Supply chain - Driving towards higher costs

We talk to wholesalers and retailers

ToL and THS – ‘additional costs in coming months’

Both Tree of Life and The Health Store, owned by Health Made Easy Group, have fairly stable workforces.

And having spent a lot of time planning around the pandemic, they have not had too many issues with that either.

However, the latest wave had more of an impact with staff having to isolate due to being ‘pinged' than actual positive cases.

“Going forward I can see risk with schools reopening and also Christmas,” says Tree of Life Commercial Director, Tim Ryan. “However, we have managed throughout the pandemic to get orders processed in a fairly timely manner.

“When resources were rationed we took a very practical stance of protecting and rewarding loyalty within our customer base.”

As far as the supply chain is concerned, Ryan says there are always shortages because both businesses hold over 10,000 SKUs.

“So within a range of that size, it is not possible to guess future demand correctly for every line. Historical levels would be between 85-90% across both businesses. However, at the peak of the panic buying, this was reduced to below 50%. At this point, we were restricting quantities on orders and filtering out speculative orders from non-regular customers.”

A few suppliers have stopped moving goods into the UK if they believe that there will be issues with clearing customs, or incremental costs that mean the trade is no longer profitable.

“Currently, we have no slippage on order processing except for the Republic of Ireland where the additional paperwork is delaying the shipping of goods by up to three days and the erratic clearing at customs led to us to stop shipping chilled and frozen goods,” he adds.

“There has been no specific effect on pricing yet. However, everyone can see that there are additional costs in doing business that will start to get passed on through the next few months.”

CLF Distribution - 'expect price rises'

The biggest problem facing the health food and natural products industry is the increasing cost of transport in and out of the country.

Robin Holiday, MD of CLF Distribution, says all third-party transport companies are adding surcharges and increasing rate cards by as much as 15%. And the company's own drivers are asking for more money, in some cases as much as 17%, because they can get better pay elsewhere.

Meanwhile product coming into CLF is often delayed due to driver shortages.

“The biggest challenge is with our own brand product produced overseas where we pay the freight,” he says. “There are shortages on land transport and containers for ocean freight. Where we were paying $2500 for a 40ft container we are being asked to pay double if we want to move our freight. This is most certainly the case for other companies so I expect we will see price rises.

“The third party transport issues are also no doubt going to result in price increases. The cost in customs clearance for EU goods now matches the costs we normally experience when buying from the rest of the world so that is not really an issue. But exporting is really challenging in terms of the cost of freight and export documentation required.”

Wholesale Health - increased packing costs

Thus far, Wholesale Health hasn't been hit by any of the staffing issues due to Brexit or people being ‘pinged'. “Fingers crossed it stays that way,” says MD Lucy Redfern.

“However, we have encountered shortages across our range of packaging, such as pots, bottles and lids. Our manufacturers have been able to offer alternatives, whether that be a different colour or type, but fortunately they have always found a way around it. Although, in most cases, this is at our expense.

“We have also seen an increase in the price of paper and card twice since the pandemic started. This has impacted on the cost of leaflets and product boxes, and on the packaging used to send our orders out.

“On top of this, freight costs have increased from the USA as a result of the pandemic, and from the EU as a result of Brexit with the extra customs charges now in place.

“So costs are up all around which unfortunately means we have had to increase some prices, but not across the board and only where necessary.”

Essential Trading still fulfilling orders

Although overseas supplier driver shortages have affected Essential Trading's business, the internal workforce has not been affected by current circumstances.

Essential's Jimmy Nelson points to a different sort of problem: “We have found that empty containers are taking longer to reach their destinations to be filled with products, due to transport issues. Then they are being left empty for a longer period before being filled.

“Despite the euro drivers issue, we have still been able to fulfil orders. There have been delays but we've caught up on deliveries due to a very capable buying team who are able to closely look at all the buying trends and historical data and order in advance.”

Driving towards higher costs...