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Consumer durable goods manufacturers are starting to face mounting pressure as freight costs have more than doubled in the last 30 to 60 days, coupled with shipment delays exceeding 15 days.
A series of typhoons in Southeast Asia has disrupted component shipments originating from China and Taiwan. These disruptions, alongside ongoing issues at Red Sea ports, have significantly pushed up overall transit times.
While the upcoming festive season should sail through smoothly, manufacturers expect prices to rise post-Diwali when new stocks hit the market. For now, companies have sufficient inventory to tide over the initial demand, as supply chains were stocked in advance.
“Television panels have already been witnessing an increase due to circuit board prices increasing. Apart from that, shipments are witnessing a delay of 15-20 days,” Avneet Marwah, chief executive officer at SPPL (Super Plastronics Pvt. Ltd. — contract manufacturer for television panels for brands like Kodak, Thomson and Blaupunkt), told Business Standard.
He added that production planning has been affected, which could impact inventory reaching the market by Diwali. China also enters its week-long Golden Week holiday, which could further strain shipments, he noted.
Arjun Bajaj, director of Videotex (a contract manufacturer for television panels), also highlighted that shipment delays have stretched up to three weeks over the past month.
“We have stocks to tide over till Diwali and as a manufacturer we do pass on the price increases to the brands. Post Diwali, the price increase that we pass on to the brands could be higher by 8-10 per cent as raw material prices have gone up,” Bajaj explained.
He also noted that packaging material prices have risen, adding to the cost of printed circuit boards, which remain on a steady upward trajectory.
Despite higher costs, Godrej Appliances expects strong consumer demand this festive season.
“Festive period is an important purchase window for home appliance categories such as refrigerators, washing machines and air-conditioners. Despite the inflationary environment, we witnessed sales momentum during Onam, and we are optimistic about the festive demand to pick up across other regions as well,” said Kamal Nandi, business head and executive vice president at Godrej Enterprises Group.
He added that a mix of improving consumer sentiment, premiumisation and a growing desire to upgrade will drive festive purchases.
“Backed by our value-driven product portfolio, our Godrej Promise of transparent 5-year comprehensive warranty with no hidden costs applicable almost across our B2C portfolio and the rapid expansion of our retail footprint, we are targeting over 40 per cent growth for the festive season,” he said.
Nilesh Gupta, managing director of Vijay Sales, noted that sales volumes could grow by 5-7 per cent this festive season despite higher price points.
“We don’t expect a shortfall in stocks till Diwali. If there could be a supply disruption, it will only come in post the festive season ends as brands prepare in advance for the season,” Gupta explained.
