EXCLUSIVE: Turbulence in catering equipment supply chain keeps industry awake at night

Container ships

Foodservice equipment suppliers are working around the clock to tackle supply chain issues that are stretching lead times and hampering stock availability.

Rising transportation costs, shipping delays and components shortages have heaped enormous pressure on the catering equipment channel in recent months, particularly for UK importers that source from Western Europe and the Far East.

But even British manufacturers aren’t completely sheltered from the volatility, as many rely on components from overseas for assembly.

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A number of companies have been forced to move to longer lead times for manufacture until the situation settles down, but at the moment there is no telling when that will be.

It is thought that the shortages would have been more acute had it not been for the fact that a lot of brands built up their inventory levels ahead of Brexit.

Sources say that deals involving products such as refrigeration equipment and ice machines are increasingly being won by who has product immediately available for delivery, while in some cases manufacturers are providing customers with higher spec kit at no added cost in order not to lose the business.

At the same time, manufacturers face a huge challenge to absorb rising costs, making further price increases inevitable. One combi oven maker said its factory had seen the cost of a fuse holder soar from €1 to €49, while other components made from stainless steel had grown fourfold.

Jacquie Jenkins, managing director at Wales-based distributor HB Catering & Refrigeration, said that unpredictability around pricing has massive implications for project work in particular.

“Manufacturers are under enormous pressure at the moment to absorb material and shipping costs, and at some point this all gets fed down the chain. We are starting to see price increases and it creates even more work for us in the office because normally you quote a customer and know that when they accept it 30 days later, for example, the price will still be the same. We are now having to get more quotations in writing and ensure that they are live for 60 days or whatever it may be because prices are starting to change so fast.”

Other logistics challenges are emerging, too. Haulage pressures and a shortage of drivers have forced manufacturers to use the services of providers they may not have done business with before.

Ms Jenkins said: “Delivery services seem pushed to the limit. Whereas normally we might expect to get a next-day delivery, we’ve now got carriers trying to deliver to us at 10 o’clock at night so that is also becoming a problem because we do sleep sometimes!

“We’re also noticing, particularly with equipment delivery, that some companies are using carriers they wouldn’t normally use and kit is arriving damaged, which is something that is quite unusual. I think we’ve had three or four deliveries of late where we’ve had equipment with dents and bangs and bumps on it. These are the kind of knock-on things that can happen when you’re forced to try and adapt and conditions are changing all the time.”

Chris Jones, group managing director of Middleby Commercial Foodservice, said supply chain challenges certainly kept him awake at night and that logistics delays were clearly an issue globally.

“We were lucky in that we bought £1m of components because of Brexit so that has fallen quite nicely for Lincat because it has given us a buffer – but obviously we didn’t know the pandemic was coming when we did that. It has been at the front of our mindset since the pandemic and Middleby globally have people working hard on the supply chain – they realised from the very beginning that this was going to cause a supply chain issue and have been focused on nipping it in the bud as it has gone along.

“We have our challenges, there is no doubt about it. With components supplies, it is not so much getting them, it is failed deliveries all the time. The supply chain seems to be elongated more than anything. It is not that you can’t have it – it’s a case of ‘next week or the week after’ – and that causes issues when you are trying to plan production.”

Hot-holding specialist Flexeserve said it has also seen componentry supplies from Europe become challenging, but it too has benefitted from pre-Brexit planning.

Customer experience director, Warwick Wakefield, commented:  “Back in the day when we used to talk about Brexit instead of the pandemic, we invested in components stock from our European supply chain and as a result of that we ended up in a really good position when the pandemic hit. Our UK supply chain has been incredible – they’ve really held our hand and stayed strong with us. We try to use as many local suppliers as we possibly can to us here in Leicestershire.”

Glenn Roberts, national head of sales at Winterhalter, said that disruption to global supply chains has also peaked at a time when many markets – not just the UK – are bouncing back.

“We are seeing quite a significant increase in demand now across continental Europe as various markets are coming in and out of things and our two factories in Germany and our factory in Switzerland are working full tilt to hit those numbers now.

“We are hearing from peer group companies and others out there that things are starting to bite a little bit, but in some ways it’s a good problem because it means there is demand back in the market. But, of course, it still doesn’t help when people want something yesterday or they have been used to a just-in-time delivery service for a decade or so. It only takes one small thing in that just-in-time logistical supply chain to fail and it becomes a problem.”

Industry trade bodies EFCEM and the FEA said last week that their members were encountering numerous logistics obstacles and warned that shortages and delays could hinder the market’s recovery.

They said copper, plastics and components of all sorts were in short supply, as well as some specialist items such as wooden utensils, but the biggest concern remains stainless steel.

One member described supply as “hand to mouth”, while another said its stainless steel supplier had raised prices by 5% and then 7% within a short period of time.

Another brand importing motors for its products from Italy said lead times had rocketed from four weeks to 12 due to a combination of component shortages and logistics issues.

And transport hold-ups meant that wait-times of 18 weeks from date of order were now not uncommon, compared to four weeks pre-pandemic.

Phil Williams, managing director of Victor Manufacturing and chair of EFCEM, said: “Until stocks are re-established effectively by supply chains, locally and internationally, and until the shipping companies have realigned their services, the recommendation is to place orders early with suppliers so that you are ahead of the queue.

“Manufacturers and importers have experienced procurement teams working hard on their sourcing strategy to get customers the product they need as quickly as possible – but you may need to be patient.”

EDITOR’S VIEW: Freight crisis threatens to nudge catering equipment prices in an uncomfortable direction

Tags : catering equipmentlogisticssupply chain
Andrew Seymour

The author Andrew Seymour

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