The enduring effects of Covid-19 on the wakeboard market
Are wetsuits the new gold? And on-time delivery of goods an impossibility? This much is clear: The Corona pandemic is turning the supply chains of wakeboarding and many other industries around the world upside down.
Where to begin, where to stop? Discussing the Corona pandemic and the turmoil it has caused in the global economic fabric is truly no easy matter. Even so, we wanted to better understand the current situation regarding supply chains themselves, and summarize it in a simplified and accurate way in this article. Although we can make absolutely no claim to completeness and 100% accuracy in our explanations, the causal chains that are currently leading to delayed deliveries and price increases can be summarized relatively quickly—for all those who haven’t yet had to deal with the topic, or who appreciate a brief overview.
One thing right off the bat: supply chain problems are, of course, not limited to the wakeboard and sports market, but are a global phenomenon affecting many markets with varying severity and varying time frames.
One important component is the shock to commodity markets triggered by Covid-19, which strongly influences commodity prices—a typical feature of crises. The cause of this, in particular, is temporary shortages of many raw materials. The pandemic caused a collapse in supply markets, as lockdowns all over the world resulted in work stoppages and interruptions to production processes. At the same time, however, many economies in Asia have already overcome the Corona dip and are running at full speed again. The USA is also already back in growth mode. This development is now stimulating demand on the market again, but is coming face to face with reduced raw material production and shortfalls in availability.
Many companies both large and small that produce basic materials have declared an inability to deliver due to force majeure. This means that they are no longer able to fulfill contracts with their customers, and are now delivering later, at higher prices, or not at all. In this way, they’ve plunged supply chains further and further into chaos. The plastics industry is a prime example of these chain reactions. High demand coupled with insufficient availability is currently increasing market pressure for polyethylene and other materials. Wakeboard features are made from this thermoplastic, and prices for the material are rising and rising. The undersupply of the material is causing record-high prices, and is therefore being watched very closely by feature manufacturers in our industry.
In addition to delayed production and raw material bottlenecks, company supply chains are currently being put to the test by another phenomenon: delivery problems. Due to corona, fewer transport options are available globally. In addition, there is a shortage of personnel in ports all over the world, leaving sea freight containers stranded. These containers are then missing from the economic cycle and exacerbate the capacity problem. Large quantities of containers are also occupied due to the sharp increase in online trade and the current unusually high consumer demand from China. Their delayed recirculation, in combination with high demand, is causing freight rates to rise significantly. Container prices have doubled since the end of 2020, leading to inefficiencies in margins and also massively affecting wakeboard brands. It’s no wonder that wetsuits and the like are taking so long to reach their destinations.
In a nutshell, the Corona pandemic conditions have caused:
- Caution, uncertainty and shortfalls;
- Rapidly shrinking, then rapidly expanding markets;
- Disruption of supply chains and production processes;
- Unsynchronized availabilities of materials and logistics capacities;
- A breeding ground for many other market phenomena, leading to
- Significantly delayed deliveries, and rapidly rising prices.
Many such markets have been compared by experts to a swarm of startled bees—there’s no longer any discernible connection between incoming consumer orders and production purchasing. Producers and buyers further down the supply chain are naturally unable and unwilling to cushion the delays and price increases of many products, so the economic impact of the pandemic trickles down to retailers and customers. That’s certainly not good, but it’s usually not the fault of individuals either. Therefore, it’s important for us to spread a better understanding of the situation in which the brands and players in our market find themselves.
The question remains: When and how will the situation improve?
In preparation for this article, we spoke with Johannes Degenhardt of UNIT Parktech, who sums up his view of things:
“The situation is improving—but it’s not returning to normal. So it’s crucial for companies to continue to innovate. For example, we already initiated a change in the manufacturing process for our wave breakers before the pandemic. Due to the new production process, we are now able to use plastic plates with greater stability, even with decreased material thickness. Via these technological adjustments we were able to reduce the manufacturing price. Companies in the wakeboard industry can’t be caught standing still—we have to work towards new solutions for the challenges at hand.”
The Corona crisis is more than a misfortune—it’s also an opportunity. Companies that invest now in the resilience of their own supply chain will emerge stronger from the pandemic.
So it’s time to pull those good ideas off of the drawing board. According to studies, 6 out of 10 companies are looking to diversify their supply chains in order to be better prepared for future bottlenecks. Speed, agility and innovation are qualities that matter now, more than ever.
We hope you’ve enjoyed this article.
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