Local retailers and restaurants face supply chain issues across the board

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Business owners and consumers are seeing the effects of the pandemic on supply chains, causing shipping delays, price increases or unavailability of products, from Christmas trees to fish to items in paper.

The Leander, Savory Alaska-based seafood company is an example of how rising market costs have affected prices for consumers. Nathanael Ferguson, owner of the business with his wife Sarah, said the seafood market, especially shellfish prices, had recently exploded.

Ferguson said crab was hard to come by and he chose not to purchase shrimp when the season opened in October because it would not be affordable for customers.

The company also stopped selling scallops because costs rose 71% in addition to a 38% increase in shipping costs. In November, Ferguson saw such a dramatic increase in costs for his scallop order that he told the producer he had to wait for prices to moderate.

“I cannot pass this total cost increase on to my customers,” he said. “No one in their right mind would pay it.”

Fish like salmon, cod and halibut have also increased, but less dramatically, Ferguson said. One of Savory Alaska’s best products, halibut, has seen its prices increase by about 19% from 2020 to 2021.

The Ferguson’s have chosen to share the difference in cost increases with customers, and it’s hard to predict when the seafood industry will improve, as fishermen don’t know how much processors will pay for their produce until just before. every season.

“I want this to continue to be a product our customers can afford,” Ferguson said. “To do that, I just have to eat a bit of the price hike and hope that next year’s prices will be more reasonable.”

What is happening

Supply chains refer to the trade in intermediate goods, “which is twice as important as the market value of finished goods,” according to the Texas Comptroller’s Office. Over the summer, product and raw material shortages are caused by the pandemic, which “has only exposed and exacerbated existing vulnerabilities and risks to the supply chain network.”

Sam Tenenbaum, chief analyst and central Texas economist for commercial real estate information company CoStar Group, said when pandemic restrictions were first put in place last year, both demand and supply of most goods have declined considerably.

However, as restrictions continue to lift and federal stimulus measures amplify demand for goods faster than expected, suppliers are struggling to keep up, according to Tenenbaum.

“We all expected the economy to weaken significantly [because of COVID-19 and] consumer spending has gone down… but it hasn’t really happened, ”Tenenbaum said. “A lot of large factory operations can’t shut down all at once, then turn around and restart operations at full capacity in a matter of weeks. This is not really how everything works.

Tenenbaum said COVID-19 has also changed the way consumers spend their money. Before the pandemic, services, not goods, made up the majority of consumer spending, but the pandemic was a game-changer, he said.

“COVID[-19] sort of made those personal interactions closer which are much more service-oriented and certainly more dangerous, ”Tenenbaum said.

He said the change had led consumers to spend more on goods than on services almost overnight, an increase in demand that contributed to inflation.

Rare supplies

Smokey Mo’s BBQ, headquartered in Leander, has experienced persistent problems finding paper products for customers, including the increased number of customers to take out restaurants.

While the company has seen ebbs and flows in the availability of pork and beef, the supply of paper products such as plastic bags and styrofoam cups has been an ongoing problem, said Chad Krause, director of operations for Smokey Mo’s BBQ, which has locations in Austin, San Antonio, and northern Houston areas.

When available, there may be sizes other than desired, such as 12 ounce cups when servings are only eight ounces. Restaurant owners have bought products like Styrofoam cups from wholesale stores like Sam’s Club when regular suppliers cannot ship products to Smokey Mo’s.

The company has seen prices for these items increase by as much as 30%, Krause said.

“Instead of making adjustments, changing prices, and raising prices, we just took on that responsibility,” Krause said. “Hopefully in the short term.”

The company changed its name earlier this year, and Krause said it was impossible to find suppliers for new plastic bags or plastic “trophy cups”. He was told their rebranded supplies could be ready in the second or third quarter of 2022.

“We can get cups for a week and then all of a sudden we’re back to styrofoam cups,” Krause said. “It’s still very inconsistent.”

Krause also said that Smokey Mo’s had times when he bought breast from three brands rather than their regular contract supplier. There was also a period in August where a rib was substituted which cost double the price as it was the only option available.

Locally, Cedar Park Chamber of Commerce president Tony Moline said businesses in Cedar Park have faced a range of issues from shipping issues with suppliers to delivery delays. These problems are accompanied by staff shortages and are catalyzed by the winter storm in February, which temporarily shut down part of manufacturing in Texas.

“I think people are really starting to see a lot of things come to fruition now that it’s shopping season,” Moline said. “People are starting to see things that are not in stock.”

Tenenbaum said it expects manufacturers to make some changes in response to global supply chain issues so that they are better prepared to deal with future disruptions.

The most notable change predicted by Tenenbaum is the reduction of overseas manufacturing in favor of local manufacturing in order to reduce reliance on the global supply chain.

“Now that we sort of understand the difficulties of a global supply chain, I think what we’ll see is an offshoring or offshoring, where we take the manufacturing process back to the United States or we keep more of it. inventory of this item, ”Tenenbaum mentioned.

Shipping dilemmas

Papa Noel Christmas Trees saw “an anomaly” in the 2020 tree buying season, which led to the company’s very first sales, said Beau Coan, director of operations for the company. 2020 trends made the 2021 season difficult to plan, so Papa Noel opened his seven tree locations in central Texas on November 17 – the company’s first opening date – and shipped his stock to ‘trees earlier than usual.

“People want their trees sooner than ever,” he said. “They’re looking for the best tree they can get, and they know it’s going the fastest.”

Coan said inventory shortages were not a major issue for Papa Noel since the company supplies the majority of its trees. Between 7,000 and 8,000 trees come from their farm in North Carolina and about 4,000 trees come from the Pacific Northwest.

But the company has struggled to receive its trees from the West Coast as the trucking industry has experienced a shortage of drivers and rising fuel costs, Coan said. Data from the US Bureau and Labor Statistics show that as of October, about 9,000 jobs in the trucking industry remained vacant from pre-pandemic levels nationwide.

Coan estimated a 10-15% increase in shipping costs, which vary depending on the week and the origin of the trees. Trees are cheaper to ship from the east coast than from the west coast, Coan said.

“It’s one of those things as a seasonal business that we just have to run and manage,” Coan said. “We still have to bring trees down here, so we kind of have to play along.”

Tree buyers are seeing slight increases in the cost of their tree this year, but the increased shipping cost is ultimately passed on to the customer to keep the business alive, Coan said. The company has chosen not to increase prices in 2020 due to the pandemic, as the company is sensitive to price increases despite increasing shipping costs each year.

“This year we just have to play the game to stay afloat,” Coan said. “We have to increase it a bit to cover our costs. But we try to be gentle with it.

Likewise, furniture buyers may see increased costs on top of the wait times of several months for some furniture deliveries. Adam Block, owner of Austin’s Furniture Outlet in Cedar Park, said the Bell Boulevard furniture store saw a spike in demand in May 2020 at the start of the pandemic, as people spent more time at home. Today, demand has returned to near pre-pandemic levels, although the store is still experiencing high demand due to the growth in square footage.

Block said furniture Waiting times depend on the location of the manufacturer. Furniture from Mexico might have a delivery time of two to three weeks, while furniture made in Asia might not be ready until March 2022. Wait times also depend on the type of furniture and what is. already in stock, Block said.

Customers could pay up to 30% more for sofas, bedroom sets and other furniture, Block said.

“It really depends on what you had to choose,” Block said. “Some stuff is badly affected, but some things are going well.”

Carson Ganong contributed to this report.


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