AmerCareRoyal - Market Update Q3 2023

AmerCareRoyal offers disposable products used in the food service, janitorial, sanitation, industrial, hospitality and medical industries.

Quarterly Market Update

Quarter 3 | Summer 2023

Product-to-Market Pathway View

Q3 2023 Market Update

SUMMARY: Canadian longshore and UPS labor disputes cast a pall on an otherwise stable global supply chain. Material and energy costs currently trend favorable, though Chinese factory output is struggling.

Vancouver and Prince Rupert, Canada along with 28 smaller ports on the coast of British Columbia, were shut down by striking workers in early July, after contract negotiations between the International Longshore and Warehouse Union (ILWU) and the British Columbia Maritime Employers Association (BCMEA) broke down. At the time of this writing, tentative agreement had been reached to end the strike, but several weeks of supply chain disruption across North America is anticipated as a result of the 13-day disruption. (DHL, Seko Logistics) In response, Trans-Pacific carriers were changing schedule rotations so that US- bound cargoes could unload in Seattle-Tacoma rather than Vancouver. Vessel backlogs were reported building outside of Vancouver and Seattle-Tacoma in early July. The US longshore workers union ILWU came out in solidarity with strikers, stating they won’t handle diverted ships from Canadian ports. (Vancouver Fraser Port Authority, Seko) . Meanwhile, despite announcements by Teamsters leaders representing 340,000 UPS employees on tentative deals reached toward a new five-year labor contract, an overall agreement has yet to materialize, and the company and union have been trading barbs since negotiations broke down after the long July Fourth weekend. Part- time employees’ pay remains a sticking point ahead of the Teamster’s July 31 strike deadline. Fed Ex and US Postal Service officials are preparing for demand to shift toward their organizations if UPS and its workers can’t reach a final deal. (NBC News) Raw material input pricing pointed mostly downward through the second quarter except for various types of paper, a commodity impacted by timber shortages driven by the Russia – Ukraine war.

Diesel fuel prices continued a months-long retreat across the US and Canada in Q2.

Chinese factory output contracted in each month April through June, revealing continued weak economic momentum for the country after its ending of strict zero- tolerance Covid 19 policies.


Restaurant Industry Update

Q3 2023 Market Update

SUMMARY: North American economies continue to defy predictions of looming recession with strong job creation and steadily downward inflation trending. Labor and expense challenges are Operators’ primary concerns.

General Economic Outlook at Mid Year

209,000 jobs were created in the US in June, leaving unemployment flat at 3.6%, while Canada’s addition of 60,000 drive a slight uptick to 5.4% from 5.2% in May. The good news on jobs coupled with decreasing inflation – down in June to 3.4% in Canada and 4.05% in the US, lowest since early 2021 – is quieting fears of a North American recession, a positive note for the restaurant industry impacted heavily by consumer confidence and available disposable income. ( US Bureau of Labor, Ycharts)

Mixed Signals

Consumer demand is stable, and consumers have continued to spend while retailers and wholesalers have reduced inventories accumulated during the pandemic and supply chain crisis era. US and Canadian consumer confidence swung back upward through Q1, though still far lower than before inflation sparked in 2022. New data from Revenue Management Solutions, for instance, finds that quick-service traffic decreased 1.8% versus Q2 last year, while quantity per transaction fell by 3.5%, indicating that consumers are ordering fewer items to spend less. Rate of menu price inflation declined in June to 7.7% versus June of 2022 compared with May’s 8.8% rate over year. ( Hackett Assoc, SEKO Logistics, Conference Board of Canada, US Bureau of Labor Statistics, Revenue Management Solutions, Nations Restaurant News)

Operational Costs and Staffing are Restaurant’s Chief Concerns

98% of 1000 Restaurant Operators surveyed in May reported seeing increases in their expenses within the past three months. In response, 64% have switched to lower-priced brands, nearly two-thirds opting for distributor-exclusive brands instead of national brands. ( Technomic)

Staffing challenges persist for restaurant operators, the second highest priority challenge behind increased cost of food. At least partially in-response, the 2023 National Restaurant Association in May featured a striking number of robotics and automation exhibits with solutions for both back and front-of-house routines, possibly fore-shadowing implications for manufacturers and distributors of meal preparation and packaging supplies.


Regulatory, Legislative & Sustainability

Q3 2023 Market Update

SUMMARY: Stable regulatory environment with no new bans to report but growing Operator opinion on about potential business impact of extreme weather events and expectations of suppliers to be prepared and helpful.

No new state or federal legislation pertaining to PFAS in foodservice packaging in the US or Canada has come about since ACR’s Spring edition of the Market Update was published in April.

However, in June, Maine enacted a law delaying by two years the start of reporting requirements for intentionally-added PFAS in certain products until January 1, 2025, this to allow time for consideration of how best to enforce the reporting law. (JD Supra)

Findings of a recent Technomic omnibus survey of foodservice operators about matters of climate and sustainability;

• 55% of those surveyed reported that their business was affected by extreme weather events in 2022. • 54% experienced low traffic and 54% said they incurred staffing issues • 42% dealt with product supply disruption • 38% had to close temporarily • And 32% lost power due to storms

54% of survey respondents are very concerned about future extreme weather events, and 24% are making plans to evaluate how supplier and distributor partners are prepared to support their businesses when extreme weather events happen.

70% of foodservice operators confirm in the Technomic study that sustainability is a priority for their organization.

On the opportunity side of the Sustainability challenge, Quick Service operators see potential for increased earnings from longer patron dwell time as Electric Vehicles are charged, with rates of change in Patron’s median spend increasing from $15 for visits less than 5 minutes to $40 for 60-minute EV charge duration visits. (Technomic Omnibus Operator Survey March 2023)



Q3 2023 Market Update

SUMMARY: North American economies are regaining strength, though restaurants face on-going cost and labor issues and threat of possible supply chain upheaval from labor unrest.

As suggested by Technomic in their Q2 consumer / operator outlook report, Restaurant Operators under expense pressure are looking to Suppliers for product suggestions and options for less-expensive products. 64% of restaurants report switching from National Brand supplies to Distributor branded products in the past year.

Foodservice managers are also looking to Suppliers for planning and preparation that helps their businesses get through adverse weather events arising from climate change.

Labor strife is starting to disrupt North American supply chains at the outset of the busy summer season. Longshore workers striking in Canada and Teamster Union actions threatened for the end of July at UPS are events that restaurants and foodservice organizations can reasonably expect will spur supply flow disruption through the summer months.

We are staying on top of these challenges by swiftly pivoting inbound arrivals to fully operational ports and utilizing alternate shipping services as needed. Stay in close touch with your sales representative in the coming weeks to address your business’s needs!

Count on 1ACR to help your business win each day!


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