Supply chain problems are rocking almost every industry from Starbucks to cars — pretty much every sector 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 how deep the problems run — and it’s all tied to the pandemic.
“It’s just kind of crazy. We’re trying to get back to normal from COVID-19 and everything, but we’re still far from that,” said Forest Evans, who works in Seattle. He said he’s been shopping for a secondhand car but is finding that the starting price is around $15,000.
“They’re 100% more expensive than last year,” he said. Microchips and other raw material shortages have led to a short supply of new cars and driven up the price of old ones.
Starbucks confirmed it’s pulled oat milk from its stores and app until it can secure more inventory. A spokesperson said other supply shortages vary by shop. In Seattle’s Ballard neighborhood on Monday, breakfast sandwiches and many of the pink or purple Starbucks “Refreshers” drinks were hard to come by.
“I guess, this year, things got turned sideways,” said Daniel Ramiro, owner of Alteza Restaurant Supply in Seattle. Ramiro said demand for inventory has never been this intense.
“We turn around, and we’re like everybody, ‘I have a refrigerator! I have a range!’ And it’s like, ‘Ahhh,’” Ramiro said. “The demand the competition for one item — this is actually very unique,” he said.
Alteza has a warehouse in Renton that can’t be kept stocked. Ramiro said he’s even started selling items from his Seattle showroom.
“This is a very high in demand prep cooler right now,” Ramiro said. “Just the most common things that are very, very vital. Very vital. They’re starting to run out,” he said. Ramiro said he expected the cooler in his showroom to be snapped up quickly.
Bill Keough is the managing director of the Supply Chain Transportation & Logistics Master’s program at the University of Washington.
“Now you’ve got this floodgate of demand — not only because people are sick of being in their house but also because people have saved twice as much money,” Keough said.
But he said the real drive behind the shortages on the supply side — whether we’re talking about cars, cups or coolers — all goes back to labor.
Keough explained that supply chains have long paths and that products have to go through multiple steps, starting from what they were as raw materials. To produce a paper cup, someone had to chop down a tree, someone else made it into pulp, and then that would be turned into cardboard. Another company produced the cup before it’s packaged, transported, then sold from a warehouse or retail store. When almost all manufacturing slowed down during the pandemic, that caused the shortage we’re feeling now.
“If you think about that, there’s a lot of inventory in the supply chain that was being used up over the past six months or something like that. Now there’s no more inventory anywhere,” Keough said.
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 reported the price for using an empty shipping container has increased tenfold — from $1,000 to $10,000.
The latest demand for labor is also adding to the problem.
“Now you’ve got to quickly bring them back. Restaurants and places like that — they’re having trouble getting people to come back,” Keough said. “There has to be people around to drive the stuff, to maintain the trains,” he said.
The higher costs will eventually be passed to you — the consumer.
“This will produce a lot of inflation in the economy,” Keough said.
It’s something, Ramiro said, happening in a dramatic way. He said the manufacturers they buy from have already sent three notices of price increases this year, which is about a 10% price hike every month or two.
Ramiro said the prep cooler in his showroom now costs nearly $2,000, which is about $400 more than last year.
“The longer I hold it, the more it’s going to go up. The value just keeps increasing and increasing,” he said.
Ramiro said he’s recommending customers who need a big-ticket item like a dishwasher, fridge or range to consider ordering as early as possible.
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