511 - Market Update Q1 2023

Our Company delivers exceptional value and quality products to our trading partners. With extensive distribution and expandable capacity, our core products are readily available.

Quarterly Market Update

Quarter 1 | Winter 2023

Product-to-Market Pathway

Risk Scale

SUMMARY: Raw material availability and supply chain functionality improvements through the back-half of 2022 is expected to continue through 2023, though Covid resurgence in China and ocean freight line profit-seeking linger as potential threats to sustained recovery.




Factory-to-Port Outbound Logistics

Ocean Transport Inbound to North America

DC-to-Customer Outbound Logistics

Raw Materials


Vancouver’s vessel wait time is 6 days, trucker order lead time is averaging around 10 days for all container types. Rail dwell time is around 17 days. Current dwell time in Montreal is 9 days. Labor availability has improved and is expected to remain strong through the winter 2023 in Montreal. (Hillebrand Gori)

China has declared just 11 Covid deaths among its 1.4 billion people since Nov. 19, despite seeing an exponential surge in pandemic cases after the government’s loosening virus policy in the fourth quarter. This fuels suspicion that the true scale of fatalities is being hidden (and portends the potential for reversion to lockdowns and production interruptions in 2023). ( Bloomberg)


Cost indices for raw materials used throughout foodservice packaging products industry continued to trend lower through the fourth quarter of 2022.

Container lines are shoring up falling freight fees with ‘blank’ or ‘void’ sailings -when a vessel misses a port call or section of a planned voyage. This is usual practice when capacity outstrips demand, and sends a clear signal that carriers are bracing for tougher times. 100 sailings have been cancelled on major routes between 12 December and 15 January - 14% of the overall 724 sailings scheduled. (Maersk, Drewry)

North American trucking freight shipping rates declined throughout 2022 and industry experts predict contract rates for truck transport

to be down about 14% by mid-2023.

Availability of most commodity inputs for manufacturing foodservice packaging supplies has recovered to pre-pandemic normal, though some sporadic supply scarcity pops up paper and pulp items and aluminum.

Spot prices for truck shipments could potentially rise late in 2023 depending on whether forecasts of driver retirements increases heading into 2024. (Commercial Carrier Journal)

Relative-normalcy has returned to glove manufacturing and to the glove consumption market, in general. Demand has rebalanced with supply, product quality and supply availability stable and the erratic consumption behaviors seen throughout the pandemic have ebbed. Challenges do remain, however; energy costs, specifically natural gas, and labor expense have spiked across Asia, causing major glove makers in Malaysia and China to signal the potential for idling production to constrict supply, potentially setting the stage for increased prices in coming months.


Q1 2023 Market Update

Restaurant Industry Update

SUMMARY: Restaurant traffic and revenue declines in the later part of 2022 gave indication of inflation driven belt- tightening across the economy. Operators began to see labor constraints lessen, enabling further recovery and expansion potential going into 2023.

Same-store Restaurant sales growth declined 3.4% year- over-year in November 2022 and when compared to growth rates for both September and October, sales dropped 1.8 percentage points. Store traffic was down too, off 4.3% in November, down by 1.1 percentage points relative to the previous month, the worst outcome for the industry since July. November could preview trends to come as traffic softens, bringing moderation in sales growth. As the past year’s menu price increases start abating, as is expected, it will be increasingly harder for restaurants to post strong positive same-store sales growth as was the case for most of 2022. Based on their 3-year same-store sales growth, the segments that performed the best fell under the limited- service category: quick service and fast casual. These segments continue to be better positioned to generate demand from guests looking to moderate their spending when eating out. Nations Restaurant News – Black Box Data Some good news for restaurant operators, hourly staffing levels appear to be recovering, now nearing pre-COVID staffing levels, down just 2% from October of 2019. Full-Service restaurants as a segment are nearing 2019 pre-pandemic levels, however limited-service trails 2019 staffing by 12%. NRN, Technomic, US Bureau of Labor Statistics

Q1 2023 Market Update


Restaurant Industry Update - Canada

SUMMARY: Canadian foodservice industry performance also reflected the impact of lingering inflation and potential recession, mitigated by improvements in staffing levels.

Indicators of Canadian foodservice sales performance finished 2022 in mixed fashion, up 9.6% over 2021 in restaurants and commercial eateries, but down 8.2% in the retail / grocery segment. Canadian restaurant industry employment performance in Canada closely parallels that in the US, at 6.7% in November 2022. Canada’s gross domestic product sat at 3.1% mid - Q4 2022, continuing a slow down trend that began early in the year. However, unemployment declined at a similar rate through 2022, ending the year at 5.0% (StatisticsCanada)

Q1 2023 Market Update


Regulatory / Legislative Environment

SUMMARY: Bans on single-use plastic products in Canada and state bans in the US on packaging made with added PFAs started on 1/1/2023, signaling increased environmental regulation of foodservice packaging reflecting increasing societal focus on environmental sustainability.

Q1 2023 Market Update


Diesel fuel pricing trends

SUMMARY: Rates of overseas shipments to North America showed declines in late 2022 confirming earlier predictions of a return to pre-pandemic consumer spending patterns and behaviors. Diesel fuel price trending down and 11 th hour legislative action averting a rail strike were good news for North American distributors and operators as 2022 ended.

On the road prices for Diesel fuel in Canada continued to decline as 2023 began, dipping below $1.50 (CA) per liter. (CheckPetrolPriceCA)

The US Energy Information Administration predicts Diesel prices to decline fall in 2023 upwards of 19% versus that experienced over the past year, though still well-above costs prior to 2022.

Q1 2023 Market Update



SUMMARY: Inflation and massive Covid outbreaks in China amid that country’s loosened pandemic restrictions cast shadows on th e pace of recovery and pose potential disruption of product flow in the coming year. Meanwhile, Operators and Distributors are learning how to compete in an environment of increasing sustainability regulation at state and national levels across North America.

▪ Although supply chain problems appear to be receding, mainly because operators have solved for handling shortages and delays, inflation and the specter of recession are putting forth new hurdles for operators to jump over after already being depleted by the last couple years of the pandemic. Signs point to a challenging first half with the latter part of 2023 brightening as we emerge from high inflation and a soft economy. Sustained attention to consumption, production and strategic inventory planning is critical for chain restaurant operators tightening belts and regaining confidence in the global supply chain through the next few months. ( Technomic) ▪ The U.S. announced new COVID-19 testing requirements in late December 2022 for all travelers from China, joining other nations imposing restrictions because of a surge of infections. China’s “zero CO - VID” policies had kept China’s infection rate low but f ueled public frustration and crushed economic growth. This move indicates high-level concerns about the scope of renewed Covid activity in China and its potential for global disruption. (Associated Press)

511 Foodservice offers the industries widest selection of packaging and consumable supplies for restaurant and foodservice operations, helping your organization overcome and succeed, whatever the challenge!

• 511 Foodservice’s depth and diversity of manufacturing sourcing options has kept supply flow robust and consistent to distributors and

restaurant companies throughout the twin pandemic and supply chain crises of the past few years. We continue to invest heavily to keep our

performance in this area in tip-top shape!

• 511 is vigilantly monitoring and proactively planning for changes to come as a result of evolving environmental regulation of the foodservice

packaging industry.

• And our Canadian customers can select from our company’s wide variety of approved alternatives to banned plastic foodservice prod ucts.

• REMINDER: Chinese New Year 2023 is celebrated January 21 – 27.

Q1 2023 Market Update


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