the day we drove a car into the ocean: a rant about international shipping
I often use this space to talk about challenges I deal with. Most of them are personal challenges, stuff that’s in my head. But this post is about a real-world challenge that bedevils me and many folks I know. It has been crushing me for years. I honestly don’t know how other company heads deal with it.
It’s international shipping.
That’s not the sexiest subject, but it may be the hardest problem I deal with on a daily basis. Well, nightly. A lot of it happens around midnight, Sunday through Thursday. I have to make big-scale decisions when I should be burrowing into the blankets.
I’d like to tell you about what the last couple months have been like, and why you, if you were me, would have thrown your laptop at the wall multiple times.
When we set our price for the board game Lords of Vegas in 2023, we included cost elements like design, art, production, and shipping to our fulfillment centers around the world. Last year, we incorporated the going shipping rates at the time. With that in mind, take a look at this chart.
When we ran the Lords of Vegas Kickstarter, shipping container rates were about $1,800 apiece. That means that with five boats on the water, three with multiple containers, we thought we’d be spending about $15,000 to $18,000 on shipping and labor. For a Kickstarter that made a little under $275,000 after taxes and fees, that’s something we could easily bear.
Now take a look at the right side of that chart. Prices began to skyrocket right as we closed our pledge manager. In one week, as we were in negotiations, prices went up 7 percent. The shipping cost is now a record-high $6,000 per container, about three and a half times as much as we estimated.
Our shipping bill came back at more than $55,000. That blew away all our margin on every Kickstarter pledge, racking up the price of each order by a double-digit number of dollars. We generally save money printing in China, so we took advantage of the expected savings based on backer feedback. This massive shipping increase wiped out all that savings. None of this improves our games in the slightest. It’s just money we get to give a shipping company.
The difference between the estimate and the current cost was essentially buying a nice new car, which we would then drive into the ocean.
This was untenable, so we spent a lot of time working with our suppliers to find a method that reduced the number of containers and used a different shipping plan. It took a lot of effort, but we reduced the car we drove into the ocean from a nice SUV to a year-old four-door sedan. Still awful, but a little more affordable for us.
Why did this increase happen? Basically, shipping is a cartel, and the cartel ran out of containers. Demand went through the roof and supply was limited. Also, Houthi activity connected to the Israel-Hamas War has scared shippers away from the Red Sea and Suez Canal, leading to a long increase in travel times as ships bound from, say, China to the UK had to go around South Africa. Oh, and also, the cartel wanted more money. Since it’s a cartel, nothing stands in the way of record stock prices.
We’re not asking anything of our customers — we’re not the kind of company that says “Hey, we ran into a problem so give us more money” — except for asking for a bit more of their patience. It’s a rough world out there, and we’re just a small group of people trying to navigate it.
What it does to me is change the dynamic of my job from “I am so lucky I get to do this” to “I hate everything about this.” If it weren’t for my teammates and the people who like playing our games, I’d probably walk out for good. They make it worthwhile, so I keep at it.
This is what every tabletop game company deals with on a daily basis. We make decks of cards, so we know what it’s like when a deck is stacked against us.
When someone asks me “What do games cost?” I’m hard pressed to answer. Because no one knows what games cost. You can’t plan for the whims of cartels. You can only hope to survive them.
Thanks for reading my rant about international shipping. I promise next time, I’ll have something a lot more interesting to talk about. Meanwhile, hug your local tabletop game company.
Mike