Like all things designed with good intent, the cost cap is becoming the penumbra under which all teams are beginning to feel the struggle of keeping within a budget despite crashed cars, development cycles desperately needed to solve major performance issues such as porpoising and now, increased freight charges and delays.
In my day job, I am confronted with global logistics challenges every day. The outrageous increase in freight costs due to a 44% spike in growth—which is 32%-37% higher than typical high-growth markets typically experience—in large part to due the direct to consumer trend increase during COVID-19 has brought logistics to its knees.
If you consider a standard Conex container used to cost approximately $800-$3000 to ship, today it has ballooned to $8000 or more. Nearly four times the amount it cost pre-COVID. Add to that the increase in fuel prices and you can see the increase immediately. Then there is for congestion.Where there used to be a ship or two waiting to load/unload, now there may be 33 to 38 cargo ships waiting days to dock.
Imagine trying to get 10 teams and all the great needed to host a Formula 1 race around the world during back-to-back or triple headers in 2022. The task is daunting and it’s already caught out Haas F1 during testing. DHL had to engage heroics in order to get gear for three teams to the Australian Grand Prix.
With that comes concerns about the congested and tight schedule in 2022 and Christian Horner told Jonathan Noble over at Motorsport:
“It’s a big challenge,” he said. “We have a very complicated calendar and there’s very tight timescales, and with some of the triple-headers, and double-headers coming up late in the year, obviously losing freight for a period of time could wreak havoc.
“So that’s one issue that we’re working, obviously, very closely with the logistic guys and Formula 1 with. But then, of course, there’s the cost element and I think freight is close to doubling this year.
“We see that in all the cost of living, we see inflation throughout the world and I think that, when you consider that freight is something that is currently within the cap, we need to find a sensible allowance that takes into account these inflationary costs.”
The important part of this comment is that freight is within the cost cap teams have to adhere by. With nearly a two-fold increase in freight, no one was anticipating that increase when the caps were calculated.
This means that teams have to factor in the cost of freight in their yearly spend and that could mean no more last-minute upgrades or over-night express shipping. In the consumer and commercial goods world, unfortunately that increase in cost has to be passed to the consumer via price increases but in F1, teams do not have that option to offset their freight increases.
Apart from the logistics nightmare of not getting gear to a race weekend on time causing delays, the other issue might be a needed increase in the cost cap to offset the freight bill. That may be a tough discussion within F1 but if you are a team who can’t afford to upgrade your car because you are paying twice as much for freight these days, it’s a battle worth fighting.