OVRSEA regularly meets with shippers to discuss the latest freight and logistics news and future challenges. This week, we had a chat with Mathieu Rigouin, logistics director of Light Scientists.
Hello Mathieu, can you tell us about Light Scientists and the company's characteristics in terms of transport and logistics?
Light Scientists is a French group of 55 employees, established two years ago after the acquisition of two major players in professional LED lighting in France: Signcomplex and Airis LED. We provide LED lighting solutions for the commercial, industrial, logistics and sports equipment markets. In terms of transport, we import a lot of lighting equipment from Asia, and China in particular. This represents an average of one hundred 40-foot containers per year, with one or two departures per week. Before 2020, we used to rely more on air, which is now reserved for emergencies. The increase in air rates, coupled with the general drop in LED lighting prices in France, has prompted us to generalize maritime transport. All our supply chain is managed by our internal teams for a better control of our operations.
We are coming out of two years that were out of the ordinary ( in terms of pricing at least). Do you experience this market downturn on a daily basis?
Yes, we are seeing it, with a drop of almost 25% on dollar freight rates between the July peak and the beginning of September (or -11% in Euro conversion). Compared to 2019, we remain at an increase of around 300%. However, we will not benefit immediately because we were, during the second quarter, under a NAC (Name Account Contract) with CMA CGM, in order to stabilize our supply and departure times. This contract will have allowed us to spread positive waves of general improvement in the group's supply chain to our teams and partners. This reduction is welcome but does not affect our transport strategy: our priority is to load our products on time into our containers in order to avoid the use of air transport.
It is always good news to see rates fall, but I remain cautious as there are other factors adding to the current situation. The euro is weakening against the dollar (-15% in one year), which offsets the benefit of lower freight rates, while we were forced to increase our selling prices in 2021 due to the explosion of sea freight, the decline does not allow us to rebalance this decline on the market, on the contrary, we are forced to increase our selling prices due mainly to the evolution of the dollar on our productions. The horizon remains foggy.
There is a lot of discussion about the accumulation of stocks since 2020, both in Europe and in the United States, which would be partially the cause of the absence of a peak season. Is this the case for you?
Yes, we have doubled our inventory in our two major structures over the past two years. On the one hand, the depth of inventory has allowed us to strengthen our sales, but on the other hand, it has created internal logistics management difficulties. We ran out of space and had to make emergency partnerships to stock. Today, with better data management, our stock levels are more balanced and we are experiencing fewer stock-outs than before.
How do you anticipate the coming months for your transportation?
It is not entirely clear what the shipping companies have prepared for us. With the announcement of the return of blank sailings from China, we risk facing new difficulties on transit times (TT). At the same time, domestic road transport is increasing in France due to the diesel tax (+15% in one year), which forces us to make trade-offs to rebalance our domestic transport.
How have you seen your job evolve since 2020?
The job has nothing to do with it anymore! We had to learn how to keep up with the changing conditions. We have reorganized our import and logistics division and developed an internal tool to track containers and suppliers - as the components crisis has also hit us hard - with the application of KPIs. We have refined our methods for estimating delivery times, for each supplier. At the same time, the context has forced us to become more transparent and educational both internally and externally.
Lastly, has this crisis incited you, like other companies, to consider leaving China or at least reducing its importance in your supplies?
Yes, these are issues that have been driving us for the past few months. It is clear that the geopolitical and economic situation is tough, so we have to look further towards Europe. This obviously creates new difficulties for us because the prices are higher, but on the other hand, we would benefit from the absence of customs and much better TT, so less storage would be required. We are currently considering this, but it is clear that, for certain product ranges, we will shift the focus to Europe.<br><br>
