Pandemic creates unpredictability in floral hardgoods supply chain
As things look and feel like they are returning back to normal, there are still many areas that have yet to rebound from the effects of the pandemic. One of those areas is product availability on the floral hardgoods side. We went from a very stable and predictable flow of product in 2019 to an environment now that is totally unpredictable in terms of both when product will be received and what the cost of that product will be once it arrives.
The root causes of both supply disruptions and price increases are many:
- Factories overseas were forced to sporadically close due to COVID, thus creating significant gaps in production. When they came back online they were faced with labor shortages as the workforce overseas, limited as it is here in the U.S, opted to move to other job functions, which put them less at risk of contracting the virus.
- Once they were back producing, the backlog of product leaving Asian ports resulted in unprecedented demand for space-aboard vessels. Shipping rates have tripled relative to last year, which has put tremendous pressure on product costs. Some importers have decided to forgo shipping low-cost items in the hope that rates will come down in the not-too-distant future. Most analysts see these problems continuing in 2022.
- Shipping containers are also in short supply. When everything shut down last spring, most of the containers ended up being concentrated in the wrong places. The backups in many U.S. ports were so bad, that many container ships headed back to China without containers on board, because the wait to have them loaded would have been too long. As a result, product is now waiting to leave China, but there are no containers to load the product on and no space on the ships to take them,.
- Certain raw materials are in short supply also. A combination of surging demand along with some of the supply chain shut for a period of time due to Covid is contributing to this,
- The shortages were not solely confined to overseas supply lines, but to those in the U.S. as well. In addition to factory closures, many production facilities had to rapidly change gears to accommodate shifting consumer demands as a result of the lockdowns. For example, domestic glass production was stalled significantly as assembly lines that were focused on producing wide varieties of vases turned their focus to items such as mixing bowls, measuring cups, wine bottles and other containers that experienced large surges in demand during the pandemic.
To mitigate this as we head into the fall and winter selling seasons, here are a few practical steps to prepare:
- Make sure that you are planning early for the product that you will need for fall and the holiday selling seasons. If you are fortunate, you may be able to procure product from your suppliers carryover stock from last year. This will allow you to both have the product for sale and to avoid potential cost increases down the road.
- Stay on top of your pricing. If you have carryover items from last year and the prices of those items have risen dramatically, ensure that you are reacting in kind so that these prices are in line with the new product you’re bringing in.
- If inventory and space allows, take some risk with Christmas containers, etc. that can also be used for Valentine’s Day. In the process, you can forgo possible supply issues as well as increased pricing.
Planning and foresight will be the keys as we all look to maximize every potential sale this year.
Nick Fronduto is chief operating officer at Jacobson Floral Supply in Boston. He can be contacted at [email protected].