As we watch the country’s foodservice industry jolt back to life at a startling pace, operators are rushing to serve American consumers coming out of hibernation. A little cacophony, a little chaos - a busy dining room. Forks tinkling on porcelain, champagne bottles popping, and loud, unmasked chatter. It sounds like people spending money again. One could even call this time a ‘new golden age’ referencing the Roaring ‘20s.
Let’s consider the context. Usually, when someone says, “it’s time to buy,” it implies a buyer’s market. The most basic economic principles have taught us that when demand has been low, supply should be high, and vice versa. It teaches consumers that the best time to buy is when prices are low.
At face value, it looks like demand is getting higher, and supply is depleting in response to that demand. As such, we’ve have seen price increases throughout the foodservice industry. The truth is far more complex. Our global supply chain has been in a chokehold for quite some time, and the damage is now becoming more visible.
“We didn’t see this far enough away,” says Jeff Hessel, President of BSE Marketing. “After four months of closed mines coupled with five months of inventory on hand at the manufacturer level, people start to run out of inventory.”
The supply of the product itself, coupled with restrictions on labor, provided the perfect storm for the current supply chain conundrum.
And then, in March, the Suez Canal became a meme. Reports flooded in about a massive container ship, the Ever Given, completely wedged into the sand, blocking off one of the most important arteries that facilitates global trade. It took almost a week to free the boat and cost the global economy an estimated $10 billion for each day that it was stuck, adding insult to injury and putting a very real price tag on this issue.
“(P)rices for the metals used in [equipment and supplies] have increased dramatically. This trend continued in April-May, according to the latest price data from MetalMiner. Global prices for copper are at a record high and spiked another 10.6% in April. Raw steel prices have nearly tripled in the past year and rose another 9% globally in April with prices for most grades up double digits in the US as demand from automakers soars. Aluminum prices are on a similar path, up another 7.7% in April,” as reported in The Ashton Report.
It will take time for manufacturers to increase their output to pre-pandemic levels, for freight forwarders to ship their backlogs as well as current shipments, before stasis between supply and demand is once again achieved. Until then, smart and strategic purchasing and our substantial inventory of equipment and supplies are helping Singer Equipment Company mitigate supply chain disruptions. Disruption or otherwise, we are dedicated to finding innovative solutions to our customers’ needs.
To learn more, contact marketing@singerequipment.com today.
