Ramstar Games blog - the state of Chinese freight

Kickstarter Advice: The State of Chinese Freight

Well, Hello There!

While this may not be the most scintillating topic on the planet, I feel it’s important for board game designers to think about, especially if you’re planning on hiring a manufacturer out of China to make your hard-developed baby as we are. Let’s get into this!

HOW FREIGHT IS DIFFERENT FROM SHIPPING

First and foremost, freight and shipping are two different beasts and should be counted as two different expenses. One is paid by the developer. One is paid by the end user.

To make the distinction I like to think of freight and shipping in terms of microscopes. I know that sounds a little odd, but hear me out. On a microscope you have two focus knobs; coarse and fine. The coarse focus knob does the majority of the work getting your image 90% into focus. Then, you switch to the fine focus knob to bring final clarity to what you’re viewing. Freight and shipping are the same.

Freight is the ‘coarse focus’, getting your games boxed up, palletized and shipped from overseas to an intermediary destination. This is a cost associated with the creation of your game and should be reflected in the landed cost of your game. Shipping is the ‘fine focus’, pulling one game out at a time and sending them on to their final forever homes, and this is paid by the end user, your super-engaged board game fans!

WHY AM I BRINGING THIS UP?

Because freight is in turmoil right now, and it might affect the financials of your board game Kickstarter.

Due to Covid 19 restrictions and how manufacturers have been hit, freighting products in and out of China has become quite a mess from a logistical stand-point. Why? Because people can’t get their hands on shipping containers, and this is causing prices to shoot up as demand for containers increases. (Welcome to market volatility folks. Good times!)

Previous to Covid 19, after loaded shipping containers left China, they would be unloaded at their destinations, re-packed with goods / materials heading back to Asia, and sent on their way. But that changed midway through 2020 when manufacturers and retailers halted orders amidst pandemic fears, consumers stopped buying and everyone waited to see what was going to happen. This was the first hit that the freight industry took. But, by the end of 2020 importers were back up and running, trying to play catch-up and making the demand for containers skyrocket. This is the second hit the freight industry took. Now, they can’t keep up with demand.

In fact, the demand for shipping containers is so pressing that owners of the containers are finding it more profitable to send them back to China empty. Rather than re-filling them with items that Asia needs, owners are charging exorbitant prices to those willing to pay for a quick turn around on empty containers and sending them on their way.

In some cases the bidding war is causing shipping containers to double, triple, and even quadruple in price, driving the cost of freight out of China way, way up. My contact at Quartermaster Logistics related to me that one of their clients got hit with a fourfold increase in their freight charge. To clarify (and de-escalateDON’T PANIC!), they were the only QML clients to pay such a rate, but it did happen.

WHY THIS MIGHT MATTER TO YOU

It’s an expense plain and simple. You’re going to want to account for it. If you’re manufacturing your game in China then you’re going to have to think about freight; there’s really no way around it. And this expense is constantly fluctuating, which may or may not work to your advantage but it’s better to face it and get a plan to mitigate it and work with it rather than hide from the problem.

Some things to think about:

  1. When are you planning on freighting out of China? – Freight charges are typically higher during the months of September and October as large scale manufacturers bring their products to market for the Christmas season. Regardless of the current state of freight container shenanigans, if you can get in before or after the Christmas rush, do it.
  2. Can you get a better rate through a fulfillment service? – A fulfillment service can assist you with keeping freight costs low by rolling your order together with several other orders coming out of China at the same time. Palletizing your 200 games with 300 games from another designer might halve the cost of freight much like sharing a cab. Working hand in hand with a fulfillment service might help in the long run. Check with your service provide for all the details.
  3. Can you warehouse your game and wait for better rates? – This is a possibility if you’re expecting extravagant freight rates at the time you plan to get your games out of China. It may be better for you to eat the cost of warehousing for a month or two until freight rates stabilize, rather than rushing and paying through the nose for freight.

Whatever you plan to do, make sure it makes sense for your project, and make sure to keep your backers in the loop! If you foresee a freight snafu causing you a two month delay be transparent about it and let everyone know upfront, if you can.

GOOD NEWS ON THE HORIZON

There’s a very good possibility that this situation is going to right itself before too long. Although freighting costs are astronomical right now, by mid to late 2021 projections are suggesting that they might be back to some semblance of normality as the world balances out it’s response to Covid 19. For those of us expecting to freight out of China at the end of 2021 (like RAMSTAR Games) this is good news. But, like all fluctuating costs inside of a project, it would be wise to keep one eye trained on the cost of freight and where it might be tomorrow.

NEWS AND LINKS

For a more in-depth perspective on the current situation, here are some news links that will be of interest:

https://www.cnbc.com/2021/01/22/shipping-container-shortage-is-causing-shipping-costs-to-rise.html

https://www.bbc.com/news/business-55740063

Also, here is a site that can help you estimate what your freight cost might be. Of course, it’s always best to check with your manufacturer or the fulfillment company you’re working with to help you get all the info you need to make an informed decision.

https://www.freightos.com/shipping-routes/shipping-from-china-to-canada/

https://www.freightos.com/shipping-routes/shipping-from-china-to-canada/

For now, that is all.

Rockin!

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