Interview with Carsten Gähle (Otto Golze) on shipping rate explosions

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This is a short interview Carpet Home conducted with Carsten Gähle (Otto Golze's Managing Director) in September, when the transport situation was getting more and more difficult. By now, costs have increased even further.

Carpet Home: We keep hearing it from all suppliers who import goods from India and China: Transport costs have increased enormously due to the pandemic.

Carsten Gähle: That's true; the per-container prices have skyrocketed in parts from EUR 2000 to up to EUR 18,000. That's an increase in costs like we've never had before. Then there is the time lag. In southern India, nothing is happening at the moment. Especially in China, ships cannot dock in the ports for days. We have seen from the blocked Suez Canal that even relatively short delays can lead to chaos lasting several weeks. Goods and raw material deliveries are therefore getting delayed and becoming more expensive. Furthermore, packaging material is becoming much more expensive and at times scarce. Cardboard packaging, for example.

But not only shipping costs have exploded, almost all products are affected by price increases. Increases of up to 25% are quite common (update 19 October: up to 40%), and for some products it is even more. Freight and product costs combined result in an unprecedented price explosion.

Carpet Home: How is Golze dealing with the situation?

Carsten Gähle: Initially, we shouldered the increased transport costs ourselves, but then the situation grew worse. When the container price increases eightfold, importing certain goods is no longer worthwhile. So we have to think things over very carefully and make some desicisions: For which products would a price increase be justifiable and by how much? What can we shoulder together with our customers?

Carpet Home: What if a product becomes too expensive?

Carsten Gähle: In extreme cases, we will have to do without that product. That's why we're restructuring parts of our range, making our collections more transparent and more concise, taking out less important variants and making sure that proven qualities will remain. For mats in particular, our purchasing team is successfully searching for new productions around the world where price and availability will fit in the long term.

Carpet Home: That sounds like a time-consuming task.

Carsten Gähle: It is, but at the same time it is a great opportunity for us to find and develop something new. This is exactly the approach that has brought us success in recent years. We want to continue to be in a good position, also and especially for our customers. If we all act in concert, especially with regard to price increases, we can look positively into the future.

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