What Keeps Me Up at Night

As the pandemic evolves to endemic, and we begin an entirely new level of geopolitical sourcing risk, the Ides of March approaches.

So too does the conference and summit season in the form of the PeopleForBikes (PFB) Bicycle Leadership Conference (BLC), and the Sea Otter Classic Summit, from the former producers of the BLC.

The BLC is a face-to-face bicycle industry conference March 21-23 (the Ides of March is the15th) at Dana Point, California. The Sea Otter Classic Summit, also a face-to-face conference, is April 5-7 at Monterey, California. It appears the two bicycle business, executive level, multi-day conferences are in competition, if the $1K+ cost to attend each is any indicator.

There is also the fact that 2022 is a transition year, with PFB now owning and producing its first live BLC, and Sea Otter Classic’s new owner’s (Life Time Inc.) attempting to find, along with previous owner Frank Yohannan, who will stay on to manage for several years, a replacement for the annual BPSA BLC that had become a regular part of the bicycle business event calendar.

Why does this keep me up at night? Even after the sales and service surge, there are few specialty bicycle retailers who can afford the cost of either of the business conferences that have now emerged from the pandemic. From the supply side this may be a sign, even if short-term, that there is no reluctance to spend the increased revenue and profit realized over the last two years.

PFB announced its agenda for the two-day BLC in a press release published in Bicycle Retailer and Industry News February 22. While very detailed and sufficiently populated with top-tier speakers, it seems to me to lack a connection to the reality of both the new era of geopolitical and economic risk we entered February 25, the in-transit goods tied up in supply chain congestion that is weighing heavily on company balance sheets, and more urgently the inventories already amassed to meet anticipated strong consumer demand that began to ebb during the fourth quarter of last year, and continues to ebb as the conference and summit season is upon us.

The Sea Otter Classic’s Summit agenda is just beginning to emerge, and new speakers were announced in BRAIN February 22.

This bicycle business conference still has an opportunity to examine and discuss the reality of the movement from just-in-time (JIT) inventory management to just-in-case (JIC) inventory management, and companies and retailers building inventories to meet what has been strong consumer demand. Over-ordering has been rife, and the impact is spreading through the supply chain. This trend will halt when demand recedes, as it inevitably will, and suppliers, brands and retailers will be holding excess inventories.

I completely understand that the antitrust laws of the land prohibit discussing certain aspects of this situation and the potential going forward, but there is plenty of room for experts to speak and interact on panels to discuss what can be the grist for public forums.

There is extensive primary consumer research that was conducted in November by Sports Marketing Surveys (SMS) for the National Bicycle Dealers Association (NBDA) that has been available since December. It can greatly enhance supplier, brand and retailer understanding of the new adult American cyclist that emerged during the pandemic years of 2020-2021. 

We say “new” because 27 percent of all adult cyclists during 2020-2021 were new to cycling, and had not participated in bicycle riding prior to the pandemic.

Add to this 20.7 percent of all adult cyclists during 2020-2021 who returned to cycling during the pandemic, and you have a total of 47.7 percent who were either new or returned to cycling during the pandemic.

Ethnicity of adult cyclists in America has been a constant and troubling demographic reality for over four decades. There has been some recent information that 44 percent of new cyclists during the pandemic were racial minorities, resulting in 56 percent being white/Caucasian, four percentage points below the national percentage of 60.1 percent.

The reality, identified by the NBDA Consumer Research, is that 73.3 percent of adults who had not cycled before and took up bicycle or e-bike riding during the pandemic were white/Caucasian, continuing the large over-indexing of the last four decades.

All demographics of American cyclists need to be reviewed and discussed because this data, along with all the other findings of the NBDA consumer research, illustrates the opportunities for the real growth of bicycle riding participation going forward.

The NBDA research was the first to identify and call out the emergence over the last two years of the new direct-to-consumer (DTC) channel of trade for bicycles and e-bikes. It provides detailed data about the American adults who identify with this new DTC retail channel, the innovative functionality of the new electric assist and throttled e-bikes, and the future intention to purchase.

In follow-up discussions with bicycle dealers and their employees, it has become clear that (1) during the last two years the DTC channel of trade has moved to an early stage of maturity, and (2) the top-tier DTC bicycle brands are primarily electric assist, and (3) the top tier DTC e-bike brands have established several new segments of e-bike product, including the so called “electric-BMX.”

While a much better name needs to be attached to this new segment, it has also become readily apparent that the American bicycle business needs to acknowledge and further define the new DTC channel of trade for retailing bicycles and separate it from online, which also needs to have its definition modified to fit the findings of the NBDA consumer research.

Defining the DTC channel of trade and its new segments includes the NBDA research findings that:

  • 50.7 percent of e-bike cyclists purchased an e-bike with a throttle because of its “ease of use.”
  • Females were more likely to purchase an e-bike with a throttle so they pedal less.
  • 88.4 percent of females stated they would consider a throttle on future purchases.
  • 94.4 percent of males stated they would consider a throttle on future purchases.

We think it is important for the American bicycle business to discuss this snapshot of important findings about the purchase intentions of e-bike cyclists, as those intentions will affect future e-bike product offerings and regulations.

This leads to Human Powered Solutions (HPS) advocacy for lithium-Ion (L-I) battery safe charging and storage. Our primary objective is to educate and inform American specialty bicycle retailers about safe battery storage and charging procedures. A summary of recommendations is available on the HPS and NBDA websites (www.nbda.com).

These protocols are offered by HPS founding partner and chief technology officer Mike Fritz as recommendations for bike shops and their policies and procedures associated with e-bike battery packs. While knowing that the chances of a battery fire are miniscule, the ramifications of a L-I battery fire are so significant that the relatively simple steps recommended are more than justified.

Why does this keep me up at night? HPS is concerned that there appears to be a reluctance on the part of much of the bicycle business to place L-I battery safety education and information on the same level, and with the same resources and visibility, as L-I battery recycling.

While I could launch into a long and detailed discussion of relevant facts and concerns, I don’t believe it would be productive. Instead, I direct you to the two webinars HPS and Mike Fritz have presented for the NBDA on this subject over the last two quarters. The recordings of both webinars are available for viewing by contacting rachelle@nbda.com.

What is appropriate is to observe, unless I am missing something, that the PFB BLC agenda published to-date does not appear to focus on or cover e-bike L-I battery safe charging and handling. Nor does the preliminary Sea Otter Classic Summit agenda published to date.

What keeps me awake at night is the knowledge that the window of opportunity may be closing for the American bicycle business to get out ahead of the adult cycling consumer’s future wants and needs relative to bicycles and safe battery charging and storage.

However, the door for HPS clients and readers of this newsletter will remain open. I will be happy to discuss this article, and what keeps me up at night, anytime. I will probably be awake.

Jay Townley: jay@humanpoweredsolutions.com


Consumer demand is what drives the U.S. market for goods and services. The 2020 surge in sales of bicycles (including e-bikes) that some in the media are calling a “Bike Boom,” was the American consumer demanding and purchasing bicycle products in greater numbers than the business has experienced in two decades.

The demand for service work (as opposed to services like restaurants, vacation destinations, theme parks, entertainment venues, air travel, etc.) also surged to new levels, as American consumers seemed to take every available bicycle they could find in their basements, attics, and garages, to bike shops to get them serviced into riding condition.

Bike shops ran out of new bicycles to sell and ran short, or out of, components to repair the bicycles brought in for service, just as other retail channels large and small experienced shortages, outages, and an overall inability to meet and satisfy consumer demand for goods as they shifted from services. Bottlenecks and disruption in the supply chain created further delays. 

American consumers, like consumers all over the world, also shifted their shopping and purchasing of goods online because they did not want to go out into stores and run the risk of contracting COVID-19.

Given the pandemic-induced market disruptions in 2020, annual U.S. bicycle riding participation is a vital component in defining and better understanding the U.S. bicycle market demand.

The National Sporting Goods Association (NSGA) has consistently used the same research methodology to conduct its annual consumer survey of sports participation, which includes bicycle riding participation, for over three decades.

Because the same research methodology has been adhered to for such an extended period of time, the data is stable and comparable, even in a pandemic and more importantly is reliable for trend analysis. The following is presented, in detail in the NBDA U.S. Bicycle Market Overview 2020 Report that can be purchased at www.nbda.com.

43 million Americans seven years of age and older rode bicycles six or more days during the year 2020. For those following the NBDA annual report, this is a substantial increase of 5.2 million or 14 percent in the number of bicycle riding participants compared to 2019.

NSGA will publish its 2021 bicycle riding participation data in early April and the NBDA U.S. Bicycle Market Overview 2021 Report will be available, including 22 years of U.S. bicycle riding participation data, by the end of April.

The NSGA bicycle riding participation data for 2020 confirms that the surge in sales of bicycles (including e-bikes) was driven by the increase of 5.2 million Americans seven years of age and older who rode bicycles six or more days during the year, contributing a 14 percent increase in bicycle riding to the overall demand for product and service in 2020 over 2019.

In November of 2021, the NBDA Bicycle Buying Consumer Research Study concluded its field work, and the sponsor reports and first editions of the 150 Powerpoint slide supplier report were made available for sale Christmas week.

The first version of the retailer report became available for sale January 6, and the second version on February 4. All versions of this landmark consumer research reported:

  • 53 percent of adult cyclists purchased a bicycle (including an e-bike) in 2020, meaning 47 percent did not.
  • 39 percent of adult cyclists purchased a bicycle (including an e-bike) in 2021, meaning 61 percent did not.

The purchase to non-purchase ratio among adult cyclists in 2021 corresponded to reports from the field during the fourth quarter of the year that retail store traffic and corresponding sales were declining, as was demand for service work.

To investigate this further, Human Powered Solutions (HPS) looked at a number of sources of data, including, as a member, the PeopleForBikes (PFB) Business Intelligence Hub. One of the data sets is the Google Search Index from Google Trends searches for any combination of the phrase “buy bike.” Google Trends is a tool to analyze the popularity, and change of popularity, of search terms to compare the search volume of different queries over time.

PFB presents the Google Search Index as: “A near real time leading indicator” because it is a record of consumer searches, in this case any combination of the phrase “buy bike.”

Given the need to understand the recent store traffic and sales decline, we determined to dig deeper into the Google Search Index and Google Trends as real time leading market indicators as identified by PFB, and contacted the HPS webmaster, Jacob Rheuban, seeking his opinion.

HPS considers Jacob to be an expert on the subject because in addition to a bachelor’s in economics and a Juris Doctor (JD) degree, he founded his first e-commerce company in 1998 and is the founder and CEO of Prevelo Bikes, a consumer-direct youth bike brand. Accordingly, he has demonstrated that he knows a lot (at least more than we do) about search engines.

The first thing we learned is “buy bicycle” is an uncommon search term for our purposes because the data is or can be volatile. To give us some perspective Jacob ran a series of sample searches.

What we determined, is the Google search term “bicycle” yielded the least volatile and, we believe, more accurate leading indicator, as shown in Chart A below. The graph shows the results for the search term “bicycle” January 15, 2017 to August 31, 2021, a five-year period through the end of the second quarter of 2021. The market pattern per-pandemic, along with the sales surge of 2020, is clearly shown, along with the sales decline in 2021.


Chart B shows the search term “bicycle” vs. the search term “e-bike” for four years from January 2018 through December 2021. Beginning about the second quarter of 2021, consumer searches shifted significantly from the term “bicycle” to the term “e-bike.”

Jacob reminded us that someone looking at this chart could conclude that in absolute terms interest in “bicycle” is now less than interest in “e-bike.” What this chart says is that relative to the beginning of 2020, searches, which is interpreted as interest in e-bikes, has grown while searches, as interpreted as interest in bicycles, has declined.

This is an indicator of relative interest through searches that need to be verified to the extent possible by asking consumers, as the NBDA has done.

This leading indicator of consumer searches points to increasing interest in and the possibility of shifting demand away from “bicycles” and toward “e-bikes” during the time frame charted.


Chart C is another step in digging into the leading indicator identified in Chart B. Jacob suggested we create a basket of 10 bike shop brands and a basket of 10 direct to consumer brands (DTC), and compare the average trend lines, which is what this chart shows.


Remember that this is not absolute, but as consumer interest, in the form of searches, shifted from the term “bicycles” to the term “e-bike,” so did consumer interest, in the form of searches, shift from the average of our basket of 10 bike shop brands to the average of our basket of 10 DTC brands.

The leading-edge indicator is apparent consumer interest, in the form of searches, shifting from “regular” bicycles to e-bikes, and from traditional bike shop brands to DTC retailers, with overall consumer demand ebbing.

While brands should be paying attention, bike shops are advised to take action to adjust strategic and business plans to accelerate development of omnichannel merchandising with a commerce-enabled website, social media presence, and an expanded offering of e-bikes integrated into all product categories and price ranges.

Do not expand your SKU count. Rather, consolidate with e-bike models integrated into your merchandise offerings, and replace regular bicycles with e-bikes, paying attention to retail price points and your gross profit margins.

Pay particular attention to new, emerging e-bike product categories being marketed by DTC brands (as an example, the so called “BMX” 20 and 24-inch fat-tire e-bikes).

Watch inventory levels carefully, and monitor KPI’s like gross margin return on inventory (GMROI), inventory turns and net profit per category and SKU weekly.

If any readers have questions, please contact me and I will do my best to help you: Jay Townley, resident futurist, Human Powered Solutions: jay@humanpoweredsolutions.com

…Supply Chain Nightmare!

By Jay Townley

From January 1983 through October of that year I served as Vice President and Assistant to the President of the Schwinn Bicycle Company. My primary focus was the closing of the company’s domestic factory in Chicago and moving 90-percent of the production to Taiwan and the remaining 10-percent to a domestic contractor. 

From November 1983 until leaving the company in April 1990 I served as Vice President Purchasing and was responsible for converting the company’s purchasing and logistics operations from supporting a domestic build-to-order manufacturing and parts supply model to supporting an import ship-to-order wholesale model.[1]

I am referencing this seven-year period because I want to confirm that I was a purchasing and logistics practitioner in the American bicycle business. While it was 30 some years ago, I still have first-hand experience with and knowledge of the current…Supply Chain Nightmare!

Over the last 30-plus years the U.S. bicycle business has become totally import-dependent and that dependency has migrated from Taiwan to China since 2000 to the present.  Table 1 is taken from the NBDA U.S. Bicycle Market Overview 2020 Report (where it is identified as Table 19), and it shows U.S. Bicycle Market Import and Estimated Domestic Production as Percent Shares of Annual Market Consumption from 2011 through 2020.  Over the ten years shown imports have spanned a low of 96 percent to a high of 99.7 percent of the U.S. bicycle market.

Table 1
U.S. Bicycle Market Import and Estimated Domestic Production
Percent Share of Annual Consumption

Domestic Percent*
Imports Percent*99.699.799.698.997.597.
Sources: U.S. Department of Commerce Import and Export Statistics for 2011-2020; The Gluskin Townley Group estimates for 2008-2016; Human Powered Solutions 2017-2020 *Excludes exports. Does not include Ebikes or Used Bicycles.

Table 2 is also taken from the NBDA U.S. Bicycle Market Overview 2020 Report (where it is identified as Table 31), and it shows U.S. bicycle imports by Country of Origin for the last three years, 2018, 2019 and 2020.  China has dropped from 94.9 percent of total U.S. bicycle imports in 2018 to 88.9 percent in 2020.

Table 2
U.S. Bicycle Imports by Country of Origin 2018, 2019, 2020
Units and Country Percent of Total

YearChina UnitsTaiwan UnitsCambodia UnitsVietnam UnitsOther Countries UnitsWorld Total U.S. Imports
Source: Bicycle Retailer and Industry News March 2021 Issue; Human Powered Solutions Analysis

Section 301 25 percent punitive U.S. tariffs were imposed on imports from China in 2018 (in addition to the standard 5.5 percent and 11 percent import tariffs on bicycles and the 0 percent tariff on Ebikes), and were suspended in late December 2019, and remained suspended throughout 2020, and were reimposed late December 2020.   Section 301 tariffs had no appreciable effect on the consumer demand at retail for bicycles and Ebikes – until perhaps, most recently.

Also of interest is the sub-total of U.S. bicycle imports from the four Asian source countries of China, Taiwan, Cambodia and Vietnam 99 percent in 2018, 97.6 percent in 2019 and 98.6 percent in 2020, leaving only 1.3 percent of total U.S. bicycles imports coming from any other source country.

This becomes extremely important to the evolving Supply Chain Nightmare when viewed in the context of reports in the last week that COVID-19 is surging back into Asia-based supply chains – creating a fresh wave of disruptions and bottlenecks from ports in China to factories in Taiwan and Malaysia.

According to the Wall Street Journal Logistic Report June 11; “Dozens of vessels are backed up off the Yantian port in Shenzhen, straining fragile shipping operations that have been battered by a persistent empty container shortage and a continuing bottleneck at U.S. West Coast ports.”  The reason?  A shortage of workers because of a surge in COVID-19 cases! 

Container costs are soaring, and logistics service providers report desperate American importers paying well beyond even the listed spot rates.  Human Powered Solutions (HPS) Senior Logistics Advisor Dave Karneboge reported June 7 that the none contract rate, which currently represents about 30 percent of container shipments, is currently $10,000 for a forty-foot container that cost under $2,000 a year ago.  Twenty-foot containers now cost $9,000 – which makes them currently unaffordable, and HPS is advising clients to use freight consolidators until container prices come back down.

A recent Sea-Intelligence analysis shows an estimated 60 percent of container ships globally were late in arriving at ports in March, and according to the Wall Street Journal Logistics Report this “…trend toward increasing delivery delays” has undercut the efforts of brand and retailers to restock depleted inventories. 

The following Chart A is from Sea-Intelligence and shows the Average Monthly Schedule Reliability by Major Container Shipping Line Since January 2020 through March 2021.

Chart A

Note that the Average Monthly Schedule Reliability has steadily declined since July 2020, and while it did increase in March 2021 it was at 40 percent On Time, meaning 60 percent of scheduled container shipments were late – adding to the uncertainty and disruption.

Bicycle Retailer and Industry News ran an article June 11 quoting a Shimano Newsletter announcing the component brands “…Malaysia factory is shut down completely until June 14based on the Malaysian government direction.”  Further, “…So far, the Malaysian government has not informed Shimano what it plans to do after June 15th, so stay tuned.” The reason for Shimano factory being shut down?  The current COVID-19 situation. 

This past week Taiwan announced an alarming increase in COVID-19 cases and deaths, and the spread of the virus into Taiwan’s factories that is threatening to delay shipments that are already behind schedule because of component shortages.

While relatively small, with 23.86 million people, Taiwan is, in many ways, the linchpin in the American bicycle business supply chain, and it is suffering from its first large COVID-19 outbreak.  It is estimated that about 80 percent of the bicycle export business done by China is owned or controlled by Taiwanese companies and brands and this supply chain is already under huge pressure, so any further reduction in supply capacity is going to exacerbate the shortages.

While discussing this situation at the end of this past week the HPS team was informed that a component brand (not Shimano) had just announced a new lead time, out to December 2024 – that in turn was threatening new start-up customers with literally shutting down.

Part of this situation is being driven by both the availability and rising cost of raw material.  On June 2, the Wall Street Journal reported that, “China’s factories are buckling under the weight of rising raw materials prices.”

According to this article, “Some manufacturers are refusing to accept new orders and are even considering suspending operations” and while we could not confirm that any of these manufacturers are in the bicycle supply chain, the article did go on to report that the pressure to suspend operations was the result of, “…the added costs weigh on production and threaten to further strain global supply chains.”

There is no question that many Chinese manufacturers have passed along higher costs to overseas buyers, evidently some are finding it hard to raise prices enough to make up the difference.

The quandary the Wall Street Journal is reporting is just the latest result of COVID-19-led disruptions that have thrown supply and demand fundamentals grounded in Just-In-

Time, or JIT Systems, off balance, triggering shortages in many sectors and soaring prices for many commodities.

From 1990 to 2020 the bicycle industry global supply chain has been focused on improving and refining Just-In-Time, or JIT manufacturing and logistics.  The JIT System was conceived by an American, Dr. William Edwards Deming (October 14, 1900 – December 20, 1993) who was an American engineer, author, and management consultant.  Deming helped develop the techniques still used by the Asian bicycle supply chain manufacturers engaged in exporting their products to the rest of the world.    

Deming is best known for his work in Japan after WWII, particularly his work with the leaders of Japanese industry including Toyota. That work began in 1950 and was soon embraced by Shimano Corporation and spread to the rest of the Japanese bicycle industry and to the Taiwanese and eventually the Chinese bicycle industries.  However, Deming and his JIT System was not known, recognized or taught in the U.S. until the early 1980s. 

At its very best, the JIT System forecasts, purchases, manufactures and delivers on the day and hour that a component is planned and required for assembly of a manufactured product so that it can ship on schedule and be delivered anywhere in the world on the day it is scheduled to ship to a retailer or directly to a consumer.  This is the ideal that was continually strived for, and while not often achieved pre-pandemic, most supply chains came close.

These are the supply and demand fundamentals of the bicycle supply chain that are grounded in JIT Systems that COVID-19 led disruptions have thrown off balance! 

Today, because of the growth of direct-to-consumer and the mind-set of the JIT supply chain, there has been inventory and an on-going demand, in just about every zip code in the U.S. Companies, including bicycle brands and retailers, are struggling with the trade-off between the customer experience and the cost of inventory – in the midst of shortages created by a supply chain that is totally off balance.  

At the OEM side of the supply chain, what is being reported is China’s factory owners hoping that if they delay orders or slow production, they will be able to ride out the present period until commodity prices normalize or global demand for consumer goods cools. 

Assuming that this reporting is at least partially if not totally accurate, this represents a bigger gamble than that taken by the American bicycle importers in reducing order flow in 2019 to minimize the financial impact of the Section 301 punitive 25 percent tariffs.  The end result was a self-imposed shortage of 4.4 million fewer bicycles to meet the increase in consumer demand during the first two quarters of 2020 – when the Chinese OEMs could not increase production to meet the increased orders from the American importers.

The gamble the Chinese factory owners (including those owned or controlled by Taiwanese) are taking now has the immediate impact of more inflation across supply chains, including the bicycle supply chain, right down to the showroom floor and store shelves.  While there is a lot of speculation right now about inflation, the most significant comparison with the consumer price index won’t be available until early next month so we will hold further comment on this topic until the beginning of the third quarter.

Of more immediate concern relative to the U.S. bicycle business supply chain is what logistics experts refer to as the Bullwhip Effect. The Bullwhip Effect (also known as the Forrester effect) is defined as the demand distortion that travels upstream in the supply chain from the retailer through to the wholesaler and manufacturer due to the variance of orders which may be larger than that of sales.

Chart B illustrates the Bullwhip Effect, starting with the Consumer to the left, which is the handle of the bullwhip, or consumer demand.

Chart B
The Bullwhip Effect

The dark lines represent the Order Quantity, and the lighter lines represent the Stock or Inventory in the supply chain, starting with the Retailer, followed by the Wholesaler, or Brand and finally the Manufacturer to the far right. 

What is not shown in Chart B is Component brands and manufacturers who certainly play a key role in the industry supply chain for bicycles and Ebikes to meet consumer demand.

However, Chart B does provide a visual representation of how the Bullwhip Effect manifests itself, moving from the Consume, upstream to the Manufacturer, and the reason why the American brands and wholesalers are doing everything possible to minimize its effect – despite the Supply Chain Nightmare!

The Bullwhip Effect in the supply chain can be reduced through shared knowledge with suppliers and retailers. If members of the supply chain can determine that there is skewed or bad information causing the overreactions, they can be resolved through improved communication and the exchange of accurate and timely information and data. However, this cannot be a one-way street and has to be open two- or three-way communication.

This only serves to emphasize what we have come to realize – 2020 was an Inflection Point!  Economists tell us an Inflection Point Event, like 2020, results in a significant change in the progress of an industry, business or sector and can be considered a turning point after which a dramatic change, with either positive or negative results is expected. 

2021 is truly a Supply Chain Nightmare, but that doesn’t mean the American Bicycle Business cannot quickly learn and adapt to shifts and changes in consumer buying habits and change and modify both the supply chain and supply chain logistics to adapt to consumer wants and needs and turn the Nightmare into a positive result – a dream for the Future!  

[1] Schwinn Bicycle Company established a national network of four regional warehouses from 1964 through 1977 known as Sales Companies that stocked and sold parts, accessories and tires and tubes to Schwinn retail dealers, along with a back-up stock of bicycles and exercisers. So a complete wholesale warehouse structure was already in place when bicycle and exerciser manufacturing converted from domestic manufacturing and build-to-order to foreign sourcing and importing and ship-to-order from 1983 forward. 

2020….A Nantucket Sleighride!

2019 to 2020


…A Nantucket Sleighride![1]


Jay Townley

We are at the beginning of the third decade of the new Millennium.  2019 was a year of disruption for bicycle business supply chains, stress on economic systems and uncertainty about sourcing and distribution channels.

2019 was also a seminal year when important new business models, innovations and technology that will influence the future of the American bicycle business and Micromobility emerged, and those focused on Micromobility, as new and separate economic systems. 

All in all, 2019 was not a particularly pleasant experience for the traditional-mainstream American bicycle business, although it was a relatively better business year for the European bike business, and the American bicycle brands doing business in Europe, primarily because of ebikes. It was also a relatively good year for the emerging new economic systems around the world. 

The new decade that starts January 1, 2020, is a leap year and the first time in 60-years that the Gregorian calendar coincides with the start of the 12-year cycle in the Chinese zodiac and the year of the rat, beginning in January with Chinese, or Lunar New Year. 

It is also an election year in Taiwan and America.  The Taiwanese election in January is of importance to the American bicycle business because it is estimated that over half (or more) of current sourcing, primarily in China, is owned or controlled by the Taiwanese bicycle industry.

Early in 2019, as the U.S. – China Trade War was heating up the future of Tsai Ing-wen, the current Taiwanese President was bleak at best.  Nine months later American trade policy and President Tsai’s reshoring strategy have her positioned in most polls to win a second term, although the opposition will probably win control of the legislature.  A second term for President Tsai is projected as generally a win for the American bicycle business supply chain. 

While the Taiwanese election will be over in January, the American election will just be ramping up.  According to The Economist[2], two subjects will dominate social media, news and headlines around the world in 2020: America’s presidential-election campaign and the weakness of the global economy.  Quoting the Economist:          

“Both will induce anxiety, and each will influence the other.  It will be a volatile year, characterized by unstable, angry and polarized politics, and an enfeebled economic outlook for the world, regardless of who wins on November 3rd, when American voters go to the polls.”

America itself has hitherto been least affected by global growth slowing in 2019, and American consumers ended 2019 still confident and ready to spend.

But look for that confidence to start ebbing in 2020, as the stock market stumbles, the fiscal boost disappears and the jobless rate inches upwards.

There is a high probability America will escape a formal recession, particularly since the Federal Reserve will act promptly to reduce interest rates further.  However, the mood in the country will be gloomy as the longest expansion on record slowly comes to an end.

Retail sales of bicycles of all types and 20-inch wheel & larger have been essentially flat in terms of units in the U.S. for the past decade, while retail dollars have increased. 

The Specialty Bicycle Retail, or Bike Shop channel of trade has experienced a decline in the total number of American store fronts, but has maintained retail sales of about 3 million units per year while controlling over half of total retail sales dollars of new 20-inch wheel & larger bicycles.

All indications ten-months year-to-date are that 2019 will be another flat year, with no growth in 20-inch wheel & larger wheel new bicycle unit sales or retail dollars.

This finding is complicated by the imposition of punitive import tariffs on new bicycles and components from China, the source country for most new bicycles and components sold in the U.S. 

Some of the punitive tariffs were passed along to consumers in the form of price increases, and some were absorbed by the supply chain and were not passed along as retail price increases.  Punitive tariffs affecting the American bicycle market started with the application of Section 232 tariffs March 23, 2018, Section 301, List 1 July 6, 2018, Section 301, List 2 August 23, 2018, and Section 301, List 3 on imports arriving after June 1, 2019.

There is a probability that the passing along of at least some of the price increases to consumers has had a dampening effect on the sale of new 20-inch & larger wheel bicycles in the American market through the 12-months of 2019 resulting in another flat to down year in unit volume.  The impact on 12-month YTD 2019 retail dollar volume has yet to be determined and will have to wait for year-end data during the first quarter of 2020. 

The specter of the American stock market stumbling will serve to compound weakness elsewhere in the world as it becomes a reality.

China’s economy will gradually slow further, as its government strains to provide enough stimulus to keep its growth targets in sight.  This will serve to further slow the already contracting retail bicycle market, creating financial strain on the Taiwanese and American brands doing business in the Chinese consumer market.

It appears that Europe will face a particularly difficult 2020 because of the EU’s reliance on foreign demand, particularly from China.  Germany, the largest European market begins 2020 close to recession. 

Britain’s finally reaching a reckoning with Brexit will leave the country divided, and unfortunately damaged and diminished.

This could have a negative impact, slowing the surging ebike sales growth throughout the EU and dampening sales of the Taiwanese and American bicycle brands doing business in European markets.


Monetary stimulus will help keep global GDP growth at around 3.2% in 2020, just above the 2019 figure. 

America’s Federal Reserve, as noted will cut interest rates to take the edge off a potential slowdown.  China will do the same. 

Overshadowing the business climate will be America’s greater protectionism.  The trade war won’t ease much, and other countries will be under pressure to pick sides. 

In the worst case, tensions between America and China could morph into a global currency war, which would be a bad situation for American bicycle business importers. 

So long as this is avoided, there could be trade growth with Taiwanese and other
Asian bicycle sources able to capitalize on China’s trade difficulties with the U.S.  

Interestingly, much needed infrastructure growth in potential bicycle business source countries like Vietnam could come from China’s “Belt and Road” investment initiative.

Source countries like Taiwan, Vietnam and Cambodia will have to figure out how to position themselves, in trade and technology, between a Chinese sphere of influence and an American one.

American bicycle brands and related products will have to craft strategies incorporating short term initiatives including sourcing, distribution and uncontested market space that support mid and long-term positioning for the future. 


Although the United States will succeed in signing a Phase 1 mini-deal with China on January 15, the bulk of America’s punitive tariffs on Chinese goods and its growing determination to limit China’s access to American technology will continue. 

This and the lack of detail about what China and the U.S. must do to comply with Phase 1, and the fact that confirming compliance has not been locked down is the “Catch 22”[3] the American bicycle business faces in 2020.      

According to Bloomberg Policy & Politics: “How much Beijing complies with the recent agreement will set the tone for relations in an election year.”  As of this writing China and the U.S. have different understandings of how quickly remaining U.S. punitive tariffs will be removed once a Phase 1 deal is signed January 15, 2020. 

One of the objectives of the U.S. is to greatly reduce the trade deficit with China so that the U.S. sells more to China than it buys.  U.S. Trade Representative (USTR) Robert Lighthizer says that under the Phase 1 deal China will have to double imports of American goods and services.  Additionally, the U.S. is demanding China protect intellectual property and technology transfer. 

The biggest immediate issue for the U.S. Administration will be determining how it will monitor Chinese compliance, and perhaps more importantly, what it will do about noncompliance. 

For the most part the American bicycle business is an interested participant that has limited intellectual property and technology transfer issues with its Chinese supply chain. 

Some of this is because many bicycles and related products are not high-tech, but mostly because the American brands and companies have supplier agreements with the Taiwanese owners or JV partners with manufacturing facilities in China that protect intellectual property and technology transfer under international and U.S. law.

Where the American bicycle business is involved and vitally interested is tariffs, and what punitive U.S. tariffs on bicycles and related items imported from China will be rolled back under the Phase 1 and any subsequent deals.

What has been disclosed so far is that the U.S. is only lowering punitive tariffs from 15-percent to 7.5-percent on the smallest tranche of Chinese goods, which are the Section 301, List 3 imports arriving in the U.S. after June 1, 2019.  This covers primarily bicycle accessory and components and does not cover complete bicycles. 

The U.S. has already announced that in a show of good faith for China agreeing to the Phase 1 deal it has delayed indefinitely the Section 301, List 4 punitive tariffs that were scheduled to become effective December 15, 2019. 

List 4 would have added bicycle related imports from China that were not on Lists 1 thru 3, including lights, helmets, unspecified parts and accessories, apparel and footwear.

The Phase 1 deal leaves in force and effect punitive tariffs imposed and not subject to exceptions or suspension under Section 232 (steel and aluminum) effective March 23, 2018, Section 301, List 1 effective July 6, 2018, and Section 301, List 2 effective August 23, 2018. 

This means that most complete bicycles and ebikes imported into the U.S. from China are still subject to regular and punitive tariffs, with the exception of12-inch, 14-inch, 16-inch, 20-inch and 24-inch wheel bicycles, that were granted and exclusion from the punitive tariffs.  This exclusion reportedly went into effect mid-December 2019 and expires August 7, 2020. 

On December 31, 2019 the USTR announced an exclusion for HTS numbers that when combined with the other 20-inch wheel bicycles excluded from punitive tariffs in mid-December 2019 results in all 12-inch wheel through 24-inch wheel bicycles imported from China being excluded from the punitive tariffs through presumably August 7, 2020.  The USTR also excluded certain bike saddles imported from China. 

The exclusion also stipulated that U.S. importers of 12-inch through 24-inch wheel bicycles and certain bike saddles are entitled to recover the punitive tariffs they have paid on the specific HTS numbers covered in the exclusions.   While the importers are entitled to recover the punitive tariff payments they made, experience indicates that this might be an expensive and lengthy process.

Earlier in 2019 the Administration had granted exclusions to narrow product categories, including some single-speed adult road bikes, some cruisers, carbon fiber frames valued under $600 and some wired cycle-computers.

For China and the American bicycle business the issue of punitive tariffs and the rapid rollback of all these additional tariffs that are both still in force and effect and outside of the Phase 1 deal is of paramount importance. 

As Bloomberg Politics & Policies reports, Beijing is insisting on rapid rollbacks in U.S. punitive tariffs for “simply having reached this deal.”  If this is reasonably factual, this is the issue that will most likely sink the current deal and any hope of a Phase 2, or any comprehensive trade deal with China in 2020. 

The USTR has indicated that the Administration prefers a discretionary approach to lowering punitive tariffs contingent upon commitments made by China being met.  Normally the U.S. and China would agree to scheduled tariff rollbacks based on metrics like performance or time.  The reported lack of a schedule that both sides agree on and adhere to is at the core of the concern about the success of Phase 1.

Assuming no schedule emerges from the January 15 signing of Phase 1, we suggest three date ranges to watch for to gauge the volatility and potential disruptive impact of the trade situation between the U.S. and China for the rest of the year.

  • By early in the second quarter (April to mid-May) of 2020 we should be getting an idea of how well China is following through on its Phase 1 commitments.
  • By the summer and early fall (July to mid-September) we should know without question if China is making acceptable progress on its’ Phase 1 commitments – or not.

By September 2020, if not earlier, the Administration will have to decide between escalating the trade dispute and reigniting the trade war with China – or risk appearing unwilling to challenge Beijing in the middle of an election campaign.

This is because the Administration, and the incumbent cannot afford to be branded “soft on China” by his Democratic challenger.  No Democratic candidate will run a campaign championing a more co-operative strategic relationship with China.  If anything, the pressure to be more aggressive will grow.

Depending on who the Democratic challenger is a destabilizing link between politics and economics could kick-in.  Fearful of a radical overhaul of swathes of American business financial markets may stumble further if, as could be the case, the election seems close. 

There is no question 2020 is going to be a turbulent, disruptive year for international trade and potentially for supply chains built on the principals of globalization, like the traditional, mainstream American bicycle business and its dependence on Taiwan, China and South East Asia. 

Future Trade Probabilities

The two most important trade issues to the American bicycle business going forward from 2020 are:

  • [4] and to decouple from China and other developed production economies and focus on dramatically reducing or eliminating trade deficits by producing and manufacturing more in the U.S. and negotiating bilateral and unilateral[5] trade agreements. 

In 2020 the results of the trade war with China and the national election in the U.S. will either yield a slower and constructive transition away from the old and to the new global economy that will unfold over the next decade, or a more rapid and disruptive protectionist transition that will unfold over the next four to five years and lead to much more pronounced shifts to the new global economy during the second half of this decade.   

Imports from China and any other country will need to be strategically negotiated to minimize the impact of U.S. import restrictions and create collaborations and alliances that take maximum advantage of the new emerging global economy for the purpose of establishing assembly and manufacturing in the U.S. and other target consumer markets around the world with the emphasis on speed to market and gross margin return on inventory and investment (GIMROI)[6]

The current Administration has been straight forward in its promotion of making consumer and industrial goods in the U.S.  Depending on the results of the 2020 and subsequent 2024 and 2028 national elections and the impact of the Climate Emergency on the geopolitics of the U.S., eco-friendly variations and economic options will emerge that combine made and grown locally with global sourcing and collaboration.    

Disruptive Trends in 2020

Trade is obviously the single most important and disruptive issue facing the mainstream American bicycle business and the emerging Micromobility economies, as covered in detail above.

However, there are seven trends that we are following that have or will be disruptive and which we are advising clients to both follow and adjust their strategic business planning to accommodate or take full advantage of.

Ride Share, or Self-Service bicycle rental and bicycle-sharing systems have been gaining ground and expanding in America and are now firmly established as part of Micromobility and the last-mile solution for 200 cities and municipalities[7]

Going into 2020 two trade associations, the North American Bike Share Association (NABSA), www.nabsa.net and the National Association of City Transportation Officials (NACTO), www.nacto.org represent what is projected to be a significant part of a $200 billion to $300 billion Micromobility business in the U.S. by the year 2030.

Chinese dockless ride share brands have come and gone in a blur of 24 to 36 months, but the bicycle ride share economy has been transformed by dockless as well as electric bikes. 

The latest innovation in the form of electric scooters has spread quickly and has been incorporated into most municipal ride-share programs – but not without controversy and rancor on the part of city governments and the public. 

Governor Andrew Cuomo of New York vetoed a bill the end of December 2019 that would have legalized both ebikes and e-scooters, and in the process angered supporters of environmentally friendly last-mile solutions. 

However, Governor Cuomo said he would introduce a similar bill right after the new year – with the safety requirements included that he said were the reason for his veto.

This addresses another issue that the whole bicycle business, including bike ride share faces, and that is rider safety!  Governor Cuomo wants a requirement that riders of battery powered conveyances wear helmets, which is similar to what the National Transportation Safety Board recommended in its November 2019 Safety Research Report on Bicyclist Safety. 

E-scooters have been quickly adopted by the Micromobility ride share business and many municipalities as “battery powered conveyances” and while there is still a great deal of controversy the traditional mainstream bicycle business and NABSA representing the new Micromobility economy have jointed together in advocating that e-scooters be included within the definition of ebikes, and in some states, bicycles.

The traditional, mainstream bicycle business, or the old economy, has been tracked at a total annual retail revenue of $6 billion for the better part of the last decade. 

Micromobility in America essentially took root with the 4 to 5 bike ride-share systems in 2010, defined by NACTO as having at least 10 stations with docks and 100 ride-share bicycles. By 2018 NACTO reported 55 bike ride-share systems with at least 10 stations and 100 ride-share bicycles from which people took 28 million trips.

As already noted, Micromobility is projected to be a significant part of a $200 billion to $300 billion business in the U.S. focusing on sustainable, environmentally friendly transportation connecting the first and last mile of, or completing journeys to work, school, shopping by the year 2030. 

The brands, companies and investors already involved in Micromobility, or the new economy, except for B-Cycle which is owned by Trek, are not from or involved in the old economy, and include:

            B-Cycle founded in 2008 and owned by Trek Bicycle Company

            Motivate founded in 2009 and owned by Lyft

            Jump founded in 2010 and owned by Uber

            Lime Transportation Company founded in 2017 private, largest investor Alphabet

            Zagster founded in 2007 private

            Spin founded in 2017owned by Ford

            PBSC Urban Solutions founded 2008

Specialty Bicycle Retailer, or bike shops have the best current opportunity to become involved in the bike ride share portion of the new Micromobility business economy by offering rentals, including renting an ebike with the rental fee applied to an eventual purchase.

Also, bike shops and brands have already started to lease both high-end bicycles and ebikes, which could become the preferred way of acquiring access to, but not actually owning going forward into the new decade.

We are rapidly heading toward a time when bicycle advocates will finally achieve what they have desired since the end of World War II.  There will be more Americans riding bicycles and other forms of human powered transportation. 

Thanks to Micromobility and bicycle ride share, bicycle ridership and participation including ebikes will reach double the incident rates of 2019 during this decade, but at the same time retail sales of bicycles will be flat to declining! 

The bicycle business trade associations will need to change the metrics used to measure success.

There are many factors that have triggered a renewed interest in, and are increasing sales of Electric Bicycles in the U.S., including the rapid deployment of ebikes in bicycle ride share fleets, and the aging of the population coupled with the desire of aging baby boomers to be mobile while growing healthier and living longer.

Some combination of these demographic changes is highly likely to trigger the next surge in the sale of electric bicycles, which didn’t emerge as strongly in 2017 or 2018 as originally thought – but will take off as a part of the future Micromobility movement.   

 In 2018 ebikes were the strongest selling retail category in the bike shop and specialty outdoor channels that together accounted for 19-percent of all new bicycles sales and 63-percent of annual new bicycle direct effect retail dollars.

The U.S. bicycle market is much different than the European bicycle market that it is often erroneously compared to.  With this said, ebikes will grow to become a major product segment in the American bicycle business, but we seriously doubt that it will gain the market share realized in bicycle friendly countries like Holland and Germany.

As already noted, in the month of July 2018 a trade war that erupted between the U.S. and China, the source country for a very high percentage of compete ebikes and ebike motors sold in and used to fabricate ebikes assembled in the U.S.

On August 7, 2018 the United States Trade Representative announced that the round of tariff increases that included ebikes and ebike motors had been approved.

This meant that tariffs on electric bicycles imported under Harmonized Tariff Schedule (HTS) headings 8711.60.00 or 8711.90.01 increase from zero to an import tariff of 25 percent.

Tariffs on e-bike motors imported under HTS heading 8501.31.40 increased from four percent to 29 percent. The tariffs went into effect on August 23, 2018 and are still being imposed and collected as of January 2020 and are not anticipated to be changed by signing of the Phase 1 trade deal between China and the U.S. January 15, 2020.

The impact of the 25-percent tariff is being felt in consumer pricing as ebike brands decide if they will absorb all or a portion of the increase in their cost, or pass some or all of the increase on to retailers and consumers in the form of price increases.

Despite this dampener, the natural growth trends for the ebike market in the U.S. remain positive and the probability of substantial growth going forward remains high.

All significant bicycle brands have added ebikes to their lines, including the high-end Trek, Specialized and Giant road and MTB offerings for 2020. 

Brands and all channels of retail can benefit by adding ebikes and related accessories including replacement parts and service. 

Demographics and the resulting changes in purchasing behavior, including the preference of younger consumers not to “own” assets and things will make rental and leasing options popular.

As the Circular economy expands there will be a growing market for used ebikes and refurbished lithium-ion batteries. 

The trade associations will need to consider including segmented and category definitions for ebikes to insure proper gathering of retail sales data for analysis.  Ebikes are now designed and available in the Road, MTB and Lifestyle / Leisure product categories and are quickly becoming an option within categories and not just a category choice. 

Internet and Retail are now intertwined.  Bricks-and-mortar retailers will struggle in the face of relentless competition from the likes of Amazon.  The situation is particularly dire in America where more than 12,000 stores faced extinction in 2019[8] and the number could rise as the economy slows in 2020.

Rising political uncertainty and changing consumer tastes will put the brakes on retail-sales growth globally, which is forecast to drop to 2-percent in 2020.

As online shopping increases, e-commerce revenue in the U.S. is forecast to increase to $120 billion in the coming year. 

Walmart, the largest employer in the U.S. and the county’s largest retailer of bicycles is reaping the benefits of making a substantial strategic investment in growing its online retail business which will thrive in 2020 despite being challenged by Amazon. 

Specialty bicycle retailers can gain the advantage over their online competitors by becoming omnichannel and developing a retail methodology that integrates the personal touch that can customize products and service to an individual customer while using 24-7 availability as a tool in creating a sticky third place that is valued in their community.

Also, the purpose of retail stores is changing and BOPIS, or buy online, pick-up in-store has gained a lot of traction and is a hot trend that bike shop and other specialty bicycle retailers can take advantage of as a key component of omnichannel strategies.

The specialty bicycle retail supply chain needs to focus on collaboration and shorting time to market and enhancing gross margin return on inventory up and down the supply chain.

The mass merchant and full-line sporting goods channels will experiment with sales of ebikes and leasing to attract up market consumers to relatively high-priced ebike products as the middle-class consumer continues to decline.

As American consumers become environmentally conscious adapting a Circular business model will become particularly viable for bike shops and specialty bicycle retailers.

Climate Emergency is what Climate Change and Global Warming were called in the last decade! 

Use of recycled materials and formal and proactive recycling and sustainability and the effect on the Climate Emergency is going to become increasingly important to consumers – and will be an important piece of strategic planning and sourcing tactics for manufactures, brands, distributors and retailers. 

Greta Thunberg and the Climate Strike movement have gained the attention of activists of all ages around the world, and the Climate Emergency is rapidly finding its way into global geopolitics.

The Climate Emergency will become a major factor and will be debated as a policy plank by the time the Democratic and Republican conventions roll-around this summer.

Candidates from both parties will be confronted by young people leading voters of all ages in demanding promises and pledges to be proactive and take immediate action concerning all the issued surrounding the climate and the environment.

Companies, brands and retailers are going to have to decide if they get actively involved, one way or the other, or try to stay on neutral ground and take no active position.  This will have to be a strategic and a moral decision that will be scrutinized by more than the board of directors for the good of the company and brand, because in the Internet age such decisions will be judged by its employees and its customers. 

The mainstream American bicycle business and the Micromobility economies will be impacted as the Climate Emergency and its weather events restrict the ability and desire of customers and consumers to ride and exercise outside.

Smart Trainers and Indoor Cycles have come into their own, partly because of the Climate Emergency and partly because fit athletic bicyclists are time starved and want an efficient and stimulating experience from each riding session.  The endorphin rush is no longer good enough! 

In 1990 trainers were primarily rollers and stationary exercisers.  At the beginning of the new millennium indoor trainers had evolved to wind, electric and hydraulic resistance and robust frames that could be used by amateur and professional bicyclists to warm up before a race. 

Over the last twenty years rollers have become old school and are rarely used, while trainers have become more sophisticated, spanned a whole new generation of Indoor Cycles from unplugged trainers with no electronics or connectivity to sophisticated electronics that can use an App to micro-adjust the fit to match the riders bicycle, replicate the riders shifting and transmission system, monitor full body function throughout a ride, measure work and connect through the Internet to high quality virtual reality riding scenarios and competitive environments with other riders from around the world.

And online providers of ride and race software like Zwift, Rouvy, The Sufferfest and TrainerRoad have formed marketing alliances with Smart Trainer and Indoor Cycle brands like Saris, Wahoo, Stages and Wattbike.

This segment of indoor cycling has gone from an accessory to a full-blown category with at least three distinct and definable product segments.  The bicycle business trade associations will need to modify the criteria for collecting retail sales data to include:

  • Unplugged indoor trainers to accommodate a bicycle
  • Plugged-in indoor trainers with connectivity to the Internet to accommodate a bicycle
  • Indoor Cycle that adjusts to an individual bicycle with connectivity to the Internet and duplicates a complete riding experience while plugged into ride simulation software.

Zwift has raised millions with the goal of having virtual racing become a professional sport – and even an Olympic event.  In September of 2019 Zwift signed an agreement with the International Cycling Union (UCI) to hold the first virtual Cycling Esports World Championships in 2020. 

There will be rapid growth of the Indoor Cycle segment of this multifaceted category and the top-end Indoor Cycling segment features retail price points from $1,500 to $4,000 and subscription-based ride and race software.  Look for one or more top tier bicycle brands to enter the segment with Indoor Cycles.

REI, the leader in the Specialty Outdoor retail channel is already a national retailer of the Wahoo Indoor Cycle and other Specialty Retailers, including Bike Shops have an opportunity to expand their representation of this emerging and evolving category.

The Summer Olympics in Tokyo will generate interest in all the Cycling Events, including BMX and the Sport of Cycling is going to get a boost through exposure to a broader global audience that is huge compared to the TV coverage the Tour de France and other Grand Tours get in the middle of the night – the Summer Olympics will get prime-time coverage.

Rock climbing, skateboarding, surfing and karate have been added as Olympic sports, and baseball and softball are returning to the games after 12-years.  These new “sports” along with the return of several old favorites and the continuation of young and old cycling events will help attract an audience in the U.S.

There is also the technology!  Beyond the avid cyclists, a wider audience of Americans will be interested in watching the technology from the UK and Australia that is being hyped now and will be covered by the news media for the six months leading up to the summer games.

BMX is already the leading sports related activity in the American bicycle market and as noted, it should get a nice up-tick from Olympic exposure – along with the track events where a lot of the new technology will be showcased up front and personal.

Bike shops and Specialty Bicycle Retailers have a golden opportunity to promote and host Olympic viewing events at their stores through the summer Olympic cycling events.

Technology and innovation go beyond the summer Olympics and Bosch will be hyping its Smart Glasses at the Consumer Electronics Show, or CES that starts January 10 in Las Vegas. 

We are also confident that Bosch will feature it new technology, including it Smart Glasses at the CABDA Trade Show in January, February and March.

3D printing has been a topic covered in our predictions about future technology for five years or more, and 2020 will be the year that 3D produced products have found their way to the bicycle business.

HEXR has introduced a fully custom bicycle helmet that is manufactured through a 3D process of printing from a unique headscan. 

Specialized and Italian brand Fizik have both introduce adaptive bike saddles utilizing a 3D printing process called digital light synthesis to build an individual saddle that can have varying densities of cushioning depending on what the rider prefers.

We believe this is just the start, and 2020 is the year that technology will be introduced in several categories of componentry and accessories, including communication and connectivity.

Pollution and air quality issues will drive purification and filtering systems for cycling helmets.  Safety will bring motorcycle clothing-airbag technology to bicycling along with enhanced reflectivity and innovations in active lighting, sensors and braking.    

This concludes our introduction to 2020 and our recommendations and insights for the coming year.  If you have questions or comments, please email jay@humanpoweredsolutions.com

Thank You and Enjoy the Future!

[1] I am opposed to all forms of whale hunting, but historically, a “Nantucket Sleighride”is an archaic term from the early days of industrial whaling, when the animals were harpooned from small open boats. Once harpooned, the whale attempts to flee, but the rope attached to the harpoon drags the whalers’ longboat along with it. The term refers to NantucketMassachusetts, the center of the American whaling industry; as well as the speed associated with riding in a horse-drawn sleigh. A Nantucket sleighride was extremely dangerous.

[2] The Economist: The World In 2020, on display until 2/18/2020

[3] A Catch-22: is a dilemma or difficult circumstance from which there is no escape because of mutually conflicting or dependent conditions.

[4] Globalization In Transition: The Future Of Trade And Value Chains published in January 2019 by McKinsey Global Institute

[5] A unilateral trade agreement is a commerce treaty that a nation imposes without regard to others. It benefits that one country only. It is unilateral because other nations have no choice in the matter. … Another type is a bilateral agreement between two countries.

[6] See Human Powered Solutions White Paper: Globalization and Global Trade are in Transition, not decline

[7] Reported by NABSA

[8] The Economist World In 2020 edition, page 115.

Micromobility Is the Future!

picture of micromobility

Micromobility is already disrupting the automobile industry and has started to disrupt transportation and transport and is contributing to the disruption of the America bicycle business. 

What Is Micromobility?

It is currently defined as urban transport in sub 500kg (1,102.3 pound) vehicles, that are human-powered, electrically assisted or electrically powered.

2018: The Year of Micromobility

During 2018 the American bicycle business and related industry changed profoundly as the economics of the traditional business were disrupted in part by the larger transportation and mobility sectors as they evolved and focused on Micromobility.  According to the National Association of City Transportation Officials (NACTO):

  • Micromobility offers some of the best city-based transportation mode options because they are the fastest way across town and can be parked just about anywhere.

Dockless pedal (non-electric) ride share bikes, which rapidly spread like wild-fire across the U.S. in 2016-2017 – have largely disappeared from American cities, with just 3 million trips in a handful of cities in 2018.

Electric bikes emerged as a popular option, accounting in 2018 for 6.5 million trips, 6 million in dockless systems and 500,000 in station-based systems.

What is Shared Micromobility?

According to NACTO Shared Micromobility “…encompasses all shared-use fleets of small, fully or partially human-powered vehicles, such as bikes, e-bikes and e-scooters.” All fit inside the definition of Micromobility that we presented previously. 

Uber, Lyft (automotive ride share) and Ford (automotive) have all made recent acquisitions in Shared Micromobility and Bosch (electric bicycle), along with Jump, owned by Uber, Motivate, owned by Lyft, BCycle owned by Trek are all members of the North American Bike Share Association (NABSA).

In 2018, Americans took 36.5 million trips on station-based bike share systems and as we have already referenced, 38.5 million trips on shared e-scooters.

Why Micromobility?

Micromobility services offer a tantalizing solution to address the first mile/last-mile problem and an opportunity to shrink transit deserts (neighborhoods underserviced by public transit services); limited survey data suggests that support for e-scooters tends to be highest among lower-income users.  

But Micromobility’ s potential extends well beyond connecting people to mass transit. More than half of the car trips taken annually in the United States cover less than five miles (8 kilometers), making those journeys open to short-range alternative modes such as e-scooters, bicycles and e-bikes.  

Micromobility investor and evangelist Oliver Bruce estimates that more than 1.4 trillion miles of annual US passenger travel—and more than 4 trillion miles globally—could be converted to Micromobility modes, an addressable market potentially worth hundreds of billions of dollars.

Micromobility rapidly attracts cash and customers

According to McKinsey, Micromobility has already attracted a strong customer base and has done so roughly two to three times faster than either car sharing or ride hailing. In just a few years, for instance, several Micromobility start-ups have amassed valuations that exceed $1 billion.

Two circumstances have driven this accelerated expansion:

First, most launches of shared Micromobility take place in conducive environments.

Micromobility appears to make people happy—it’s faster than car-based trips in many situations, and users often say the freedom of being in the fresh air traveling to their destinations while avoiding traffic jams puts a smile on their face.

Second, the economics of shared Micromobility are largely favorable to industry participants, generally ensuring lower break-even points.

Companies find it much easier to scale up Micromobility assets (for example, electric bikes) compared with car-based sharing solutions.

How big is the market?

McKinsey modeled the baseline shared Micromobility market and created a forecast, which revealed a 2030 market potential of roughly US$200 billion to US$300 billion in the United States, US$100 billion to US$150 billion in Europe, and US$30 billion to US$50 billion in China.

Growing the shared Micromobility market

While the base case represents a healthy market, the question arises: What is needed to grow the shared Micromobility market into a truly disruptive trillion-dollar business?

For this market potential and mileage cannibalization to become a reality, cities need to support shared Micromobility proactively. 

Whether the disruption Micromobility causes matches the hype generated so far will largely depend on how cities react to the service.

While the industry is hoping urban governments view Micromobility favorably as an antidote to congestion and pollution, and a way to provide consumers with an enjoyable alternative to gridlock, cities could instead see it negatively.  In fact, some anecdotal evidence of the latter has already surfaced.

So, in addition to building their businesses, Micromobility players will likely have to take proactive roles in lobbying for and shaping the industry in key urban areas.

What about the traditional, mainstream American bicycle business?

Growing Micromobility to its full market potential will also require an increase in the use of individually owned and individual investment in human powered transportation including bicycles, electric assist bicycles, electric scooters and light electric vehicles of all types.     

Electric bicycles represent one of the connectors for growth

Electric bicycles represent one of the connectors between the traditional mainstream American bicycle business and the emerging Micromobility ecosystem.

The reason: E-bikes are simply easier and more fun for people to ride. The extra push from a motor makes previously unconquerable hills manageable, and for people with mobility issues, older residents, or those who have not biked in a long time, the assist makes cycling more accessible.

Electric bikes also are effective in closing the distance between the “enthusiast cyclist” commuter set (typically fit, middle-age men who commute in spandex) and people who just want a reliable, efficient and environmentally friendly way to get around their city.

The bottom line – a broad range of people like electric bicycles.  Accordingly, they represent potential growth for the American bicycle business.

Bicycling Advocacy – disrupted and improved by Micromobility

For the last decade Federal funding for bicycling has averaged about US$800-US$880 million per year with projects ranging from trails to bicycling paths and designated lanes in cities. 

These funding levels were generally considered minimally acceptable by the traditional mainstream American bicycle business trade and advocacy associations – but are being challenged as not being adequate to sustain and grow the Micromobility movement in American cities. 

There seems to be agreement among the large consulting firms in McKinsey’s finding that: “…in addition to building their businesses, Micromobility players will likely have to take proactive roles in lobbying for and shaping the industry in key urban areas.”  

Accordingly, it also seems obvious that the issues of overall safety, accessibility and connectivity will require the Micromobility providers of the first mile/last-mile solution to become actively involved in bicycling and pedestrian Advocacy relative to cities.

It is both logical and inevitable that the traditional American bicycle business and the new Micromobility ecosystem will come-together to advance their mutual interests under the Micromobility banner and expand the bicycling, electric scooter and pedestrian access, connectivity and safety first-mile/last-mile network throughout American cities and suburbs. 

A reminder that America is not Europe

There has been a tendency over the last two decades to look to Europe as the example of what bicycle riding facilities and participation can be in both the short-and-long term future in America. 

The conventional wisdom that persists is that electric bicycles, or ebikes will be accepted and adapted by Americans in the same way they have been in Europe, where the category has grown over the last ten years to become the dominant category in the European market.

While we agree that there is little doubt that electric bicycles will be accepted and will grow substantially in the American market, it will take more time and there are and will be different reasons and motivations for market acceptance than has been experienced in Europe, and will be much more dependent on the connections and boost given by Micromobility. 

The role of technology

The rapid rise of Micromobility in the U.S. simply would not have been possible or be viable going forward without technology and specifically hand-held phones, cell technology and Apps.

By the beginning of 2019 shared Micromobility technology had expanded to include the latest in docking technology and communication, new dockless technology and Apps, new e-scooter dockless technology and Apps and electric bicycle options for both docking and dockless systems – all with either server based or cloud based data collection and storage and AI analysis. 

Ride share bicycles and scooters have driven the rapid development of a range of technology that will continue to evolve, and will have an impact on the development of both smart bicycles and the next generation of componentry for individual bicycles and electric bicycles that will contribute to the growth of Micromobility.

The future

Micromobility in form, function and definition didn’t exist 48-months ago.  It may not exist 48-months from now…but it already has – and no matter what it is called in the future – will continue to disrupt the establishment and the traditional channels of trade and advocacy. 

Human movement and transportation will continue to evolve and change and will be served in some way, shape or form.  Human Powered Solutions will be riding the wave, and whether it is Micromobility or its off-spring or replacement HPS will enjoy, participate, report, analyze, inform and advise its clients and fellow travelers in our community of interest. 

Look to The Future! 

Note: A Micromobility White Paper is available as a PDF file from this website.

It Isn’t Over till The Decider Decides!

I fear Bike Europe stretched the facts and overreached the reality of the situation November 7, 2019 when it reported: “Trump Tariffs To Be Phased-Out as US – China Trade War Is To End”.

The respected Dutch based bicycle industry trade publication reported: “It will bring enormous relief in both the United States as well as in China; this morning it was announced that the Trump Tariffs are to be phased-out.  This is to put an end to the trade war between America and China as well as the heavily raised import duties on many bicycle products that are imported from China into the U.S.” 

The U.S. trade press in the form of Bicycle Retailer And Industry News, or BRAIN was silent on the subject and has been up to this writing.  A wise move perhaps – although BRAIN is clearly avoiding its obligation to report and provide an accurate analysis of the fluid U.S. – China trade situation in a timely manner.

What happened between November 7 with the announcement by the Chinese Ministry of Commerce that the “…two countries have agreed to phase-out the existing import duties” and Friday November 8 was – The Decider[1]

Microsoft News, November 8, 2019

The first thing that sticks out to HPS in the English translation of the Chinese Ministry of Commerce is the line that states: “…if the first-phase deal with the US is signed, the levies will also be withdrawn, in line with the agreements made.” 

The word “if” is a logical way to refer to a deal that has neither been completed and committed to a written text, nor agreed to and signed by the parties.  But is also a caution from the Chinese that a first-phase deal has not been signed yet. 

Later in the same day the BBC News reported: “Potential US China trade deal could remove tariffs” and the New York Times reporting: “The U.S. and China agreed that an initial trade deal would roll back some tariffs placed on each others’ goods, a big step toward easing tensions.” Emphasis added.

Please note that I have underlined could and some in the above paragraph to emphasis them for the reader because by the end of the day BBC News reported: “Potential US-China trade deal could remove tariffs.”

Most of the world and most businesses at all levels of the global supply chain want an end to the China – U.S. trade war, including a rollback to the duty levels enforce before the confrontation started.  This explains the reception and very optimistic and positive interpretation of the Chinese Ministry of Commerce announcement.  The world was ready for and thought that the U.S. and China were about to do the right thing!

The same day, November 7 the New York times reported that the U.S. had collected $7 billion in import tariffs during the month of September, representing the most the U.S. had ever brought in as the punitive tariffs on Chinese imports had become in full force and effect.  U.S. tariff revenue increased 9-percent from August and was up over 59-percent from the previous year[1].  The sharp rise in U.S. tariff revenue was driven by a new 15-percent punitive tariff that was added on consumer goods that went into effect Sept. 1.  The Wall Street Journal reported on November 7 that 69-percent of all U.S. imports from China were covered by punitive, or additional tariffs in September 2019, and increase of 38-percent from the previous month.

No wonder the Sourcing Journal was so giddy at the prospect of the trade war being over that its headline to members on November 7 was: “BREAKING: China, US Agree to Phased Tariff Rollback – Apparel Could Go Unscathed”

By now most folks in the American bicycle business know and understand that the $7 billion in import tariffs was paid by the importers of record, and it was paid immediately upon the goods clearing U.S. Customs – so it became a part of the cost of goods as they entered the supply chain.

There has been some delay in passing the punitive tariff increase on to consumers, but this delay has or is about to come to an end, and like other commodities the full impact of punitive tariffs will show up in consumer prices in the form of increases.

Bike Europe, like so many others, wanted to believe the U.S. – China trade war was about to be over when it said: “Trump Tariffs To Be Phased-Out as US – China Trade War Is To End”.  But like so many others it still doesn’t understand the disruptive chaos that the Decider has at his command.

On Friday, November 8 president Donald Trump: “…told reporters he has not agreed to roll back tariffs on China.”

International trade watchers have come to understand that it really doesn’t matter what the Chinese negotiators or the Ministry of Commerce, or the U.S. negotiators say – the final word and all decisions on the U.S. side will be made by and come from – The Decider!

HPS will keep up with the twists and turns of U.S. – Chinese trade negotiations and provide strategic opinion and advice to clients and provide current reports on this Blog.

Jay Townley
Resident Futurist

[1] The new figures published by the New York Times are based on an analysis of official Commerce Department data compiled by Trade Partnership, an economic consulting firm, and released by Tariffs Hurt the Heartland, a coalition of business and agricultural groups who oppose the tariffs.

[1] “I am the decider” is credited to president George W. Bush and has not been used by president Trump.  This terminology has been introduced by the author of this HPS Blog post.

On Sunday September 1, 2019 …the American Bicycle Business got a lot harder!

On Sunday September 1, 2019
…the American Bicycle Business got a lot harder!

At 12:01 a.m., Sunday September 1, the latest round of tariffs on Chinese products took effect.

U.S. Customs began collecting a 15% punitive or additional tariff, equivalent to a tax on consumer products such as clothing, footwear, pens, pencils, diapers, Bluetooth ear buds, televisions, golf clubs, fishing line and a wide variety of bicycle parts and accessories and related apparel.

The official list of affected items runs 114 single-spaced pages of primarily consumer products imported into the U.S. from China that had not previously been subject to any additional tariff, over and above a regular tariff or no customs duty at all.

Specifically – lights, helmets, baby carriers, kickstands, wire baskets, carriers and racks, chain tensioners, toe clips, fenders, most handlebars, stems, seat posts, reflectors, headsets, horns, and suspension shocks imported into the U.S. from China became subject to a 15% punitive tariff to be added to any previously existing tariff, or no duty at all, effective Sunday, September 1, 2019.

Unlike previous punitive tariffs, there was no wiggle room on the September 1st date. Any listed item arriving at Customs in the U.S. from China subject to Customs inspection or clearance on and after 12:01 a.m. September 1, 2019 had the new, additional 15% tariff imposed.

With previous punitive tariffs, the United States Trade Representative (USTR) has allowed shipments that were on the water at the time the tariff was announced to enter the U.S. without the additional tariff. Not this time!

How did we get here? The President announced on August 1 that he would target $300 billion of Chinese goods with a 10% tariff on September 1. After hearing from retailers worried about a negative impact on holiday season sales, he opted to split the action into two parts, with a second round taking effect on December 15.

But after the Chinese retaliated by increasing their own levies on about $75 billion worth of American products, the American President suddenly doubled down. He increased to 15% the planned 10% levy and announced a separate increase to 30% from 25% on an earlier $250 billion of Chinese goods, to take effect October 1.

If the President proceeds with all of these planned punitive tariff actions, nearly 97 percent of all Chinese goods imported into the U.S. will be subject to taxes by mid December, according to economist Chad Bown of the Peterson Institute for International Economics.

These are “punitive” tariffs because the items covered were previously subject to an existing tariff or no tariff at all, and this new tariff is being added on and is in addition to any previous existing tariffs. This is also true of the new tariffs imposed on electric bicycles, electric motors and bicycles earlier this year.

As an example, items previously subject to 10% tariffs have or will have the additional punitive tariff of 15% add-on, so they will be subject to a total 25% tariff starting September 1st.

Most lights and helmets previously had no tariff, so the total tariff on both items will be 15% on and after September 1, 2019.

Lights that mount to the arm, leg, or helmet had an existing 3.5% tariff, so the total tariff on these items on and after September 1st will be 18.5%. Protective sunglasses and goggles also will receive the 15% punitive tariff starting September 1st.

Balance bikes were the one product category that was exempt from the September 1 punitive tariff, which, along with other exempted items will not receive the extra punitive tariff until December 15, 2019. The punitive tariff on balance bikes imported from China into the U.S. starting December 15 will also now be 15%, instead of the originally proposed 10% punitive tariff.

All of this is, as previously referenced, happening because on Friday, September 23, 2019 the President doubled down by tweeting that tariffs on the $250 billion of imports already in place will be raised to 30% from 25% on October. 1. He also said an additional tariff on the remaining $300 billion of imports set to go into effect on
September 1 will be imposed at a rate of 15%, rather than 10%. 

The 25% punitive tariffs already in place will increase to 30% on October 1, 2019, so 11% bicycles now being hit with 25% additional punitive tariff will get hit with an additional 5% October 1 and pay a total of 41%.

5.5% bicycles now being hit with 25% additional punitive tariff will get hit with an additional 5% October 1 and pay a total of 35.5%. The components and accessories that are now subject to the 25% punitive tariff will get hit with an additional 5% October 1.

“This is the first time U.S. consumers will see the costs quite directly, right as we head into the busiest shopping time of the year,” said Edward Alden, an economics professor at Western Washington University as recently quoted in the Washington Post.

This is because previous punitive or additional tariffs, for the most part affected the portion of supply chains up-stream from the consumer. Punitive tariffs on steel and aluminum, as an example, are being paid, over and above any previously existing tariffs, by the stamping houses, can makers and fabricators at two to three steps from the consumer.

As a result, the financial impact in the form of higher retail prices has been softened up until now by currency devaluation, suppliers and fabricators in the supply chain absorbing a portion of the additional cost, and by some retailers doing the same thing.

The American administration lead by the President has claimed the punitive tariffs imposed on Chinese imports are being paid by the Chinese government or manufacturers, when in fact the total financial burden has been on the American importers of record.

What professor Alden is pointing out is the fact that this latest punitive tariff will affect a large variety and number of consumer goods that are being imported from China by two step brands and wholesalers, and by retailers selling directly to consumers. This means the additional cost of the new punitive tariff will have to be passed on in whole or part.

Why can’t retailers in the U.S. simply “eat” or absorb all or a portion of the cost increase attributable to a punitive tariff? Not a lot of attention has been paid to the retail sector what with all the other issues swirling around lately.

According to the news media, including MoneyWise.com, approximately 7,500 retail store locations have closed through August 26 of this year and the current prediction for all of 2019 is a total of approximately 12,000 retail store closings!

The fact is – most American retailers simply can’t afford to absorb the cost increase that is coming at them because of the punitive tariffs on the products imported from China are substantial.

The American President recently accused business executives, some of whom oppose his tariff strategy of blaming him for their own failures. On August 20, 2019 he tweeted: 

“Badly run and weak companies are smartly blaming these small tariffs instead of themselves for bad management…and who can really blame them for doing that?

According to the Washington Post the President also told reporters that “13 percent of companies are going to be leaving China,” an apparent reference to a survey by the U.S.-China Business Council, which found that 87% of companies operating in the Chinese market plan to stay put despite trade tensions.

The Washington Post article went on to state that: “Only 3 percent of the 220 companies surveyed said they would relocate to the United States while 17 percent said they had reduced or halted planned investment in China.”

In an Op Ed published by BRAIN on June 5 of this year Human Powered Solutions referenced the fact that on May 22 the Secretary of the Treasury stated that he has personally been contacting America’s largest companies about their plans for weathering the trade war with China, including encouraging firms to reorient their supply
chains and source their products elsewhere.

On August 24, 2019, the President tweeted that he “hereby ordered” US companies to start looking at  alternatives to China on the basis of claimed powers which the White House later said were under the International Emergency Economic Powers Act (IEEPA), Title II of Public Law 95–223, 91 Statute 1626, enacted October 28, 1977.

The President, however, did not formally declare an emergency as required by IEEPA, and has not to date.

The IEEPA, is a United States federal law authorizing the President to regulate international commerce after declaring a national emergency in response to any unusual and extraordinary threat to the United States which has its source in whole or substantial part outside the United States.

IEEPA permits presidential emergency declarations only in response to threats originating outside the United States. Beginning with the Carter administration, in response to the Iran Hostage Crisis, presidents have invoked IEEPA to safeguard U.S. national security interests by freezing or “blocking” assets of belligerent foreign
governments, or certain foreign nationals abroad.

As an example, following the 9/11 terrorist attacks, President George W. Bush issued Executive Order 13224 under IEEPA to block the assets of terrorist organizations.

On May 30, 2019, the White House announced that President Donald Trump would use IEEPA powers to introduce tariffs on Mexican exports in response to the national security threat of illegal immigration from Mexico into the United States.

Relative to the May 30 Mexican situation, like the recent ordering of U.S. companies to start looking at alternatives to China, the President did not formally declare an emergency as required by IEEPA and has not to date.

Beyond tariffs, the trade hawks in the current administration, including those in the White House are pursuing what they call decoupling, or breaking up a relationship between American companies and Chinese suppliers and consumers that they now feel poses a long-term strategic threat to the United States.

The trade hawks hope to get American companies to shift their factories to friendlier countries. They are pushing to restrict Chinese investment in the United States and cut academic and other long standing relationships.

The majority of the Chinese bicycle business export trade is owned or controlled by Taiwanese companies and U.S. customers will be able to move sourcing, and some will go to Taiwan with the majority to other Southeast Asian countries where the Taiwanese and North Americans have already started or are starting factories and joint ventures.

However, the capacity in Taiwan and elsewhere in Southeast Asia is currently well below that required to replace Chinese sourcing to U.S. customers.

In addition, the bicycle manufacturing and delivery supply chain in China has been well developed and modernized (with the help and assistance of American, European and other Asian countries) over the last 40 years and are tied to the up-to-date and sophisticated Chinese logistics infrastructure that efficiently moves large quantities of consumer goods, including bicycles and related parts and accessories from production
facilities to U.S. ports.

The reality is, it will take two to four years, until 2021 – 2023 to completely resource the U.S. bicycle supply business out of China.

In the short term from 2019 through 2021 there will be dramatic disruptions to the bicycle and bicycle parts and accessories supply chains from China and South East Asia to the United States, further aggravating an already volatile and generally flat to declining traditional North American bicycle business sector that is being challenged by changing consumer demographics, shifting buying habits, economic and environmental
conditions and the rise of Micromobility.

According to a recent Bloomberg report Goldman Sachs Group Inc., Nomura Holdings Inc., and JPMorgan Chase and Co. are among the leading financial firms that have rewritten their forecasts as the U.S. threatens to impose a tariff on 97% of Chinese

Analysts at Nomura have made the U.S. threat their baseline forecast and see it as a 65% probability before year-end.

U.S. companies, brands and retailers should adapt their business plans to this baseline and revise and update economic and market assumptions in quarterly and six-month buckets and rolling planning horizons with regular monthly reviews and updates out through 2030.

Anyone interested in learning more can contact Human Powered Solutions by calling 920-351-4883 or filling out a request for a free consultation.