Notice of Non-Price Increase
September 20, 2022
Dear Customers and Industry Partners,
I am writing to inform you of something perhaps considered unusual, and that is an announcement that I am not increasing prices of Captiv8 Aquaculture products, including Reef Blueprint, at this time despite circulating news that interest rates are going to increase substantially between now and the end of the year, kicking off with tomorrow’s anticipated rate hike announcement by the Federal Reserve, which will have global financial consequences.
I am taking this position because I expect end users to be stressed with the additional financial burden on critical resources (particularly food and fuel) resulting from these rate increases. Additionally, I am anticipating substantial increases in the cost of shipping over the next 9 months, due to the UPS strike which is forecast to occur in the second quarter of 2023 and the impact that it will have on delivery times and rates of other carriers, leading up to that event and in the aftermath, combined with FedEx recently announcing that their margins are so far below their projections that they will be forced to close facilities in the near future. Collectively, these points suggest that freight rates are going to get much worse than they are at present if things continue along their current path; this will be particularly true of packages shipped via services such as UPS Ground, FedEx home delivery, and DHL, but it will also impact LTL and FTL freight. Freight rate increases generally don’t reverse, as history shows us, so these increases will continue to contribute substantially to fixed costs. Additionally, we are already seeing signs of discontent within ground delivery services in the sheer number of damaged packages that have been occurring of late; these losses will exacerbate the rising cost of delivery.
While it’s clearly beyond my capacity to control the increasing cost of freight, I can hold our pricing for the time being. This ability is due to several physical factors regarding our operation and company structure, however I would like to make it abundantly clear that I am making this decision because I want to do everything in my power to continue to support our customers and the end users of Captiv8 products, and to support the continued health and welfare of organisms being maintained in recirculating systems under the care of these individuals and organizations. Costs of raw materials and packaging have been on the rise to the tune of 3x - ≥10x their cost at this time in 2021, and with the aforementioned rate increases and continued saga of freight costs, many, if not most, manufacturing companies, will likely take a combination of approaches in the coming weeks or months to mitigate these increases, which may include changing product formulations or components, implementing price increases out of necessity, or increasing prices as a matter of normal annual procedure. There will be no changes made to our formulations or the purity of materials incorporated at any time, regardless of these increases. The quality of the products and the impact that they have on recirculating aquatic ecosystems is the primary reason that Captiv8 Aquaculture exists, and nothing will change that.
Some of the physical factors that permit me to make this decision to hold pricing include the following:
The structure of Captiv8 Aquaculture is such that we are not top-heavy with fixed costs, nor are we reliant upon the business of just one or two customers to permit us to operate;
We continue to implement packaging materials utilizing less space in transit, decreasing the cost of freight, both inbound and outbound, and this savings is helping us maintain pricing rather than increasing our margins;
We are able to source raw materials and packaging in quantities that helps offset the aforementioned increasing costs, so we’re able to tread water and stabilize pricing a bit more effectively.
Some points that I hope you will consider:
If you or your customers are involved with commercial aquaculture, biofuel production, research, or installation and/or maintenance of aquarium systems or zoological displays, then please take note that we are continuing to package our formulations in sizes suitable to large-scale application, despite the disproportionate increase in the cost of packaging materials required for these sizes relative to smaller packaging sizes.
If you are sourcing and/or selling competing product lines, then I hope that you will consider moving more of your dollars to Captiv8 to support our business as much as I am committed to supporting your business.
Whenever possible, our formulations exclude water, and this fact enables these products to weigh less and treat more volume than diluted competing products, costing less to ship and representing a much better value to the end user than liquid suspensions or solutions. Additionally, our ionic solutions are extremely concentrated, generally considerably more than competing products. These points are worth considering if you are an end user, and/or worth mentioning to potential customers as we progress into this period of greater global financial stress and environmental instability.
We continue to incorporate new packaging materials which are 100% post-consumer into the product lines, sourced as locally as possible to mitigate our carbon footprint and decrease associated costs of inbound freight, respectively.
Lastly, I will reiterate my permanent position to exclude Captiv8 and Reef Blueprint products from mega e-tailers and auction sites, forum marketplaces, and all other 3rd party online retail platforms. Again, please take this into consideration when you are planning on purchasing goods from our competitors who have taken an alternative position, if these modes of sale conflict with your business or personal principles.
I will continue to hold this position on pricing for as long as possible. In the event that we see an increase in the cost of specific raw materials which requires an increase in our pricing, then I will do my best to mitigate the increase and apply it only to applicable products.
In the event that you have questions (or comments), then please do not hesitate to contact me. I sincerely appreciate your continued business, and your time in reading this message.
CR (Chris) Wood
Marine Biogeochemist, CSO