Dive Brief:
- Weber is raising prices for the third time in the past 12 months as it continues to face high inbound freight costs, CEO Chris Scherzinger said in a Q1 earnings call.
- The outdoor cooking products manufacturer's high freight costs are driven by congestion in outbound capacity from China, continued high demand for shipping from the Christmas season, and the shipping push leading to the Lunar New Year, said CFO Bill Horton on the call.
- Horton said the company is not expecting conditions to normalize this fiscal year. Weber projections currently have inbound freight "increasing more than three times from two years ago on a percent of sales basis, from 3% to 10% of sales," Horton added.
Dive Insight:
Limited container availability pushed the grill manufacturer to the pricey spot market to secure export containers from China, which contributed to higher freight costs.
"In Q1 2021 our global blended inbound cost of container was in the $3,500 to $4,500 range. Today, we are paying $14,000 and $16,000 on average per container, a year-over-year cost escalation of three to four times," said Horton.
Ocean rates remained stable, but extremely elevated during the fourth week of February, according to a Freightos update. The rate to transport containers from Asia to the U.S. West Coast was 179% higher than the same time last year.
Weber is seeing "four times historical averages" in terms of rates and expects it to remain elevated in the future. "We’re not being optimistic in our outlook on where container rates are going to go," Horton said.
In response to inflationary pressures the company is setting its second price increase of 2022 in "most key markets," said Scherzinger. This would also mark the third price increase in the past 12 months. The company expects to see effects of the price increases across the second and third quarters, Scherzinger added.
