Container Excess Dwell Fee and Raw Material Shortage Impacts Karat Customers
Issues at the Port of Los Angeles and the Port of Long Beach, a large part of the global supply chain debacle, have become a national emergency. At the White House, the Biden Administration has created the Biden-Harris Supply Chain Disruptions Task Force to help address the issues at the port that have led to increasing inflation and inventory shortages across the nation.
In mid-October, the task force announced a 24/7 port schedule1 and urged private retailers to pick up containers at night when transportation is more efficient. This has done little to alleviate the issues as last week there was a record 73 cargo ships anchored outside the ports waiting for their turn to unload. With such a significant bottleneck, some shippers are canceling travels in December from Asia to avoid being stuck there.
Last week in an attempt to relieve the congestion, the Biden Administration rolled out another initiative2. As of Monday, November 1st, all shippers will be charged a fee of $100 per day per container that is kept at the dock over 3 days, if scheduled to leave by rail, or 9 days for transportation via truck. These fines will be passed to importers, including Karat by Lollicup, and so forth until ultimately the consumer bears the grunt.
Fines can be as much as $500K a month for larger importers, yet it will not make a large enough impact on the situation at the docks because there is still a shortage of staff at the port to load containers onto trucks and inland there are full warehouses with no more room for additional containers.
At the other end of the supply chain, a global shortage of raw materials has contributed to further inflation rates as material costs rise sharply3. For restaurant supplies, many foodservice operators are already experiencing higher prices and even many out of stock issues. Paper mills are increasing prices monthly which affects paper cold cups, paper hot cups, paper cup sleeves, paper food trays, and more. PET and PP resin added an additional 5-13% increase in November that will impact cups and lids sold by all restaurant suppliers.
All across the supply chain, from raw material to production to transport, there is a snowball effect that is leading to price increases at every point. With the holiday shopping season in full swing, is it not possible for businesses to catch up. Conservative predictions foresee these issues to continue well into the first quarter of 2022, however, it is more likely to run into the 2nd half of next year.
Karat by Lollicup works diligently to find the most reliable suppliers with the best prices, but additional price increases are expected. As always, customers will be well informed of any changes to come.
For more information about the latest news and trends, check out https://www.karatpackaging.com/latest-news/ .
Resources
1 Wilkie, Christina (2021, October 13) White House plan aims to help key West Coast ports stay open 24/7 to ease supply chain bottlenecks. CNBC. https://www.cnbc.com/2021/10/13/supply-chain-biden-backs-running-west-coast-ports-24-7-to-ease-bottlenecks.html
2 Lynch, David J. (2021, October 26) Stubborn supply chain woes are resisting Biden’s remedies. The Washington Post. https://www.washingtonpost.com/business/2021/10/26/supply-chain-ports-fees-biden/
3 Reuters (2021, October 28) Factbox: U.S. companies raise product prices to tackle wage, raw material inflation. Reuters. https://www.reuters.com/business/us-companies-raise-product-prices-tackle-wage-raw-material-inflation-2021-07-23/