This article will explain the supply chain crisis by explaining the logistical headaches the e-bike company Pedego faces in the present time.
When a new owner purchases and rides a Pedego e-bike, it has travelled many kilometres in a route not as smooth as its predecessors have travelled.
Pedego, a California-based company, has an affordable model called Element. It became so popular during the pandemic; it is called pandemic baby.
The model was built in Shanghai and shipped to the Port of Los Angeles-Long Beach. Then it is trucked towards 200 dealerships within the US. But during the pandemic, Pedego faced the global supply chain crisis like its counterparts.
First, they have to face a tight market for lithium-ion battery cells since their Malaysian suppliers shut down their factories. Then the shipping costs shot through the roof. Then the containers jammed at the ports, and to top it all the chip shortage came in.
To overcome this, they tried many methods, from shipping frames and batteries separately to change of suppliers during the shortage. Then there is the growing domestic demand which dealers are struggling to fulfil.
Nearly 100% of the inventories for US bicycles are imported, most of them are manual pedal-powered. Earlier, the share of e-bikes was 2,00,000 to 3,00,000 out of the total 17m bikes sold annually. But this changed during the pandemic.
During the pandemic, the sale boomed especially that of the e-bikes. Some estimates even put them at a record sale of 1m. Then the issue of inventories arose after the manufacturers reduced imports because of Trump tariffs.
The company has five factories in China, two in Taiwan and one in Vietnam, with an order to produce 37,000 bikes annually. But when they tried to increase it by 10,000, they were unable, to do so because of the parts shortage.
In early 2020 the company was able to ship 5,000 bikes from Shanghai to California in just six weeks. Now it would take twice the time.
It takes two weeks just to find a container in Shanghai port. The company even had to ship bikes and batteries separately for together it would be classified as a hazardous material. Such containers are harder to source.
The trans-Pacific journey takes two weeks to complete, then moving through LA-Long Beach port takes another six weeks. It then travels to a warehouse, where it takes another two weeks to get to the dealers.
Then there is the cost hike throughout the supply chain. As a solution, they changed the suppliers and even parts. But the more expensive the product, the more difficult it becomes to procure, produce and ship.
LCD panel, battery to regulator, these parts are dependent on chips. Its shortage has caused a delay of model launches by months.
New year looks uncertain under this crisis, especially when the demand is overwhelming the supply.
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