IKEA's goods are produced in diversified locations, such as Vietnam, Malaysia, and mainland China, all of which rely on air transport to arrive in Hong Kong.
However, global supply chain problems plague the industry. Congestion in various ports has led to continuous increase in container prices and rising transportation costs.
Hong Kong and Macau Marketing Director Li Chaocheng said that the company's operating costs will increase by at least 5% this year, but there are no plans to increase prices at present.
In March this year, the "Ever Given" (Ever Given) ran aground on the Suez Canal during its voyage, which also included IKEA cargo.
(Photo by Ou Jiale)
IKEA currently has 3 distribution centers in the Asia-Pacific region, located in Shanghai, Malaysia and Australia. Goods from all over the world will be delivered to these distribution centers before being distributed to different branches.
Hong Kong goods shipped from Shanghai have been out of stock for 2 months
"Malaysian branches will ship to all IKEA in Southeast Asia, while Australia will supply New Zealand, etc., and 50% of the goods in Hong Kong come from the Shanghai distribution center. As for larger pieces of furniture, they will also be shipped from Dalian, Zhejiang, Guangdong, etc. Place to send it over."
The global supply chain has plagued the industry, and the congestion of various ports has led to continuous increase in container prices and rising transportation costs.
Li Chaocheng, Marketing Director of Hong Kong and Macau, recalled that in August the Hong Kong port was "stuffed and bursting." "But the ship will not wait. They will go directly to Singapore, so our goods will not know when they will come back."
At the beginning of this month, foreign media reported that IKEA countries have insufficient inventory, and many household products ordered by customers can only be stacked in warehouses due to transportation problems, especially in the United Kingdom.
IKEA's goods are produced in diversified locations, such as Vietnam, Malaysia, and mainland China.
(Photo by Ou Jiale)
The stock-out problem continues to linger on multinational giants such as IKEA. In early September, the company finally announced plans to charter and self-purchase ships in the future to counter this unprecedented challenge.
Li Chaocheng said that the congestion of the port is a joint problem, and one plug will cause the delay of delivery of a whole batch of goods.
"The longest out-of-stock period is 1 to 2 months, and the goods will be temporarily off the shelves." He smiled and pointed out that there would never be a situation where the order was ordered but the delivery was delayed. "We are a very fair company. Sell spot, not futures!"
There is a chance to set up factories in Europe in the future. The company does not plan to increase prices
The stock-out problem continues to haunt IKEA. At the beginning of last month, the company finally announced that there will be plans for chartering and self-purchasing ships in the future to counter this unprecedented challenge.
When asked whether these ships would be used by Hong Kong, he pointed out that in fact, all goods shipped to Hong Kong have to go through Shanghai, so the voyage of the ships is very mobile, but "still not enough."
"As the global supply chain may not be able to recover in the short term, the company intends to set up factories in Europe, but this is only a very preliminary idea."
The shortage of containers and the congestion of routes will inevitably increase operating costs. Li Chaocheng said that the company's operating costs will increase by at least 5% this year, "all due to the increase in transportation costs!" However, he said that the company has no plans to increase prices. Determined to "surmount the difficult times" with the public, increase revenue and reduce expenditure in operating costs, but emphasized that it will not lay off employees.
"The company would rather bear the extra transportation expenses on its own, and don't want to pass the pressure on to consumers and our employees."
Li Chaocheng stated that the company has no plans to increase prices and is determined to "surmount the difficult times" with the public.
(Photo by Ou Jiale)