MAGFAST is a partnership.
Literally – because the company structure we’ve chosen, the Limited Liability Company, is a form of partnership between the executives, staff and investors. Everyone who owns piece of the company (already over 1,000 people) is called a member, almost identical in law to a partner.
And figuratively – because everyone who visits this website, watches our Upgrades or preorders a MAGFAST product is a partner on this challenging but highly rewarding journey.
Every company has its share of achievements and problems. We’ve had a good peppering of both in our short history - and our partnership with you extends to sharing plenty more than you might expect about life behind the scenes, our aspirations, successes, headwinds and failures.
The latest bump in the road?
This article summarizes some of the research we’ve been conducting, and the planning we’re undertaking, as a result of the ‘Great Supply-Chain Meltdown’ of 2021.
The great global-supply-chain meltdown??
If you hadn’t heard, there’s a massive and growing global shortage of all sorts of things that we normally take for granted. You were probably aware that the price of steel and lumber went through the roof earlier in the year. There have also been shortages of paint, sealant, chlorine, even ketchup.
But perhaps the biggest hit of all has been to things made of other things, particularly electronic things like kitchen appliances, computers and cars. High-tech companies have been hit by a shortage of electronic components including capacitors, resistors and semiconductors, the computer chips that control the final products.
Gamers attempting to lay their hands on the latest graphics cards (GPUs) from Nvidia and AMD have had to wait months or pay exorbitant prices, and it seems that the GPU shortage will last well into 2022. Toyota, the world’s largest vehicle manufacturer, is cutting production by 40% because, while they can build cars, they can’t get hold of crucial semiconductors. For the same reason, General Motors has closed down much of its truck production in North America, and Ford has been mothballing plants and cutting F150 production.
Parts that used to take a few weeks to ship can now take six months, often because components to make those parts require semiconductors.
Forbes underscores that “Unless the situation is resolved soon, the consequences for the global economy may be dire.”
At MAGFAST, we’ve been taking a close look into the meltdown, its causes and potential resolutions. After the unexpected bumps of the past, we’re working very hard to minimize the impact of this one.
No mistake, this is a real issue that is impacting us now – slowing our production and increasing our costs.
But there are good reasons for optimism, as we’ll explain below.
What’s causing the meltdown?
What’s behind these shortages, so massive and so fundamental that even the world’s largest corporations can’t find a way around them?
Supply was tight before the pandemic, and became rapidly more constrained as factory workers were sent home to quarantine. Within months, to universal surprise, demand for consumer products took off like a rocket. With ships and containers in the wrong places, rail and trucking services dysfunctional and insufficient manpower to load and unload cargo, ports quickly became choked. Click here to read our summary of how and why this has happened.
How has MAGFAST been affected by all this?
It goes without saying that our research and this article came about because MAGFAST has been hit by some of these challenges. Shipping from our factory in China has become incrementally expensive and difficult. We need semiconductors to make every member of our product family. Supply-chain disruptions mean that costs of some components are off the scale: one control chip is in such short supply that its price has leapt from under 50¢ to over $10.
Nevertheless, our research shows there are reasons to be optimistic:
Looking at the big picture, cargo shipping has been forced into record levels of efficiency. Cargo loading and offloading productivity is now 50% higher than pre-pandemic. While it’s true that cargo ships are waiting much longer to be unloaded, they are now processed more quickly than ever before – so much so that the Port of Los Angeles processed the equivalent of over 1 million 20-foot containers, 74% more than 2020, and a world record for any port in the western world.
Shipping companies are reinvesting profits in buying record levels of both shipping containers and container vessels. Some are even more urgently solving the problem of ‘containers in the wrong places’. Hapag Lloyd, for example, now has 52 craft dedicated to moving hundreds of thousands of containers to where they’re needed.
What’s MAGFAST doing about all this?
At MAGFAST, we have been working proactively to ease the situation where it hits us directly:
Thanks to the tens of thousands of pre-orders from you, we were able to place large purchase orders for most of the long-lead components needed to build thousands of MAGFAST units of the first two products. And we placed purchase orders a long time back for the hard-to-get MFi (Made-for-iPhone/iPad) components needed for MAGFAST Time and Lightning cables and tips.
Many of you invested in MAGFAST last year, giving us real negotiating power for the first time. Our manufacturing partners, P3 International, also have deep connections with industry vendors and have pulled long nights and many favors to get hold of thousands of components in short supply – components that have arrived at the factory and are right now going through testing.
Air freight is becoming an option once more. Most air cargo is carried in the bellies of passenger jets, and the drop in commercial flights pushed the already high cost of air transportation even higher (it’s about eight times more costly to fly your pre-order than to ship it by sea). But the supply-chain crisis and an increase in passenger travel have begun to ease the strain, and some airlines have even converted passenger jets to carry cargo instead. We have already made provisions to absorb the extra cost of air cargo until the ocean-freight jam eases: as a result, thousands of early supporters will receive free shipping for your MAGFAST products shipped directly from China, by air.
Yes, MAGFAST is a partnership. We’re incredibly lucky to have you in the family. Without your support, we couldn’t keep building this company for the long term, or have a shot at changing charging for good.
Partnership is fundamental. As we’ve said so many times before, if you don’t want to stay the course, we really do understand. Please reach out to customer care for help – we only want you here as a willing supporter excited to help us fight through short-term challenges so we can build for the long term.
We thought we’d give the final word to Luen Thain Tan, Deputy Chairman of Hong Kong Industries, who told Bloomberg News: “I wish when shoppers see our product they give it a kiss when they realize how difficult it was just to get it to the shelf.”