The Real Ugly Impact on the Lawn & Garden Industry
Supply shortages. Delivery woes. The good, the bad, and the Arett Sales commitment.
The Good:
We don’t have to tell you, the demand for lawn and garden products has surged. The lockdown inspired consumers to spend time and money on their homes. Now, pent-up consumer demand is fueling spending as people become more optimistic about a return to normal after COVID-19 restrictions begin to lift. That is the good news. While the sun is shining down on a new spring/summer season, the supply chain and import issues have created the perfect storm and are creating a real nightmare for our industry.
The Bad:
All the links in the supply chain are stretched. We are all seeing a disruption in trade that the world has not seen, and it is driving up costs on several levels. The ships, the trucks, the warehouses…the pain is being felt industry wide. The increased costs of importing containers have gone up significantly and it is primarily due to surcharges that have doubled. Several factors have created this perfect storm.
- Imports into the US from Asia/Pacific have significantly increased with an acceleration in March 2021, jumping a whomping 22% from February 2021 for a total of 1.66 million TEU. This is also up a staggering 90.5% from the same month a year ago. According to IHS Markit PIERS, March was the second busiest month in the history of the Transpacific trade, surpassed only by the 2020 Peak season month of October.
- Freight cost of shipping containers from Asia to the US averaged $5000 in June 2020. Current rates average $13000 and are still rising.
Importers, including Arett, are receiving confirmed bookings weeks before departure only to be informed the week of shipping their order will not be loaded to the vessel and they must reschedule a booking. Arett Sales imports from all over the world, and while each country, province, or port has unique challenges, everyone is experiencing delays and cost increases included China, Vietnam, India, Europe, Malaysia, and more.
This is a classic supply and demand model causing double digits increases. As demand continues to rise, so do costs. Those costs affect the bottom line but also have a negative impact on shipping. There are significant container and chassis shortages at most US ports. Ships arriving into West Coast ports are delayed 7-10 days and it is getting worse. Domestically, trucking is at or near capacity. Railroads that deliver containers within the US are at a standstill and not accepting new bookings to complete the delivery. There are not enough qualified drivers and dockworkers, pay rates have increased resulting in the limited availability of workers and drivers causing delays and moving cargo throughout the country. In addition, the price of diesel fuel has increased 19% since January and it’s 23% higher than just one year ago. All these issues lead to higher costs for transportation and yes, delays. While no one has a crystal ball, these additional freight costs and shipping challenges will not end anytime soon and most likely will carry through into 2022.
It’s not just finished goods that are affected. You may be buying from a domestic vendor but if they buy their components from overseas, then those prices are going up. Material price spikes and the shortage of workers all appear to be tied to supply and demand issues. Do you know that bamboo rake your customers can’t find? It’s because there’s a shortage of material. Can’t get those tomato cages in time? There’s a domestic labor shortage. The ripple effect throughout the country and resulting in delays in production, delivery, and higher costs.
The Arett Sales Commitment:
For distributors like Arett Sales, these are unplanned costs that hit our bottom line and we are working to take the impact to avoid passing the full increase along to retailers. While the global impact on import cost has been felt for a while, it is now affecting distributors across the nation. No industry is immune. As your partner, Arett Sales is working hard to make sure you are informed about the issues we face and the efforts we are making to get through what is sure to be a bumpy ride. We are committed to doing what is right and fair for both Arett and our customers therefore, we are simply passing through the additional costs for these container shipments, which in most cases are minimal.
We are leveraging our relations to get priority for supplies and products to take the burden off you, our customers. We are absorbing some of the costs, and as your partner, we guarantee we are doing all we can to get the best prices, lowest supply costs, and shipping rates to offset any additional costs to you.
Much like you, our Independent Garden retail partners, Arett Sales is a family business – four generations strong. We know your challenges and appreciate your business. The Arett management, sales staff, customer services, warehouse workers, and the entire team are doing all we can to support you during this time.
The impact on our industry is something that Arett Sales is managing. As we leverage our relationships to negotiate the best import deals, delays and extra charges may arise. However, we are working to move goods on schedule without additional fees. We are planning ahead and working every day to find ways to help weather the storm together.
