Local businesses face supply chain issues and rising costs
When Lucy Cooper’s Texas Ice House announced plans to open a new store in Braunfels in late spring 2021, president and owner Braunda Smith planned to open his second restaurant in a few months.
As the end of 2021 approaches, Smith said she was still struggling with equipment delays and supply shortages that made it difficult to estimate when the restaurant would open.
“We keep getting pushed back,” Smith said. “I ordered a three compartment sink months ago and am not sure when it can or cannot fit. “
Supply chain scarcity, delivery delays and rising costs have taken their toll on consumers and business owners as industries continue to grapple with coronavirus restrictions and backlogs. shipping.
Facility closures and lockdown measures in the early months of the coronavirus pandemic have helped shut down production and soar the costs of many consumer goods, according to a report from the American Farm Bureau Federation.
“The public is frustrated when they go to [the store] and they’re limited to two packs of chicken wings, ”Smith said. “Well, we’ve been dealing with it now since last August. “
As the holiday season approaches and suppliers forecast demand for merchandise to increase further, Smith said current high costs and shipping delays are expected to persist.
Supplies dwindle under COVID-19 restrictions
In October, the consumer price index rose 6.2% year-on-year in the United States, the largest increase since November 1990, according to the United States Bureau of Labor Statistics.
The Consumer Price Index, or CPI, measures inflation by tracking the price movement of a selection of goods and services as determined by the Bureau of Labor Statistics.
Goods such as food and gasoline are included in the consumer basket of the CPI.
In Texas, the CPI rose 5.41% in September from 2020, according to the Texas Comptroller.
While many factors are contributing to inflation, Sam Tenenbaum, economist at CoStar Group, said factory closures and global shipping delays caused by the coronavirus pandemic sparked the recent wave of problems.
“A lot of price increases are in a way the domino effect of the [COVID-19] supply chain problem, ”Tenenbaum said. “A lot of manufacturing operations cannot shut down all at once, then restart and restart operations at full capacity in a matter of weeks. “
During the closures instituted at the start of the pandemic, many manufacturing facilities and shipping centers were temporarily closed, Tenenbaum said.
“We all expected the economy to weaken significantly and consumer spending to decline,” Tenenbaum said. “But that didn’t really happen, as the federal government stepped in and provided interim measure to get us to the other side of the pandemic.”
As spending on services such as haircuts and travel plummeted, federal stimulus funds and rising unemployment benefits have led to increased demand for consumer goods.
With the reopening of manufacturing and commercial industries, demand quickly outstripped supply and exacerbated shortages, Tenenbaum said. Delivery times from the country of origin to the market have also increased significantly, said William Chittenden, associate professor at the McCoy College of Business Administration at Texas State University.
“In 2019, the end-to-end transit time between China and the United States was 40 days. And today it’s almost double: 73 days, ”said Chittenden.
Plastic products have become scarce, said Madison Monaco, chef at Sylver Spoon restaurant in New Braunfels. When Monaco was able to find the equipment and supplies it needed, they were often significantly more expensive than before the pandemic.
A beverage dispenser ordered by Smith in May was not delivered until October due to equipment and labor shortages, she said.
As product prices have risen, owners of businesses like Monaco have said they have changed their services in an attempt to keep costs down.
“We’ve changed the menu a bit, so it’s still fine dining but a bit cheaper for us,” she said. “I realized that I was worrying a lot more about food every second. “
Seana Rousseau, owner of The Chain Link Bicycle Shop in downtown New Braunfels, said she has an overdue bicycle inventory that continues to grow with only a few at a time.
“I still have 70 bikes out of stock since last October,” Rousseau said. “I take two at a time, maybe. “
Rousseau said the problem is similar with bicycle parts and accessories, such as tubes and tires.
“I started stocking things that I wouldn’t have bought before… I’m just filling in the gaps with whatever I can,” she said.
The increase in manufacturing delays has also resulted in increases in wholesale prices. An average price of $ 400 per bike now stands at around $ 600, a 50% increase. It is difficult to justify passing this increase on to the client, Rousseau said.
“I ordered a high end bike for someone who took me 9 months to get it. It was around $ 5,000 … The retail price went up and so did my cost but I [had] Sold it to him before … I lost $ 600 on that one, ”she said.
Prepare for continuous delays
According to Federal Reserve estimates, price hikes and shipping delays are expected to continue throughout the new year as demand increases during the holiday season and major industries struggle to find supply. workforce.
The Federal Reserve is responsible for conducting national monetary policy, supervising and regulating banks, maintaining national financial stability, and providing banking services.
The long-term effects of the pandemic and the ensuing supply chain problems are likely to force business owners and consumers to adjust their spending and expectations, Smith said.
Smith said she still doesn’t know when she’ll be able to open Lucy Cooper’s Texas Ice House New Braunfels location, and other businesses in the area would likely continue to experience chain delays. supply, she said.
“It’s not just about the virus anymore. It’s about the cause and the effect of what is created, ”Smith said. “We all need to look at the challenges we have and find an opportunity that works for every business owner. “
Carson Ganong contributed to this report.