Global Supply Chain Difficulties in 2021

While 15 percent¹ of all foodservice establishments didn't make it through the pandemic, the foodservice industry is finally looking up: The COVID-19 crisis is slowly being curbed by vaccine distribution, local governments are lifting restrictions on indoor service, and spring has made outdoor dining much more attractive. Many operators are gearing up to expand their operations or use government grants to replace old equipment, but they are running into problems getting the new equipment they need.

The global supply chain is facing several significant difficulties, some resulting from the pandemic and some from unique occurrences – like a ship getting stuck in a canal. Everything from big-ticket refrigerators to more replaceable glassware has been hit by this slowdown in the global supply chain. While this might inconvenience an operator looking to expand, the slowdown could also cripple a business actively needing to replace broken equipment or stock up on disposable items. We'll explain what's causing it, which items are being impacted, and how long these delays might last.

Why Is Everything Backordered?

All types of restaurant equipment are facing unprecedented backorders, shipping delays, and broad unavailability. Items that used to ship in days now have lead times measured in months. The supply chain is incredibly complex, stretching across the world over dozens of borders and thousands of miles of ocean; currently, the manufacturing industry is facing challenges in every one of these areas.

The problems create exponential delays, as well, and one setback can't be fixed until the previous one has been addressed. Our system has redundancies built in to counteract these types of problems, but when everything slows down at once, even the backups fail.

Raw material production has slowed due to Covid.
Factories are having trouble finding appropriately skilled workers.
Demand has increased across the board.
To top it all off, a ship got stuck in the Suez Canal and blocked billions of dollars of trade for six days.

What happened to the raw materials?

Mines across the world have been working at reduced capacity to try and shield the workers from the coronavirus. In the cramped spaces of a mine, where fresh air is already limited, a contagious virus can spread like wildfire. To counteract this danger, many mines have reduced their operation to enable social distancing between miners. Of course, this results in fewer raw materials being extracted, and what is extracted goes for a higher price because of the higher demand. This problem can only be resolved when the different countries in which the mines are located get the virus under control, relax their Covid restrictions, and permit full-capacity mines again.

Why are factories slowing down?

Factories are experiencing compounded complications. First, just like the mines and other raw material production operations, factories are implementing social distancing protocols to protect their workers from contracting and spreading the coronavirus. Second, they can't get materials from the mines and other producers. This means factories, which are already running more slowly than normal because of the pandemic, can't run at all until they get delayed shipments of raw materials to begin work.

Additionally, now that some parts of the world are coming out of pandemic lockdown, factories are having trouble finding workers to fill important positions.² Factories across the country are unable to find qualified candidates for machinists, welders, and other skilled manufacturing positions, which means even when a factory gets materials, creating the products takes longer than it normally would.

Why has demand increased?

Many of the leisure activities that would normally occupy consumers have been prohibited due to the virus; thus, consumers are spending their money on goods to try and make time spent at home more pleasant.³ A good chunk of the money that would usually go to theme parks, restaurants, and vacation spots has instead been spent on concrete goods.

In the United States, people have also received stimulus checks, which have temporarily inflated the spending power of the recipients. Additionally, some companies, including most restaurants, have received stimulus funds that can be redirected into new commercial equipment. All these factors together have driven up demand for all sorts of goods, including restaurant equipment. Production is slower, but there are also more people buying what little is made.

Why does one stuck ship stop global trade?

The Suez Canal runs between the Red Sea and the Mediterranean Sea and, more importantly, between the Indian Ocean and most of Europe's waterways. This makes the Suez Canal the fastest way to ship goods from India, China, and the rest of Asia to Europe. Approximately 12 percent of global trade goes through the Suez Canal,⁴ and it took six days to get the ship unstuck. The ship completely blocked the canal's traffic going one direction, leaving hundreds of other ships stuck behind it. Nearly 10 billion dollars of trade were blocked each day.

The canal blockage compounded the other supply chain woes, and even though the ship has been freed and trade can resume passage through the canal, some businesses are going to be weeks behind. Oil is one of the main trade goods that passes through the canal, so even if none of the raw materials or pieces related to your product come through the Suez Canal, the oil slowdown will still have wide-reaching effects.

Additionally, the world is running low on container ships since so many have been caught up in the blockage. Those ships were slower in unloading their cargo and thus slower in taking on new cargo.

What Items Are Affected?

Nearly every type of equipment has been affected by at least one of these problems because the global pandemic has caused worldwide slowdowns in manufacturing, resource harvesting, and transportation. Even items made nearby that aren't affected by the shipping slowdowns are subjected to backorder delays because of increased demands and a shortage of skilled workers. Everything from melamine plates to commercial ranges to restaurant furniture is facing abnormal lead times. Items that were recently a two-week lead are now a two-month lead; some are delayed without even an estimate as to when they'll be available.

While we strive to keep the estimates on our shopping pages accurate, the uncertain nature of these supply chain instabilities mean there will be some delays that slip through the cracks. Our sales team will keep you informed as to the status of your order, and we'll get every product shipped as soon as we can.

When Will These Delays End?

Everyone in the supply chain is working diligently to get everything back in normal working order, but as with the pandemic, we can only wait and see how it goes. As America opens back up, factories and mines in the country will start producing higher volumes of product, and demand for material goods may go back to normal levels, which will help alleviate the first few issues. On the other hand, the pandemic is affecting different parts of the globe at different rates, so some places will return to normal much more slowly than others.

Manufacturers and distributors are doing everything they can to make more products available – but we know this doesn't make operators feel any better while they wait for a vital piece of equipment. Planning ahead as far as possible can alleviate some of the worst of this global slowdown, but that's not always an option. If you need assistance ordering equipment or supplies, contact the KaTom team for more information on what is currently available. In the meantime, we'll keep working to solve these supply chain challenges.

Resources

2021 State of the Foodservice Equipment Industry. FER Mag. Accessed April 2021.
U.S. factories desperate for workers, even as ranks of jobless remains high. Reuters. Accessed April 2021.
Supply Chain Woes Threaten to Slow Foodservice Recovery. FES Mag. Accessed April 2021.
The cost of the Suez Canal blockage. BBC. Accessed May 2021.