Supply chain issues continue to plague Charleston businesses, and the community is feeling the strain.
An April study of 97 businesses by Lowcountry Local First identified problems getting products and supplies as the top commerce challenge over other issues such as health insurance, hiring and rent costs. On a larger scale, 81% of Americans named supply chain issues as a significant source of stress, according to the American Psychological Association’s March 2022 Stress in America report.
“Every brand is, behind the scenes, taking on that stress because it’s this all-encompassing thing between supply chain and inflation and gas,” said Phil Civitella, president of North Charleston fulfillment service company Nice Commerce.
Packed ports
“Consumers are buying more than ever before,” said Liz Crumley, communications manager at South Carolina Ports Authority. “All the buying drove up imports across the U.S.”
Imports to S.C. ports in fiscal year 2022 were up 22% compared to 2021, Crumley said. In March and April this year, S.C. Ports Authority had a record number of around 30 ships in its Wando Welch Terminal, North Charleston Terminal and Leatherman Terminal. This queue cleared by early May.
“It was unusual what happened and representative of what’s happening in the broader supply chain,” she said. “In response to the fact that we were having record cargo volumes, we’ve hired 150 people since last July. Those [positions] are in operations — people out on the terminal who are in charge of moving containers and working cranes, which is really the core of what we do.”
While the rest of the coast is pretty backed up, Charleston’s port is fluid, Crumley said. “And that can always change. The pandemic is not over. Supply chain challenges are ongoing.”
She said it’s been a hard year or so for everyone in the supply chain — port workers, truck drivers, warehouse workers. “We go to the grocery store and grab something off the shelf or go to Target,” she said. “You just start expecting your items to be here, but so many people are working behind the scenes to make that happen.”
Spiking prices
Local fulfillment center Nice Commerce fine-tunes the shipping process for 50 businesses in the Charleston area.
“A lot of people are taking losses in their product costs just to get the goods from Asia over to us,” Civitella said. “So it’s a really big issue where it’s not just the price, but it’s been time in transit. If you’re shipping anything to the Port of Los Angeles, you were backed up — luckily, Charleston doesn’t have that issue — but it’s still been a nightmare for the past two years.”
Nice Commerce uses a lot of corrugated as well as recycled craft paper in order to fulfill products and get them out the door. It used to order mass quantities of packing materials with a week lead-time, and nowadays it orders four to six weeks in advance.
“The hail storm never stops,” Civitella said. “[Businesses] need to know 12 months in advance what they’re doing, instead of it being a four- to five- to six-month [foresite]. Everything’s doubled.”
Transit costs are killer, Civitella said. “The average cost to ship to customers has gone up 25-30% in the past couple years.”
He’s received price increase notification from carriers such as UPS and FedEx and tech solution companies such as Slack and Tetra. Businesses are trying to figure out new price points that make sense for everyone, he said.
“Everything is so tough to navigate right now,” he said. “If you’re a small brand, if you’re someone who is passionate about what you do, lean into that and find the margin that works for you. Don’t try to scale up super quick. Don’t overburden yourself.”
Having to deal with longer lead times and increased prices shows up similarly even for a locally sourced business, like Local Love CHS gift shop on James Island. The shop offers a unique selection of carefully curated items created by Charleston-area makers and artisans with a focus on sustainable products.
While products are sourced locally, artisans are experiencing issues accessing sourced items used to package and present products on shelves.
“For example, [the artisans] just can’t seem to source glass bottles anymore or glass containers,” said co-owner Medea Duffy. “And sometimes if they are able to find them, they’re astronomically priced or they take forever to arrive. So that’s been a huge issue.”
Local makers are already competing with larger scale producers, Duffy said, so inflated pricing for packaging sets them way back when it comes to competing price wise.
What artisans end up doing is using alternative packaging, which often means using plastic. For a sustainably focused store, that’s a major tradeoff, and a temporary one, she hopes.
Duffy also noticed that the alternative packaging confuses customers as sometimes it prevents them from seeing the item they’re purchasing. “It’s tricky,” she said. “People don’t know what’s what, so we have to explain. Quite frankly, [items are] just harder to sell, when before they were very easy to sell.”
Warehouses out of whack
After working with Celadon Home furniture store for 14 years, vice president Rebecca Hawkins has experienced her share of supply chain woes, but in the last two years, issues amplified.
“Early on, it was the inability to get things and having your money tied up and things were just taking a really long time to come,” Hawkins said. “Now on the flip side, so many of our vendors say they are getting in so many things that they’ve had on order forever. So now we’re getting everything at once.”
Between Celadon’s warehouse team and buying team, it takes roughly 50% of the time to manage being reactive to inventory levels, Hawkins said. Often, having a sale is the only solution to having too much of one thing.
“I think you’re seeing that on a larger scale at Target and Walmart, and that’s why they’ve been having huge sales, because everything’s coming in at once,” Hawkins said.
Warehousing has been Celadon’s greatest challenge, according to Hawkins. “We’ve had a lot of our warehouse team for a long time but with so many units coming in increased volume, we’ve been lucky enough that so many people have moved to this area that we’ve been able to sell a lot of merchandise.”
Supply chain issues have gone side by side with a labor shortage, which has been a challenge for Celadon.
“We’ve needed additional helping hands,” she said. “If you don’t have enough people to help with heavy lifting, your warehouse can get crowded really quickly.”
Charleston has a shortage of warehouse space, she said. And when warehouses run out of space, there’s not a lot of choices — businesses have to have sales to combat the pileup.
Hawkins added, “It’s definitely been a wild couple of years.”
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