Game Production and Shipping Woes: A Round-up

Global shipping is a nightmare. We have already posted a few Daily Illuminator entries about the state of freight (May 23, June 29), and things are not getting better. Freight costs were once a part of the business; now those costs threaten to devastate publishers.

As an example of how freight is impacting games, our Car Wars Sixth Edition project required five containers (all on the water, and slowly making their way to our primary warehouse) that each cost over 3x more than they would have if the game had shipped in 2020. As many of you know, 2020 was the planned shipdate...and then a global pandemic decided to enter the picture and completely disrupt our plan and the manufacturing schedule.

These freight costs are tearing into already-thin margins for many publishers, and some publishers are being forced to make decisions between shipping now and losing money, or holding inventory at the factory — and losing money. If there is such a thing as win-win options in game publishing (or for any small businesses who rely on global trade), we're now as far from those options as we can get.


We, Steve Jackson Games, are fortunate that we have evergreen sellers and that we took steps late last year to stock up on some of those top titles for the 2021 holiday season. Munchkin Deluxe, Zombie Dice, and Illuminati Second Edition are in the warehouse, and deeper inventory levels on those top titles will help us weather the next six months or so. But unfortunately, the day is fast approaching when the freight costs will force our hand and we'll have to take steps to mitigate the excessive (and increasingly painful) impact of freight. (Not to mention rising overhead costs in other facets of the operation. As you may have noticed, everything is getting more expensive these days.)

If you have a small game publisher or two who you want to see survive to create new games, please visit your favorite local game store* today and buy a game or two. The publishers and retailers will appreciate the show of support.

— Phil Reed

* And yes, we mean visit a physical store. Because as bad as things are for the small publishers, several of the small game stores are also facing tough times and can use your support if they're going to be here next year. If you're not sure of where your nearest local store is located, please visit our store finder. If you're a retailer who is not already in our store finder, please email retailers@sjgames.com today and we'll get you added to the list.

[T]here is a severe container shortage. When a company manufactures goods outside the U.S., such as in China, [the goods] need to go in a container, get loaded onto a ship, and make the long trip across the ocean. Normally, finding a container takes a couple of weeks. These days, it can take much longer, months in fact. (I'm talking about China to U.S. here, but the problems are worldwide regardless of route.)

Related, container prices (well, the price to rent the container and put it on a boat bound for the U.S.) are skyrocketing as a result of the disparity between supply and demand. Normally, a container runs us $5,000. These days, we're seeing prices north of $20,000.

I'm not providing this information to discourage you. But these are the facts on the ground, and we have to deal with them...


So where are we with this project? In the last update, I mentioned that Tower production had started and that Panda were forwarding their components to Capable for final assembly. One of the effects of the container shortage is that the factories are having to store more completed goods because they can't make it on to boats. We ended up in a situation where Panda had finished the goods and wanted to get them out of their factory, but Capable didn't have room in theirs. We ended up having to rent an off-site warehouse near Capable to store the Panda components so Capable can draw from them as need them. That has now happened, and the first 2,000 finished games should be ready to leave the warehouse this week. Capable estimates 3,000 completed games per week from here on out.

At this point, we have a steady stream of completed games that will be coming off the line. So really it is now just a matter of when we can get the containers to ship them in. I had previously mentioned that we would likely start Asia fulfillment by the end of this month. Given the uncertainty with the containers, we've decided we need to be a bit more nimble in our approach. We're going to basically take every container we can get and continue moving the games to fulfillment hubs as they become available. If we hit a lull, where we can't get a container for a shipment, that's when we'll send a batch to the Asia fulfillment hub. So, as a practical matter, we don't know yet where that first batch will go.

Related, some of you have asked about how the rise in container cost will impact the project. It's not ideal, of course, but we will not ask you all to bear any of that additional expense. This was one of the factors in raising the MSRP to $190.

All inbound and outbound container services at Meishan terminal in Ningbo-Zhoushan port were halted Wednesday until further notice due to a "system disruption," according to a statement from the port. An employee tested positive for coronavirus, the eastern Chinese city's government said.

The closed terminal accounts for about 25% of container cargo through the port, calculates security consultant GardaWorld, which said "the suspension could severely impact cargo handling and shipping." Germany's Hapag-Lloyd AG said there will be a delay in sailings.

This is the second recent shutdown of a Chinese port due to the coronavirus, after the closure of Yantian port in Shenzhen from late May for about a month. That led goods to back up in factories and storage yards and also likely lifted soaring freight rates, which are at record levels and a source of inflation.

The pandemic still has an impact on the world and on the games industry as well. Paper is a commodity which is in high demand. On August 11, NPD group reported an increase in sales for games and puzzles of 17% to 2020 and 31% to pre-pandemic times (that is for the U.S., but the rest of the world is no different). At the same time, global shipping is erratic, containers are scarce, and prices soar. That leads to the unexpected situation that we cannot get all the paper and cardboard we need, especially not on short notice; we even face a shortage of wooden pallets and a tripling of the price for them! Yesterday Ningbo harbor in China was closed again for an unspecified time span, so things are going to get worse before they get better.


We are trying to get paper as soon as possible as well as the new cutting die. Right now we have tentatively scheduled the new boards for somewhere around mid-September, but that is without having confirmation from the paper suppliers. There will probably be several weeks (from now) without change and without new information, as the paper suppliers now talk to the paper mills, and they need to check if enough raw material will be available and when the paper machines will produce the paper and cardboard required.

This week, we were supposed to receive north of 60 tons of grey cardboard from one of our suppliers. On Monday, we received the message that we would get none — like in ZERO! tons — this week. Now, two of the three lamination machines are standing still and in spite of being completely full, we had to send some machine operators home because we had no work for them.