Supply chain issues are rocking nearly every industry, from Starbucks to cars — just about every industry you can think of.
If you open your Starbucks app, the first thing you get is a pop-up that reads: “Sorry for the inconvenience, some items are temporarily unavailable”.
But that’s just a sign of the depth of the problems – and it’s all pandemic-related.
“It’s just a little crazy. We’re trying to get back to normal after COVID-19 and everything, but we’re still a long way from that,” said Forest Evans, who works in Seattle. He said he was looking for a car used, but found that the starting price was around $15,000.
“They are 100% more expensive than last year,” he said. Microchips and other raw material shortages have led to a shortage of new cars and driven up the price of old ones.
Starbucks has confirmed that it has removed oat milk from its stores and app until it can secure more inventory. A spokesperson said other supply shortages vary by store. In the Ballard neighborhood of Seattle on Monday, breakfast sandwiches and many pink or purple “refreshing” drinks from Starbucks were hard to come by.
“I guess this year things got sideways,” said Daniel Ramiro, owner of Alteza Restaurant Supply in Seattle. Ramiro said the demand for inventory has never been greater.
“We turn around, and we say to ourselves like everyone else: ‘I have a refrigerator! I have a range!’ And it’s like, ‘Ahhh,’ Ramiro said, ‘Competition’s demand for an item — it’s actually very unique,’ he said.
Alteza has a warehouse in Renton that cannot be stocked. Ramiro said he even started selling items from his Seattle showroom.
“This is a hot prep cooler right now,” Ramiro said. “Just the most common things that are very, very vital. Very vital. They are starting to run out,” he said. Ramiro said he expected his showroom cooler to be picked up quickly.
Bill Keough is the Managing Director of the University of Washington’s Master’s in Transportation and Supply Chain Logistics program.
“Now you have this demand valve — not just because people are tired of being in their homes, but also because people have saved twice as much money,” Keough said.
But he said the real driver of supply-side shortages – whether cars, cups or coolers – comes back to work.
Keough explained that supply chains have long paths and products have to go through many stages, starting with what they were as raw materials. To produce a paper cup, someone had to chop down a tree, someone else made paper pulp out of it, and then it became cardboard. Another company produced the mug before it was packaged, transported, and then sold from a warehouse or retail store. When almost all manufacturing slowed down during the pandemic, it caused the shortage we are currently feeling.
“If you think about it, there is a lot of inventory in the supply chain that has been used in the last six months or something. Now there is no inventory anywhere,” said said Keough.
Combine that with the sudden surge in demand as states simultaneously reopen, and you have a big problem.
Keough said shipping costs from China have tripled. Ramiro said manufacturers he works with have reported that the price of using an empty shipping container has increased tenfold, from $1,000 to $10,000.
The latest labor demand also adds to the problem.
“Now you have to bring them back quickly. Restaurants and places like that — they have a hard time keeping people coming back,” Keough said. “There must be people around to drive the equipment, to maintain the trains,” he said.
The higher costs will eventually be passed on to you, the consumer.
“It’s going to produce a lot of inflation in the economy,” Keough said.
It’s something, Ramiro said, that happens in a dramatic way. He said the manufacturers they buy from have already sent out three price increase notices this year, which amounts to a price increase of about 10% every month or every two months.
Ramiro said the prep cooler in his showroom now costs nearly $2,000, about $400 more than last year.
“The longer I hold it, the higher it will go. The value just keeps going up and up,” he said.
Ramiro said he recommends customers who need a big-ticket item like a dishwasher, fridge or stove consider ordering as soon as possible.
©2021 Cox Media Group