to the company’s shipments (6 weeks instead of 4) and it may add a little extra cost compared to what it was paying before, it is the best solution for now. Whether or not Wahoo will continue to use this shipping route if and when West Coast ports resume normal activity… time will tell.
One thing is certain – many Americans won’t likely be getting everything they asked Santa for this Christmas. Don’t blame Santa, though. His shipping system seems to be in order.