Freight shipping is pretty wild right now, isn’t it? Even though prices and shipping times have steadily risen during the pandemic, over the last few weeks I’ve seen an explosion of social media posts about the cost of shipping containers from manufacturers (typically in China) to fulfillment centers and distributors. Today I’m going to add my perspective, assisted by data from Justin at ARC Global (justin.bergeron@arcglobal.us).
There are a variety of reasons that freight prices and shipping times have increased during the pandemic, including temporary shutdowns at port, worker shortages, increased demand, increased fuel cost, and general congestion. Those reasons are likely to continue for at least a year, maybe longer if people continue to prolong the lifespan and spread of COVID by avoiding vaccination.
Impact on Shipping Time
Before the pandemic, a shipment from China to St. Louis typically took around 5-6 weeks from origin to destination. That time is now more like 9-12 weeks, and I think it could be even slower leading up to the winter holidays.
If you’re trying to keep customers, retailers, and backers updated about shipping estimates, I suggest waiting until the containers arrive at their destinations. There’s simply too much uncertainty before then. We’ve even had containers arrive in St. Louis but they aren’t delivered to the warehouse here for another 2 weeks because of the trucking backlog. As a result, I’m hesitant to open preorders for any product until all units have arrived at each of our fulfillment center.
Impact on Shipping Cost
As reported in a recent article from Cardboard Edison, publishers are seeing the cost of freight shipping containers is 300-400% of what it was pre-pandemic. That’s on par with what we’ve seen. Before the pandemic, a 40′ container would cost around $5000. Now Justin at ARC Global is seeing those prices a little under $15,000.
A $10,000 increase is quite a bit. But I think it’s more important to look at the per unit cost increase than the overall increase. I’ll use Wingspan as an example, as it’s a fairly standard board game size (296x296x70mm). 5292 units of Wingspan fit into a 40′ shipping container. So the freight shipping cost of 1 copy of Wingspan pre-pandemic was around $1. Now it’s around $3.
Wingspan has a $60 MSRP, which means that distributors buy it for $24 (part of which is paid to the designer as royalties). It costs around $12 to make. So instead of us making $11 in profit per unit, we’re now making around $9.
We make quite a few copies of Wingspan, so the extra $2 in shipping fees will amount to well over six figures of lost profits this year. However, this decrease in margin will NOT result in an increase in MSRP for it or any other Stonemaier product. After all, the shipping costs have less on an impact for our less-expensive products because more of them fit in a shipping container, and we already have better margins for our more expensive products. I understand if other retailer-focused publishers need to consider an MSRP increase, though, particularly if their volumes are lower.
[UPDATE spring 2022: With freight shipping costs continuing to rise, we’ve realized that while we can survive eating a few extra dollars per game, the added cost is not sustainable for distributors and retailers. Out of respect for those partnerships, we’ve increased our webstore prices to better reflect the prices retailers need to charge to keep the lights on.]Crowdfunding Impact
While I understand why a retailer-focused publisher may consider an MSRP increase, the story is quite different when it comes to Kickstarter. As I discussed in this post, the margin on most Kickstarter tabletop game projects is excellent.
For example, let’s say you recently backed a game for $50 on Kickstarter that will eventually have a $60 MSRP at retail. The creator also charged you $15 for shipping after the campaign, so fulfillment fees are covered. As I mentioned above, a $60 game typically costs around $12 to manufacture. So even with freight shipping costs at $3 per unit, that’s a $35 profit margin to the creator!
Yes, there are other sunk costs (art, graphic design, molds, personnel, marketing, etc) in bringing a game to life that are essentially spread over the first print run. There’s also the 10% Kickstarter fee, and for some of these giant-box games, the freight shipping cost per unit could be more like $6-$10 than $3. I do not mean to diminish the impact of the cost increase.
I’ve heard of a few Kickstarter creators who are highlighting per-container freight shipping costs and asking backers to pay more (after the campaign) as a result, which raises a red flag. If you see that happen, I think it’s appropriate for you to politely ask the creator to break down per-unit costs as compared to the reward prices. The per-container cost is a flashy number to parade around, but it’s the per-unit cost that actually matters.
If they don’t want to share, here are a few points of reference to calculate freight shipping cost (assuming the current per-container cost of $15,000 for a 40′ container and $11,000 for a 20′ container):
- Tapestry Plans & Ploys (204x204x53mm): 13,608 units in a 40′ container (4480 units in a 20′ container)
- Wingspan (296x296x70mm): 5,292 units in a 40′ container (2100 units in a 20′ container)
- Scythe (370x300x100mm): 3024 units in a 40′ container (1200 units in a 20′ container)
- Scythe Legendary Box (365x300x199mm): 1620 units in a 40′ container (810 units in a 20′ container)
Please keep in mind that every project is different. The margins on a $20 game on Kickstarter are much lower than a $125 deluxe extravaganza, though cheaper games are generally smaller (more fit into a container) and expensive games tend to have higher sunk costs. Also, some creators are responsible with the money you paid, setting aside appropriate funds for freight and fulfillment the day the campaign ended…and others may have seen the big boost to their checking account and spent the money rashly. It really depends.
Hope for the Future
I think there’s a good chance the carriers will increase capacity, including by quite literally building more freight shipping boats and containers. The demand is there, so why wouldn’t they? I also hold out hope that critical rates of vaccination will significantly decrease the spread of COVID, having a positive ripple effect throughout the entire supply chain.
This is also an opportunity to produce some products regionally instead or internationally. The viable options depend on the region (certain components almost exclusively are made at scale in China), and freight shipping issues extend beyond ocean freight, but it could help.
If you’re a publisher who sells almost solely to distributors, this is also an opportunity to revisit how you’re serving customers who want to buy directly from you. It doesn’t mean you need to betray your invaluable distributor/retailer relationships. But going from 100% sales to distributors to a 90/10% split between distributors and direct customers could help with your sustainability as a publisher–distributors can’t sell your products if you’re no longer in business. Also, by increasing your margins with some direct sales, you’re able to offer lower MSRPs to distributors/retailers, which benefits them and you.
Oh, and this is a great opportunity to think about box sizes. The smaller the box, the more you can fit into a carton, pallet, and container, which means less of a burden per unit for freight shipping. This is not a good time to ship big-box products.
Also, if you’re struggling with these increased freight costs, I’d recommend contacting Justin at ARC Global (justin.bergeron@arcglobal.us). While he doesn’t have a magical solution, Justin has reliably coordinated our freight shipping for years, and the per-container prices I’ve seen from him are lower than others posted on social media by fellow publishers.
I’d love to hear your thoughts on what I’ve shared today, and I’m happy to answer questions in the comments below.
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43 Comments on “The Current State of Freight Shipping (2021)”
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[…] The Current State of Freight Shipping (2021) […]
Hello Jamey, great article! I was wondering if you d have the desire to write an update to this article for this current year’s spring. How are things fairing for board game shipping now that we are seeing some freight related costs getting lower? Did you notice a positive change in your line of work?
Xavier: I’m currently seeing costs around $12k per container, but that depends on a variety of factors specific to us. I’d recommend getting a quote from a freight provider like ARC Global.
Thank you for your answer! I will.
[…] Freight: A freight company (I work with ARC Global: justin.bergeron@arcglobal.us) ships cartons/pallets/containers of products from a factory to several different fulfillment centers (Australia/NZ, Canada, US, and Europe). Depending on your scale, you can potentially freight ship directly to distributors (who sell games to retailers). Here’s my 2021 update on freight shipping. […]
[…] You’ve probably heard about the chaos that is freight shipping right now. […]
Hey Jamey, awesome article.
I’m just going through this process for the first time myself, and I’m wondering about Safety Testing for board games for a younger audience than ages 14+ (mine is 10+).
I’ve heard that it’s fine to just get standard set of tests for the CE mark, since they are stricter than the other regions (Canada, USA, UK). I’ve also heard that the CE testing doesn’t include the lead testing required for the US, and that that needs to be done seperately.
Is this all still true, especially since Brexit and the new UKCA mark?
My manufacturer basically asked me for a list of which tests I want done. They listed 16 common tests in the EU, including the EN71 series, EN 62115, REACH series, 94/62/EC, and POPs. They also listed just as many tests for the US, Canada, and Australia. And finished by telling if I I asked for all of them it would be incredibly expensive.
I honestly have no idea what to tell them. I’m surprised that I can’t easily find a compiled list online of all the tests that need to be done – all articles I see about this basically just say “make your game ages 14+”, which isn’t an option for me.
Would love your thoughts on this!
Thanks Sam! These are great questions, though with all the changes in Europe in particular, I can’t answer with confidence–I’m sorry! As you know, we use 14+ and CE (with the actual testing done in advance), but that doesn’t cover lower age groups. Have you contacted someone at HABA Games? They specialize in games for kids, so I bet they’d know.
Thanks Jamey that’s a great suggestion. Just reached out to Tiffany!
[…] different destinations is great these days. I’m guessing those were 20′ containers, so in the current market, you can expect to pay closer to $6-8k for a single 20′ shipping container. It’s notable to […]
[…] numerous frustrations plaguing it and different campaigns they’d began. Stonemeier Video games have additionally vocalized that delivery prices have leapt up 300-400% when it got here to producing their very own board […]
[…] adding to the many frustrations plaguing it and other campaigns they had started. Stonemeier Games have also vocalized that shipping costs have leapt up 300-400% when it came to producing their own board games. But […]
[…] den vielen frustrationen Plagen es und andere Kampagnen, die sie gestartet hatten. Stonemeier-Spiele habe auch vokalisiert dass die Versandkosten um 300-400% gestiegen sind, wenn es um die Herstellung ihrer eigenen […]
There’s an interesting question of how best to split total payment information between pledge level, and separate shipping and tax amounts. Some of it may be dictated by tax legislation – I don’t know what the requirements are for determining which elements of the total the backer pays are taxable price, and which are tax-exampt fees – but so far as there’s a choice, I know I respond better to a pledge level that’s, say, £150 including taxes and shipping than to a £100 pledge level with £20 taxes and £30 shipping.
Of course, there are also issues with what Kickstarter can support in terms of having pledge levels reflect backer location, which could make it impractical to offer a custom pledge value to each backer (and the legal situation may preclude offering a standard final price to all backers and either adjusting the taxable price by region or using funds from one region to cover taxes for another to make the numbers work out) but it would be nice to have a reliable headline figure that’s the actual amount that will leave my bank account rather than having the headline figure be smaller (so more attractive), and then have to add on multiple additional charges (which offers multiple opportunities to feel negative about the cost)
[…] Jamey Stegmaier (whose Stonemaier games has released Scythe and Elizabeth Hargrave’s Wingspan) has put together a wider look on his own blog, accompanied by some data from research firm ARC Global. Cardboard Edison have also been polling […]
I’m a supply chain consultant and strategy gaming aficionado (Scythe was last weekend’s choice!) who ended up here via another article linked by the WSJ today. We are definitely seeing this industry-wide. I’m hopeful we’ll see a new equilibrium in shipping by mid-2022. Right now shipping costs are almost impossible to believe. Over the last month, container cost from Hong Kong to the west cost were up 600%!
Being a distributor based in Europe, we are also experiencing this problem not only with shiping (3000 euros per 40ft container before the pandemic to 12800 at the moment…), but also with increased manufacturing prices with factories in Europe(Ludo) due the looon lead times and increase in prices for raw materials. Everything is distorted at the moment, but we hope things will be getting back to normal. We heard that a lot of publishers are trying with Turkey as alternative to China. But as you Jamie mentioned, the increase per copy of game is significant (for us from 0.3e per game to around 1.1e on a 30e msrp game), but in overall picture it is not a lot. But then you add taxes and vat on that increase… We hope that we won’t be forced to increase the price for consumers.
The Micro Dojo campaign is going through fulfilment (literally) right now, and a couple of things really helped keep the shipping costs down. It’s pretty unique as a campaign and won’t work for all projects, but having cheap shipping at a time like now was a big draw for a lot of backers. Micro games might well be popular for some time until shipping costs settle down.
Designing the game to ship flat in an envelope as a standard ‘Letter’ by Royal Mail meant international shipping anywhere in the world was under £2. The game being cheap also fell under the EU’s Low Value Consignment Relief (LVCR) preventing backers getting charged VAT (though this goes away from July 1st).
Similarly, because the game was small, it meant that shipping from the manufacturer to the UK (for further fulfilment) could be done via air freight. So from the campaign closing to 2000 copies arriving in the UK, took 23 days.
Finally, the game being complete at launch meant that there were no surprise shipping upgrades a year later, which seems to be the thing that is hitting a lot of KS campaigns hard at the moment.
So a few factors together combined to make fulfilment relatively easy, and I hope this helps some other designers into looking at a micro game :)
To update on this, the total shipping cost (both freight of the product from the UAE to the UK, and the shipping for fulfilment to individual backers) worked out to be around 30% of the total funding amount. This is without the costs of using a fulfilment partner.
“The per-container cost is a flashy number to parade around, but it’s the per-unit cost that actually matters.”
This is such a key part of this and I couldn’t agree more with the article.
I certainly understand the cost increase isn’t ideal for any of us, but it is manageable in its current state. There seems to be a lot of people looking to use this as a reason to charge more after a Kickstarter has finished, or put their prices up, which personally raises red flags to me about their methods.
I hope every publishers takes a minute to review their numbers and processes, looking at how to manage these extra costs without rushing to an “easy fix” by increasing their prices.
Hi Jamey, excellent article, but just remember that not all Kickstarter’s have the same degree of profit margin that you state. Our upcoming Kickstarter has a lower margin than the example games you have given in your article – ours is very miniature heavy – we need to get the volumes to pay for the molds that the plastic parts get injected into. We thus have to charge a lower price and get a lower margin. Our boxes are also much bigger than your game and thus the number of units we can fit into a 20 ft container is a lot lower than the games you have indicated. Our cost would have risen from about $5 per unit to about $20 + per unit. That’s massive!
Anyway, thanks for a very useful and well done article! Thanks for your time and efforts that go into your articles!
Indeed! I spent a few paragraphs talking about that:
“Yes, there are other sunk costs (art, graphic design, molds, personnel, marketing, etc) in bringing a game to life that are essentially spread over the first print run. There’s also the 10% Kickstarter fee, and for some of these giant-box games, the freight shipping cost per unit could be more like $6-$10 than $3. I do not mean to diminish the impact of the cost increase.”
“Please keep in mind that every project is different. The margins on a $20 game on Kickstarter are much lower than a $125 deluxe extravaganza, though cheaper games are generally smaller (more fit into a container) and expensive games tend to have higher sunk costs. Also, some creators are responsible with the money you paid, setting aside appropriate funds for freight and fulfillment the day the campaign ended…and others may have seen the big boost to their checking account and spent the money rashly. It really depends.”
I didn’t realize the shipping delays were still so bad. Would this be the reason why the Wingspan Oceania expansion has been so hard to find recently?
No, it’s that demand is higher than supply for that particular product (despite the large quantities we’ve made over several print runs). We keep making more, though!
I’m going to disagree with you a bit here, Jamey. :)
Supply and demand is a bit of a reactionary game, seeing how much we sell, and then how much additional demand there is from distributors (generally from retailers who want more of a game from them).
Traditionally there’s been about a 4 month delay form having a demand to getting supply to everyone around the world (3 months manufacturing, 1 month shipping). Now it’s more like 6-7 months.
For Oceania, that means we received the second print run only about a month before we would have been receiving the third print run if timelines were normal. Not only does that mean games are getting here slower, but it means demand from retailers and distributors is slower too, because they don’t have games to sell to know how much more people want more games. That in turn means it’s harder to know how much more to print.
So, while it’s demand being higher than supply, it’s exacerbated by slower shipping, as knowledge of demand is even harder to ascertain than usual.
That’s fair, Alex! I was thinking that John was referring to a direct correlation (like, Oceania is hard to find because it simply hasn’t arrived yet–it did arrive a few weeks ago).
That’s true! Though some distributors and retailers are still waiting on receiving it, so now that I think about it, there is a direct impact there as well.
Good point!
This was a very interesting read. I will be curious to see if/how prolonged increased shipping costs will impact games on Kickstarter. For a variety of reasons, I’ve been backing fewer and fewer Kickstarters of late; shipping costs are one of the reasons. A game like 6: Siege is already projected to be at least $28 for at least the base game! Granted, it is likely to be chock full of KS exclusive miniatures but I worry that hobby is going to be unable to sustain wave after wave of these massive KS projects and that will have ripple effects throughout the rest of the industry.
What would that $12 cost be if produced in the US?
I don’t know–based on the components in the game, that’s not an option.
Would you be willing to share which components are not producible in the US or Canada? This is mostly curiosity around the holes in manufacturing capability.
Pretty much any custom component for tabletop games made out of non-cardboard components are very difficult to produce at scale in the US or Canada.
Multiple people have commented that it might make sense to build more ships/containers because of the increased demand. However, has demand increased or has supply shrunk by 25-50%. Jamey indicated that shipping times have gone from 5-6 weeks to 9-12 weeks. This indicates that a single container can possible only do 6 trips per year instead of possibly 9. Big difference. Once the shipping process gets back to normal, supply might return to normal quickly.
Thank you for contextualizing this. I have been wondering about how impactful per unit cost is because of how small a cost freight is to the overall pie.
In a number of recent articles you’ve talked about KS margins and pricing. Do you have guidance on how a new publisher should think about pricing their game? The $50 example game you gave above is more than the retail price once you factor in shipping (which feels a little off to me).
Definitely! Here are some detailed articles on that topic:
https://stonemaiergames.com/kickstarter-lesson-201-a-step-by-step-guide-to-pricing-your-core-reward/
https://stonemaiergames.com/kickstarter-pricing-in-a-world-of-different-shipping-fees-taxes-and-tariffs-ks-lesson-266/
https://stonemaiergames.com/whats-up-with-reward-prices-on-kickstarter/
I’ve also seen a lot of buzz around the whole Ares Expedition in Target. I backed that game and I’ve backed a number of Stronghold’s other games. I’m not particularly ticked that (a different version of) the game is now available at many Target stores. It’s not like the campaign guaranteed that we’d get it first, and I also don’t consider KS to be a pre-order system. But man oh man the angry complaints are so loud, I don’t know how customer service folks handle it … especially given that most backers don’t understand how the agreements between publishers and big retail chains work.
I just wanted to post here and thank you for such a wonderful article, Jamey. As a first-time publisher and game designer – with my game launching on Kickstarter in early July – I’ve had A LOT of sleepless nights and anxiety about how to handle things regarding shipping and freight (and VAT!!!) in the future.
Your comments – and facts about size/weight/cost of the Stonemaier products – have really put me at ease. Your additional comments about the Kickstarter scenario also help, as while I knew I’d be working with a bigger margin, I was still very worried about that scenario too.
Thanks again Jamey!
Dave
Thanks Dave! Indeed, VAT is a whole other (challenging) piece of the puzzle.
And we really haven’t helped that one in the UK by requiring foreign companies to create accounts with HMRC and handle the VAT at point of sale.
As in any business – or life in general – being transparent is always the best practice. I’m a backer of Streets who just recently announced a price increase for their shipping due to this very issue. I feel like their update was pretty clear and it seems most (including me) are ok with the increase. It is interesting though that they didn’t seem to offer the ability to someone to back out of their pledge if they were not happy with the added cost. Maybe KS and their pledge manager make that too difficult to do at this point, but I feel like that’s something a creator should consider doing too. My feeling is the vast majority of backers would not back out of their order but that it would foster a lot of additional goodwill for the creator, in presenting that option.
Thanks for sharing that example, Mike. I agree that it’s best practice to let backers cancel a pledge if you ask them to pay unexpected fees post-campaign.
I just wanted to follow this up to say Sinister Games has sent another notice out to backers today stating that the small added shipping charge is going to be optional – backers do not need to pay if they don’t want to. Props to them for that – I think that’s a great way for them to handle this. =)