Higher prices likely to outlast supply chain problems, says California warehouse owner

David Erlanger’s warehousing and distribution business in Riverside, Calif. Is full of boxes of wine glasses, luggage, linens and more.

Once the container ships are unloaded at the ports of Los Angeles and Long Beach, the dailies move individual shipping containers to warehouses like Erlanger, many of which are within an hour inside. lands at Riverside. Between shipping delays and consumers spending more on goods than before the pandemic, Erlanger has never seen anything like it in nearly 40 years at the company.

Erlanger Distribution Center President and CEO gave Marketplace host Kai Ryssdal a tour of one of its two warehouses, which occupy approximately 200,000 square feet.

Erlanger started working in the family business in 1984 and bought the business – where his own son now works – from his father a decade ago. The Erlanger distribution center employs between 40 and 60 people, and this number increases during peak periods such as holidays. He works with importers who sell to large retailers like Walmart and Dollar General or ship direct to consumers.

“You watch the merchandise coming in. We palletize it and ship it,” Erlanger said. “And a large part, because of the port’s problems, remains. ”

On November 12, Erlanger received containers with Halloween merchandise for one of the importers he works with. Due to the late arrival, Erlanger will keep the products for another year until their customer can sell them. In addition to the delays of products entering the warehouse, the containers that the Erlanger team has already emptied are collected late to return to the ports.

“I have 14 containers between here and the other warehouse that are empty and awaiting pickup,” Erlanger said. Before the pandemic, it was normal to only have two voids sitting outside.

“We’re trying to get him out right away,” Erlanger said. “We will have labels ready, truckers ready for the appointments. But one, the trucker might not come and pick it up because that trucker might be late for someone else or overbooked. And then the other thing that happens is we might not get the container. ”

Recently, Erlanger and his team prepared to receive six to eight containers per day at the warehouse. But because of the delays, only one is delivered.

“That then means these containers are coming in later, so now it’s a Saturday that we have to work on,” Erlanger said. “So it’s an overtime day. There is a huge expense if it is not at the right time.

Despite the delays, Erlanger Distribution Center is on track for a record year. Much of the increased shipping costs – like container rates or trucking charges – are paid by Erlanger’s customers, the importers. Its warehouse is filled to the brim with imported goods stacked on wooden pallets, with even more product blocking some aisles.

“We tried to buy another warehouse,” Erlanger said, but they struggled to find space. “We have [a Small Business Administration] loan of about $ 12 million and found nothing. It’s tight, and now it’s moving to Banning or Beaumont, ”which are California towns further from the ports.

As a pivot point between importers and retailers, Erlanger does not see the end of our global supply chain problems in the near future. Much, he believes, will depend on the weather and the mitigation of the pandemic. And he predicts that prices will stay high.

Everything at the Erlanger distribution center is stored on wooden pallets, and prices for pallets have dropped from $ 5 before the pandemic to $ 12 to $ 20 a unit.

“It’s a hell of a raise,” Erlanger said. “And of course it gets passed on, so somebody’s going to end up paying for it.” And when things get back to normal, when do the prices go down? ”

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