Freight Costs, Shipment Delays Put Pressure on Consumer Durable Manufacturers

India’s consumer durable manufacturers are heading into the festive season with enough inventory to meet near-term demand, but rising freight costs and longer shipment timelines are beginning to put pressure on the supply chain. 

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Freight costs have more than doubled over the past 30 to 60 days, while shipments are taking more than 15 additional days to arrive. A series of typhoons in Southeast Asia has disrupted the movement of components from China and Taiwan, while continuing problems at Red Sea ports have added to transit times. 

For consumers, the immediate festive season may remain relatively insulated from these disruptions because manufacturers had built up inventories in advance. The impact could become more visible after Diwali, when fresh stocks arrive at higher costs. 

Television manufacturers see delays of up to three weeks 

Television manufacturers are among those already dealing with higher costs and slower shipments. 

SPPL, which manufactures television panels for brands including Kodak, Thomson and Blaupunkt, said panel costs have been rising as printed circuit board prices move higher. Shipments are also running around 15-20 days behind schedule. 

The delays are making production planning more difficult and could affect the availability of fresh inventory around Diwali. 

Another potential hurdle is China’s week-long Golden Week holiday, which could add further pressure to shipment schedules. 

Videotex, another television panel contract manufacturer, has seen similar disruption. Shipment delays have stretched to as much as three weeks over the past month. 

Prices supplied to brands could rise 8-10% after Diwali 

Manufacturers have enough inventory to manage demand until Diwali, but the next cycle of stock could come at a higher cost. 

Videotex expects the price increases passed on to brands after Diwali could be 8-10% higher as raw material costs rise. 

The pressure is not limited to electronic components. Packaging material has also become more expensive, while printed circuit board costs continue to move upwards. 

That combination of higher freight, component and packaging expenses is gradually raising the cost of bringing consumer durable products to market. 

Festive demand remains strong despite cost pressure 

Higher costs have not significantly weakened expectations for festive-season demand. 

Godrej Appliances expects categories such as refrigerators, washing machines and air conditioners to benefit from the festive purchase cycle. 

The company saw sales momentum during Onam and expects demand to strengthen across other regions as the festive season progresses. 

Improving consumer sentiment, premiumisation and consumers looking to upgrade their appliances are among the factors the company expects to support purchases. 

Godrej is targeting more than 40% growth during the festive season, supported by its product portfolio, expansion of its retail footprint and its five-year comprehensive warranty offering across almost its entire business-to-consumer portfolio. 

Retailers expect 5-7% volume growth 

Retailers are also expecting demand to hold up despite consumers facing higher price points. 

Vijay Sales expects sales volumes to increase by 5-7% during the festive season. 

The retailer does not anticipate a shortage of products before Diwali because brands typically prepare their inventories ahead of the key shopping period. 

Any meaningful supply disruption, therefore, is more likely to emerge after the festive season as existing stocks are depleted and companies begin replenishing inventories. 

For now, advance stocking is providing the consumer durable industry with a buffer. Beyond Diwali, however, manufacturers will have to contend with the higher cost of raw materials and freight as well as longer shipping timelines when fresh inventory begins reaching the market.