Survey finds supply and shipping issues forcing members to reconsider operations

Tariffs, shipping challenges and supply shortages are converging on the foodservice equipment and supplies industry. The current situation is forcing members to alter supply chains, shift the ways finished goods are shipped to customers and delaying the delivery of products. These findings are part of a recent NAFEM-member survey of that found supply issues are impacting members’ abilities to control costs, compete and grow.

“The survey feedback paints a clear picture of the multiple challenges facing the industry,” said Charlie Souhrada, CFSP, NAFEM’s vice president, regulatory & technical affairs. “This input will guide NAFEM’s work as we advocate for solutions to this wide variety of interrelated issues.”

Rate the following supply chain issues in order of impact on your business
(1=highest, 5=lowest)

  1. Supply shortages
  2. Rising cost of shipping
  3. International shipping delays
  4. Section 301 tariffs on imports from China
  5. Section 232 tariffs on steel/aluminum

Members responding to the survey report supply shortages and the rising cost of shipping are their top two concerns, with international shipping delays and tariffs close behind. As for supply shortages, steel and aluminum are the most prevalent, but respondents also are impacted by shortages of plastics and semi-conductor chips, lumber, wire and wire harnesses and other items. In response, members are sourcing new vendors both within and outside the countries where they currently source. Overall, respondents are unclear whether removal of the Section 232 tariffs on imported steel and aluminum would provide needed relief.

Recently, shipping also has become a significant concern for members with the vast majority of respondents reporting being negatively impacted by delays and cost increases in ocean freight and truck transportation. More than half of the respondents also say delays and cost increases in air and intermodal shipping are having a negative impact on their businesses.

Concerning imports from China, 60 percent of respondents reported experiencing supply issues that, like metals shortages, are forcing them to shift supply chains by sourcing new vendors both in China and in countries including India, Malaysia, Mexico, South Korea, Taiwan, Thailand, Turkey and Vietnam. Similar to their feedback on the Section 232 tariffs, respondents also are unsure whether the removal of Section 301 tariffs on imports from China would provide relief.

Together, shipping and supply issues are resulting in delays in respondents both receiving materials and component parts, and in customer deliveries of finished goods.

In the survey, NAFEM also sought to understand the degree of members’ concerns with the current state of U.S. infrastructure, including public transit, roads, dams, airports, etc. Those responding were about evenly divided, with 51 percent very concerned or concerned and 49 percent somewhat or not concerned.

“While highlighting a frustrating situation for members, the results of this survey help illustrate the important issues facing the industry,” Charlie said. “The findings, including better understanding the locations and number of employees for each member, are important in advocacy outreach with state and national elected and appointed officials. “The survey was distributed to 400 member company contacts in early April; 41 members – or about 10 percent – responded for the statistically valid findings.