Summary of Key Drivers Impacting 511 Foodservice Customers
Raw material costs spikes and unprecedented challenges to global supply chain efficiency keep cost pressures high for foodservice operators and distributors as they prepare to emerge from the pandemic.
▪ Pricing pressure on Paper and Fiber-based products increased significantly during the first Quarter due to dramatic spikes in the costs of key raw materials. Rate of Raw Material Input Cost Increases, January – March 2021
Bleached Pulp (Paper) - 32% | Recycled Containerboard – 40% |
Chinese Bagasse – 22%
▪ Asian factories worked through Chinese New Year and recurrence of COVID-19 outbreaks have been less- than-feared, helping to stabilize Gloves and Plastic-product availability. However, key manufacturing materiel costs continue to rise.
Plasticizer (DOTP) - 29% | Latex – 15% | HD & LD Polypropylene – 20 – 24% | Aluminum Foil – 10%
▪ Global Supply Chains continue to struggle with unprecedented demand and resource disruption.
▪ As we predicted in January, Ocean Freight Container pricing is normalizing to new levels established by spot-pricing practices, 2.5 to 3 times previous norms. ▪ Containership schedule reliability is at historical low, with an industry-wide on-time arrival rate under 50% and a days-delayed average of nearly six. (theloadstar.com)
▪ 511 Foodservice has experienced nearly 40% higher in-bound overseas shipping expense and we forecast an additional 11% in Q2.
▪ Foodservice operators in all segments are entering a make-or-break summer and fall season where survival moves made in 2020, including shifts to delivery-only, outdoor dining, Ghost Kitchen and Virtual concepts, become permanent and are invested-in fully as strategies for staying viable over the long haul. ( Technomic )
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