Chia Sisters feels ‘long tail’ of supply chain disruption due to ingredient shortage


Business

The disruption to global shipping has worsened this year and isolated Kiwi businesses are deemed too risky to trade with certain export markets.

Health drink maker Nelson Chia Sisters is running out of its star ingredient: chia seeds.

Chia Sisters chief executive Bonnie Slade said the global supply chain issues that emerged late last year have had a long tail.

“I had huge problems getting product into the country, which I think will probably continue for a bit longer as the ships pretty much bypass New Zealand ports,” Slade said.

“Two of our most popular products have been out of stock for long periods of time because we couldn’t get the key ingredients. “

Like Chia Sisters, most New Zealand exporters were also importers.

Slade said where the company could, it sourced locally and most of its drinks were made from fruit grown in the country.

But there were also key ingredients that just weren’t grown here.

And, in those countries, Covid had exacerbated labor shortages and restricted the flow of goods.

“Some of our suppliers in South America have been affected by Covid in their countries, so the actual quantities are dropping because they have not been able to harvest the chia seeds.”

A turmeric shortage in Sri Lanka has also hit the company’s best-selling product, a hot turmeric and manuka honey tonic that performed incredibly well in Chia Sisters’ Hong Kong market last year.

Competitor Six Barrel Soda came to the company’s rescue earlier this year, sending in a few lozenges of the Golden Spice.

After the sourcing issues from the country of origin, the shipping issues facing the Kiwis.

Chia Sisters’ export markets saw strong growth last year, as health-conscious customers in Singapore and Hong Kong drank their healthy drinks amid the pandemic.

Hoping to capitalize on its export success, the company attempted to enter the United States, but six-month talks with a potential distributor collapsed as New Zealand was seen as too risky a market facing several months late in sending and receiving shipments.

As Chia Sisters was a B-Corp accredited company, it relied on ocean freight to meet its low carbon commitment.

Getting quotes from shipping lines was tough enough, let alone getting space reservations for the containers, Slade said. Shipping a container to the United States could cost anywhere from $ 2,500 to $ 4,000.

Chia Sisters chief executive Bonnie Slade said the Covid-related disruption to global supply chains that began late last year has had a long tail. Photo: Supplied

Slade said the company overhauled its logistics system by implementing secondary suppliers.

“We feel like we are getting the problem under control now, but it has taken a long time.”

The long road to normality

New Zealand Customs Brokers and Freight Forwarders Federation president Chris Edwards said there was no “one size fits all” solution to overcoming disruptions in the global supply chain.

Big box import retailers and large influential export companies like Fonterra, T&G and Zespri with their own logistics departments have had a very different experience than smaller importers and exporters.

“I know some big importers bought their Christmas stock and it’s already in the warehouses. But small and medium businesses may not have that luxury, ”Edwards said.

While shipping problems started last year because of Covid, the backlog caused by the pandemic has further stretched freight businesses this year.

“It’s getting worse and worse and more expensive.

Edwards said prices are unlikely to drop, but lead time reliability is expected to return by the end of 2022 as more ships are built, adding capacity to the global network.

He said some companies have been forced to stop imports because they can no longer afford the large markups, while others have changed their supply chains by ordering more at a time, which has exerted pressure on cash flow.

“I think what we forget is that if you look at any map, we are at the end of the world and therefore at the end of any supply chain. By the time a ship arrives here from Europe or Asia, it is probably already significantly delayed due to problems in other ports that they call on [at] on the way to New Zealand.

Australian port workers announced a strike this week, which will likely add further delays.

“I think what we are forgetting is that if you look at any map, we are at the end of the world and therefore at the end of any supply chain.”
– Chris Edwards, CBAFF

Edwards said supply chain issues have highlighted the lack of strong lobbying for small and medium Kiwi exporters.

The federation called on the government to ask shipping companies to stop adding stress to freight issues through other surcharges such as container detention, which were additional fees that importers had to pay if they did not. could not empty the container in time.

“You normally have about seven days to unpack that container and return it to what we call an empty container depot. The problem is, a lot of those empty container depots you drive past the highway in Auckland are blocked. Some are running at 200% capacity, which is not helped by the blockages in Auckland.

“So you are faced with a very difficult position where you want to return the container you just unpacked, but sometimes there is no room at the depot that the shipping company has designated, but they will always charge you up to $ 150 per person. day not to make it.

The federation suggested it was time to look at other models for many supply chain players, such as a ‘hub and spoke’ model with Australia, with small supply vessels moving around. back and forth across Tasman bringing import containers and outgoing export containers for SMEs and midcaps, helping to avoid port congestion.

“We have to be innovative. The way we move containers has to change because the old way is not working at the moment.”


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