Granite State companies face global shortages and transportation disruption

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Val Zanchuk, CEO of Graphicast Inc. in Jaffrey, doesn’t want to be a weak link in the supply chain, but he can’t stock up fast enough, and now the backlog to fill customer orders has reached nearly one year.

Consider his attempt to replace a diseased furnace built in Germany. The replacement was due to arrive in July, but the supplier’s supplier was unable to obtain any parts, so it was shipped two weeks late. Then it was stranded in Belgium because of a Covid epidemic on the ship. When it finally got to Newark, it was on the ship for weeks because there weren’t enough workers at the port to unload it, then in a warehouse because there weren’t enough truckers. to drive it.

“We were in a panic situation,” Zanchuk said, before the oven finally arrived in mid-October. Without this third oven, “we had a hard time keeping up with demand. We couldn’t melt things fast enough. As a result of such things, “you are just part of the slowing down of the chain. “

Graphicast is not alone and hardly anyone in New Hampshire is to blame. The state is at the end of the supply chain. Its port, the smallest on the East Coast, is only big enough to handle bulk commodities like oil and salt, not the cargo containers that pile up at major ports like Los Angeles and New York. Even Boston is a relatively minor player, although it is trying to level up.

The main rail terminals are outside the state. Indeed, nine out of ten pounds of all freight enters the state by truck, and this industry suffers from the same labor and supply shortages as everyone else. There is currently a deficit of 60,000 to 80,000 drivers, which is expected to increase by another 100,000 over the next decade.

“We have 80 drivers and we could use at least 30 more tomorrow,” said Sean McKenna, president and owner of Manchester Motor Freight.

The supply chain in New Hampshire is complex, as it is everywhere else, as are the causes of current shortages. But there is an overall tension that causes everything else in the chain to warp.

There was the sudden end of the pandemic and border closures, then a relatively brutal attempt to reopen the economy while the pandemic was still strong at least in some parts of the world. And there simply weren’t enough people in the workforce – in part because of the pandemic – to cope with the sudden increase. As a result, the prices of many raw materials have increased, including the costs of shipping itself, such as sea containers and truck rentals, which have skyrocketed.

The cost of shipping a container from China to California has dropped from around $ 2,000 before the pandemic to $ 25,000 in early 2021. This is also true to a lesser extent on the Atlantic coast. So while the cost of salt – as a seasoning for cooking or for safety on winter roads – has remained the same, the cost of getting it to Portsmouth harbor has increased. Dry bulk shipping rates, for example, have gone from $ 18,000 per day in 2019 per vessel to $ 34,000 per day today.

The need for coal is primarily at the root of the salt hauling dilemma, according to William Creighton, chairman of Granite State Minerals in Portsmouth. As utilities reduce their use of oil and natural gas around the world, they need back-up power, like that produced at the Bow Coal-fired Power Plant, on peak days. But the same ships that carry coal also carry salt.

Likewise, rising prices for shipping have led to an increase in gasoline and heating oil. With the shortage of truck drivers to cover the last mile, you can expect huge home heating bills this winter, with the potential for some customers to be literally left behind.

“For ourselves only, we have a 100% supply guarantee,” said Jason Grower, Manchester-based regional operations manager for the regional fuel company Dead River based in South Portland, Maine. “The problem will be the cost. “

Supply is limited for all kinds of materials, so they have become more expensive on every level.

“The costs are very high for stainless steel wire, up 25%,” said David Greer, CEO of Wire Belt Company of America in Londonderry, which manufactures equipment used in the production of fast food for restaurants and frozen sections of grocery stores.

The price of everything is going up, said John Dumais, president of the NH Retail Grocers Association, including “the wrapping paper, the boxes and trays, and the product itself,” he said. Suppliers can’t even get enough aluminum for canned drinks. The exceptions are fruits and vegetables, as they are largely locally sourced, he said.

A candy retailer, who makes hot fudge for Christmas, “can get jars, but can’t get lids on jars.” It’s just weird, ”said Nancy Kyle, president of the NH Retail Association.

The two were complaining during an Oct. 29 listening session with U.S. Senator Jeanne Shaheen about these supply chain issues. The event took place at United Parcel Service’s customer service center in Manchester near the airport, although it was difficult to hear the din of goods being unloaded. At one point, as he walked away to let the delivery trucks pass, the senator noted that the truck was from Enterprise, not UPS.

“We ran out of vehicles – everyone’s looking for them,” said Rich Murray, Northeast District labor relations manager for UPS. “We are busier than last year and thought we were occupied with the pandemic. But rentals are essential, and people are essential right now. “

But while Shaheen called for suggestions for federal legislation, few were received. When a Teamsters official suggested that foreign production should be brought back to the United States, Dumais stressed, “We don’t have the manpower to do it here. We have to look at the whole supply chain, which is huge. “

“Huge” is perhaps an understatement. Even tiny New Hampshire has some 72 million tonnes of cargo passing through it each year, worth $ 107 billion, according to a 2019 transportation report, the latest data available.

This is a figure well above the $ 12.4 billion in international trade ($ 5.5 billion exported and $ 6.9 billion imported) reported last year in New Hampshire. This is because we get more of our goods domestically than internationally, and a large portion (almost 30 percent) of the goods just go in transit.

About 90 percent of these goods are transported by truck (according to 1995 figures, the latest with such a breakdown), and nearly 20 million tonnes are in, about a quarter of which are from Massachusetts. And more than two-thirds of Massachusetts traffic picks up goods at Ayer and Worcester rail depots.

There is rail freight in New Hampshire, but it only accounts for 6% of that 72 million tonnes of weight and 5% of the total dollar value. And almost everything goes through the state to other destinations. Less than a million tonnes are deposited in nine depots, such as coal for the Bow plant and rock salt at Walpole.

Manchester Motor Freight is one of those trucking companies that picks up goods from these depots in Massachusetts, as well as Albany, NY. had to wait because the containers got stuck in Chicago.

The main way it experiences supply chain “growls” is the shortage of trucks and truck parts.

“We recently had to replace a bumper that was supposed to come from Quebec. This is a common part for a common brand Freightliner, and it was really hard to get that part.

Then there is the shortage of drivers. They “are in high demand,” he said. “It’s an aging workforce. The average driver is 56 and 57 years old.

There has been a shortage of drivers for years, said Robert Sculley, president of the NH Motor Transport Association, but this year the situation has worsened. It’s not just that the workforce is aging. It is difficult to get drivers to replace them. One of the reasons is that you can’t drive a semi-trailer across state lines until you are 21. At that point, “they’re about to do something else”.

There is also a lack of trucking schools in New Hampshire, as well as testing facilities. That’s why Sculley pays tribute to Governor Chris Sununu, who is using federal grant money to invest $ 4.6 million to establish more testing sites.

Sculley also hopes the increase in trucker wages will attract more people to the industry.

Even less cargo arrives on ships directly bound for New Hampshire, the smallest port on the east coast, where about 1% of eastern sea traffic is handled, almost all inbound. Last year, ships carried around 2.8 million tonnes, half liquid bulk and half dry bulk. It is the same amount as five years ago.

“We don’t have the capacity to take containers,” said Geno Marconi, director of the New Hampshire Port Authority.

Boston is bidding for more traffic with Massport working on an $ 850 million upgrade project so it can handle bigger ships. But demand is so high now that some ships are bypassing Boston for New York and New Jersey ports, which means some New Hampshire truckers have a longer trip.

Air freight accounts for less than one percent of all cargo handled in New Hampshire, but this cargo accounts for nearly 8 percent of the total value. Only two airports in the state are set up to handle cargo, and Portsmouth International Airport at Pease is primarily used for oversized items, like large printing presses, for example. The bulk of air cargo passes through Manchester-Boston Regional Airport and is measured in pounds, not tonnes. So far, it looks like the airport is on track to equal the record 211 million pounds of cargo unloaded last year, said airport manager Ted Kitchens.

Kitchens said the airport handles current traffic smoothly, but there isn’t much room for growth. All warehouses are advertised and are near full capacity before the holidays, so the airport is working with a developer to triple the available warehouse space and spend around $ 12.9 million (of which 95% is from the federal government). ) to add three aprons to the existing five for unloading cargo.

While there were delays in Christmas deliveries last year, it wasn’t the airport’s fault, Kitchens said. Still, he and many others have suggested that everyone order their holiday items early this year.

“Now is a good time to buy a frozen turkey,” suggested Dumais of the Grocers Association, “because they may not be there for Thanksgiving. “

These articles are shared by The Granite State News Collaborative partners. For more information, visit collaborativenh.org.

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