Supply chain challenges suffocate small businesses – business news – .

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Supply chain challenges suffocate small businesses – business news – .


Before the COVID-19 pandemic, Helmi Ansari could have espresso machines and stainless steel water bottles made within three months and delivered to Canada by ship for around US $ 4,500 per shipping container.

Between labor shortages, rising stainless steel costs and overwhelmed ports, those days are over. Ansari’s products now take nearly a year to manufacture, and he pays about US $ 28,500 to ship 10,000 to Canada, assuming he can get them shipped.

He often outbid the boat berths and had to prevent shipping companies from sending his goods back to the factory by offering more money.

“All our margins have disappeared. We sell products, but we don’t make money, ”said Ansari, owner of Grosche International in Cambridge, Ont.

“This is insane. There is absolutely no way that a small business like ours can really continue to deal with this. “

The pressures Ansari faces as he struggles to keep his business alive are reflected in small businesses across the country.

They feel the tightening labor market and supply chain challenges – semiconductor shortages, skyrocketing shipping costs, safeguarded ports and flooded areas of British Columbia – but haven’t not enough weight or money to get out of trouble.

The timing couldn’t be worse. With the winter break in full swing, late shipments and bare shelves could be disastrous for the busiest selling season of the year.

The outcome could be even bleaker for businesses that relied on this time to help them bounce back from COVID-19 shutdowns and even avoid bankruptcy.

“It’s a matter of survival,” Ansari said of the supply chain challenges, which prompted his 15-year-old company to take out its first bank loan.

“We have people who depend on our business to be able to put food on the table, so we have to make sure the business survives, but not having inventory would mean… we would have to lay off staff. “

Ansari has resisted the price hike, but knows that many other companies have taken this route as transport demand is at an all time high and packages are piling up in many ports, allowing shippers to raise prices. In some cases the cost has more than tripled.

The Drewry World Container Index, for example, showed that the rate of movement of a 40-foot container from Rotterdam to New York reached US $ 6,214 in early December and had jumped 208% from last year. The Shanghai-Rotterdam route was even more expensive at US $ 13,500, up 283% from last year.

Prices are also rising because Statistics Canada said the annual rate of inflation reached 4.7% last month, the largest year-over-year increase in the Consumer Price Index since. February 2003.

Food prices rose 4% last month alone.

“The meat went up by about $ 2 a pound and my co-packer said it went up by 25 cents,” said Lola Adeyemi, founder of It’s Souper, a Toronto-based company that makes Afro-fusion soups.

It had to raise prices to cope with inflation and a labor shortage at a company hired by Adeyemi to make its new line of sauces that kicked off just as the products needed to be packaged.

Adeyemi had no choice but to rent a kitchen, stock up on supplies, and turn to friends, who took time off to help her cook and bottle lots of green peppers and of peri-peri sauces.

“I still don’t know if I will be able to produce it through the producer or if I will have to continue producing it myself,” she said.

David Yeaman has seen many small businesses face similar challenges or struggle to have products made or shipped from overseas.

“We have people who are definitely struggling and looking to retool right now,” said Oro Medonte, Ontario president of Molded Precision Components, who has tried to quickly relocate their manufacturing.

While companies often switched to overseas production before the pandemic due to falling costs, Yeaman said shipping prices and other expenses have increased so dramatically that companies are no longer saving money. so much thanks to overseas manufacturing.

Myriam Maguire, the Montreal designer behind Maguire Boutique, understands these risks.

She had to create waiting lists for products sold through her fashion business after European factories were closed during COVID-19 outbreaks. The factories have reopened, but now problems are looming in Asia.

His hand-made $ 300 combat boots in Florence were delayed four times because Maguire’s outsole supplier struggled to get an ingredient from China.

“Even when they’re produced in Italy, the main chemical comes from China, but right now China is keeping as much of it for themselves as possible, so it’s really struggling,” Maguire said.

She gets by by shipping products by air and using presales and waiting lists to train customers to expect delays.

About 300 people are on the waiting list for combat boots, with no complaints so far.

“During the pandemic, people were ordering stuff from Amazon that would arrive a month or two after, so people got used to it,” Maguire said.

“The fact that they’re more patient really helps small businesses. ”

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