Supply chain crunch a 'nightmare' for local businesses

·12 min read

Already scrambling to adjust to current supply chain woes prompted by the COVID-19 pandemic, local businesses are now concerned with the potential effects record-breaking rainfall and flooding in B.C. — which have closed highways and cut off rail access to Canada’s biggest port — will have here at home.

Brandon Chamber of Commerce president Barry Cooper said the biggest question coming out of the flooding and the ongoing struggles with the global health crisis is how these factors will impact the timing and distribution of supplies across the country. He added it is difficult to assess what the long-term impacts will be and how long the effects could last. It could take anywhere from two weeks to six months for recovery to begin.

“It’s a disaster for the people of B.C. and it’s a disruption for us,” Cooper said. “Keep it in perspective that it’s a problem for us but an absolute disaster for them. I think we have to be aware of that, and our hearts go out to those folks and the things that they are battling through.”

The supply chain issues felt around the world during COVID-19 have only been exacerbated by the flooding wreaking havoc in B.C., essentially turning the port of Vancouver into an island separated from the rest of the country.

The Canadian Press reported limited access is slowly being restored to some B.C. highways after a state of emergency was declared due to widespread flooding in the southern region. The province may impose an order to prevent passage except for essential travel and commercial vehicles.

Every major route between the Lower Mainland and the Interior has been cut by washouts, flooding or landslides following record-breaking rainfall across southern B.C. between Saturday and Monday.

Repairing roads where debris has come down from above will likely be relatively straightforward, while in other places temporary bridges and detours may need to be put in place while major work is done. Areas where roads have been flooded and the water table has risen will likely be the most complicated, and construction will only become more difficult as the cold weather sets in.

The impacts of these closures can already be seen in Brandon.

“All you have to do is drive by a car [sales] lot and count vehicles and count empty spaces. You’ll find that most of the vehicles that are being sold now are being sold before they hit the lot. They’re being bought ... unseen,” Cooper said. “There are lots of things where the backlog between manufacturing and shipments is a big challenge.”

The supply chain has been broken during the pandemic, and it can even be a problem getting products on a container for shipment. Businesses are seeing a 10-fold increase in price to move items due to the cost and high demands for shipping.

Cooper said one of the biggest challenges businesses now face, especially those that are smaller and local, is how to pass those costs onto consumers.

“They can’t continue to eat them,” Cooper said.

Businesses face dire issues with shipping unpredictability because even now it is difficult to guess what will happen with the roads and rail lines in B.C. that have been affected by natural disasters.

Regardless of when the movement of products is restored, there will be long-term effects on the national supply chain, and the demand squeeze created by these unprecedented calamities will be felt in Brandon.

“We are seeing some supply chain issues already … at this moment really around fresh foods,” Cooper said.

Consumers will first feel the effects of a failing supply chain at the grocery store — anything out of California, including berries and leafy greens, will be re-rooted around British Columbia, likely causing price increases driven by the rising costs of transportation around the province.

The majority of these products will see a short-term disruption but the significant effects worldwide will grow as businesses already face significant supply issues. There is a huge backlog of ships sitting in the Vancouver Port that have already been experiencing delays.

“They were already having troubles getting unloaded in a timely manner and now they can’t get trucks in and out of there. The port has basically stopped,” Cooper said. “We were already seeing challenges in all major ports, not just Vancouver, around getting products unloaded — COVID stopped everything and [now] we’ve learned that restarting is harder [than] stopping.

“It’s hard to know how big an impact that is going to have, until we get a bit of handle on how these roads and railroads will reopen,” Cooper said.

Businesses knew they would be facing supply chain challenges as soon as COVID-19 hit, Cooper said, and it soon became an issue in March 2020.

The first signs of supply chain weakness began to emerge in the process of securing agricultural products — producers were buying up items out of fear that dealers might be closed due to the pandemic.

Consumers then became aware of these issues in March 2020 when they went to the grocery store and were met with shelves without toilet paper, paper towels, cleaning supplies and more.

Issues of supply have only been amplified over the last 20 months, especially with disasters like the ones in B.C., and will continue for the foreseeable future.

“Every wave contains a little bit more of a challenge,” Cooper said. “I think that we’re all getting better at learning how to navigate it.”

A shortage of products will become an experience people will grow more familiar with, Cooper mentioned.

“Revenge spending,” a term used to describe when people have a little extra cash in comparison to other years, such as in 2020, will likely create an increased demand for products this Christmas.

Cooper urged people to start shopping a little earlier in anticipation of the festive season and be open to the idea of choosing different gifts based on availability.

“There are fewer varieties available. There’s less selection this year and that’s just how it is,” Cooper said. “Local businesses are doing their absolute best to purchase products to get in their stores, to provide great service to people when they’re there, and I ask that people be kind to them and understand that some of this is just beyond [their] control.”

The Canadian Press reported Dennis Darby, president of Canadian Manufacturers, said the cost of a shipping container has gone from just under $2,000 in 2019 to about $10,000 as of November 2021.

The Bank of Canada has warned that problems are likely to worsen towards the end of the calendar year, before improving in 2022, and help push high inflation rates even higher.

Also acting as a hurdle is finding enough workers, such as truckers, to move goods across the country, Darby said.

The most recent jobs data from Statistics Canada noted that manufacturing in September remained 0.8 per cent below pre-pandemic employment levels, while transportation and warehousing was still 2.5 per cent below levels recorded in February 2020.

Green Spot Home and Garden Inc. owner Bernie Whetter said it has been difficult navigating the supply chain issues.

He is grateful because the shop has Christmas inventory leftover from 2020 due to several items being deemed non-essential in the province, rendering it unavailable to the public during hard lockdowns. These items are helping lessen the impact of supply chain delays.

The 2020 items have been pulled out to stock shelves, and new products ordered from overseas and shipped from Europe and Asia are slowly starting to arrive.

However, Whetter said, the backlog of shipments in Vancouver will affect the store.

These issues of shipments sitting and waiting to be brought to the mainland have been compounded due to a shortage of drivers, warehouse space shortages and boats unable to unload items.

“All year it’s been tough to get containers,” he said.

This crunch of cost has been magnified by the price of shipping. Typically a 40-foot container shipped from Europe or Asia costs about $6,000 but because of shortages, that price has climbed to between $18,000 to $24,000 per container.

He added the Green Spot was also affected by a cargo ship carrying Christmas lights for the shop that caught fire in October in Vancouver.

Since the flooding hit B.C., nothing has been able to get out of Vancouver, he said, so even if freight companies were able to move products onto the mainland, there is nowhere for them to go until roads and railways reopen.

“That has come to an absolute halt until they can figure out a road,” Whetter said. “They think that by next week, they might be able to route things through Highway 3.”

He added moving items through the United States is also a possibility, but this will add to the already lengthy time it is taking items to arrive at the Green Spot.

He expects that it will be about a two-week delay until a new route can be found, but that will still add time as the detour will not be as quick as the Trans-Canada Highway.

These delays will impact the Christmas greens, wreaths and Grinch trees available at the shop along with some holiday décor. Things are being safely stored in B.C. for now, he said, and will arrive at the store eventually.

“It’s just been chaos — it’s really devastating,” Whetter said. “There is nothing any of us can do about it. I know that they are working as hard as they can to make it work. There are millions and millions of dollars tied up in this.”

Vendors have absorbed these costs, but consumers will soon face an increase in retail prices due to high demand and low supply.

Customers have for the most part been understanding during the supply chain issues, he added, because it is a situation that is beyond anyone’s control.

Real Christmas trees will be available at the Green Spot as they come from eastern Canada, and the Manitoba-grown poinsettias are also in stock. He cautioned that the supply of Christmas trees has been cut back by about 40 per cent.

“The rush [at the Green Spot] has been a little earlier and a little heavier, but it’s certainly not anything that we can’t handle at this point,” Whetter said. “With our new facility, we’re just excited for Christmas. We’re ready to go.”

Brian Johnson, Extreme Electronics general manager, said in an email the supply chain issues have been challenging for the store.

This adversity was amplified when the store was forced to close its doors due to COVID-19 public health measures from November 2020 to January 2021. The closure caused them to miss Black Friday and Boxing Day sales, which are crucial times for generating revenue.

“Some products we ordered a year and a half ago still have not arrived. We’re buying as much stock as we can from wherever we can or that is available, but in a lot of cases, even now, customers are being told not to expect to receive it till January,” Johnson said.

The prices of some products have increased at the store, and he expects rising costs will be a reality for both local businesses and consumers.

“To be honest, I’m hopeful and optimistic that we will do OK through Black Friday and through December, and Boxing Day and ... into the next year,” Johnson said. “We have some great customers, that are very understanding, and are going out of their way to shop local and support the community. To them, I say thank you very much from all the local merchants.”

Dan Saunders of Active Muffler and Auto Repair has been feeling the squeeze of supply chain shortages since mid-2020 when the effects of COVID-19 first rippled across the world.

It has been a turbulent time trying to get stock for repairs, Saunders said, because what was once quick and simple fixes for customers can now take months based on the availability of parts.

“We really can’t always book [cars] in because I don’t always know if the parts are available. If we did book it in and parts aren’t available, then we get stuck because then the vehicle is on the hoist and tore apart.”

He added Active Muffler is doing its best to keep customers on the road because many families are also feeling the keen economic sting of COVID-19 and are down to one car.

It has become a daily task speaking with customers explaining it will take several weeks or months to secure a needed part for a repair. These can be upsetting conversations but the supply chain breakdown is something beyond the control of local business owners.

This is a situation that can leave small business owners feeling powerless, he said.

For his businesses, his workload has nearly tripled during the pandemic.

“The stock [has] depleted beyond belief and it’s only going to get worse,” Saunders said. “If you waved the magic wand today and everything was fine, our industry is so backed up now, that even if everything as of Dec. 1 went back to normal, it would easily take a year for us to get caught back up.”

Parts for the automotive industry typically come from the east, but the vehicles shipped to dealerships come from the west.

Active Muffler will be largely unaffected in terms of supplies by British Columbia, but his customers will feel the supply chain pinch.

“He can’t buy his car, I can’t safety it; it snowballs. A little community like we are, we rely on all that small business,” Saunders said. “Right now, it’s a fight.”

The supply chain trouble affects every aspect of the automotive industry, Saunders said, because every part of production is currently on hold or delayed.

This is on top of products sitting in shipping containers waiting to be sent out.

These challenges of securing stock are in turn driving up the price of items for consumers. Saunders estimates that on his end alone the cost of securing parts has risen by around 20 per cent.

He is hoping for some stability to be established in the future, because as of now there is none, without even factoring in issues like B.C.

“It’s not a good time to be in small business right now,” Saunders said. “It’s a nightmare.”

» ckemp@brandonsun.com

» Twitter: @The_ChelseaKemp

Chelsea Kemp, Local Journalism Initiative Reporter, Brandon Sun

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