You may have seen the news recently about the substantially increased costs of overseas container shipping. Van’s Aircraft utilizes container-ship transportation services when moving parts to, and assembled kits from, our contract QuickBuild assembly centers in the Philippines and Brazil. Due to ongoing and significant increases in these costs over the past several months, Van’s has determined that for kits shipped on or after January 10, 2022 we must assess a transportation surcharge for QuickBuild kits that were ordered prior to December 15th, 2021. This surcharge represents a small portion of our increased shipping costs.
In addition, for a period of time in 2021 customers ordering QuickBuild kits were not required to immediately submit the standard 25% deposit when their orders were placed. Van’s will be collecting the kit deposits from those customers, now that an estimated delivery timeframe for QB kits on order has been determined.
Overseas Freight Cost Increases and Related Surcharges
The cost to transport each QuickBuild kit from the overseas assembler back to Van’s Aircraft has increased substantially – from approximately $500 per kit a year ago to $2500+ per kit today. This represents a per-kit cost increase of more than $2000 as of the date of this notice.
As a result, Van’s Aircraft must recover at least a portion of that increased transportation cost. We know this surcharge is unexpected and our customers have not planned for this additional cost, so we are setting the surcharge amount at $375.00 per QuickBuild kit, which we will collect at the time of the final kit payment. While covering only a small portion of the increased expense, this will allow us to partially compensate for the increased cost of overseas transport while keeping the overall cost of a kit as close as possible to what the customer expected at the time of order. There’s really no way to avoid this severe increase in container shipping costs. We’ve certainly tried. These increases were a surprise initially and have continued to grow substantially month-to-month.
This surcharge applies to QuickBuild kits ordered on or before December 15th, 2021. Currently, we don’t anticipate that QuickBuild kits ordered after that date will require a surcharge. Van’s will continue to review our actual overseas shipping costs and will make any necessary adjustments in the future. We certainly hope that we will not need to increase the surcharge amount in the future, but we reserve the right to adjust should it become necessary.
This shipping surcharge policy does not affect standard-build kits.
Collecting Deposits for QuickBuild Kits Ordered in 2021
For a period of time in 2021, Van’s allowed QuickBuild kit customers to place their orders without requiring an immediate deposit, due to the fact that we were unable at that time to provide an estimated delivery timeframe to customers placing the orders. As we communicated at the time, once the estimated timeframes were determined we would begin collecting the deposits for those orders. Since those dates have been communicated, we will be reaching out to customers from whom a deposit has not yet been collected requesting the kit deposits be submitted.
For all newly-placed QuickBuild and Standard Kit orders, Van’s is collecting the standard 25% deposit at the time of the order.
Summary
In case you missed it, we recently communicated an update on kit production and delivery planning, which you can read at this link.
We’re working to balance our need to ensure financial stability and predictability in the current environment with meeting the expectations of our customers. In some cases, it’s a difficult balance to strike and we know that our customers are trying to plan their lives around their projects even while dealing with inflation across the board. Given the extreme cost increases we are currently faced with, we believe this policy minimizes impact to our customers while ensuring we are able to operate the business in a manner that aims to ensure long-term stability.
