The supply chain crisis has hit the Bay Area

Nathan Rundel ordered a new refrigerator for his home renovation in Orinda in April. It won’t arrive until January and it doesn’t even have a delivery date for its new dishwasher.

This aggravation is exponentially higher in his role as president of Build Group, a huge entrepreneur in San Francisco. Rebar, drywall, metal studs, appliances, cabinetry and HVAC systems “are all in terrible shape,” he said. “These are both shortages and delays.”

Mac Harman, CEO of Balsam Hill in Redwood City, pays 270% more to import artificial Christmas trees and decorations from factories overseas. “Sea freight rates have gone up like crazy,” he said.

Steve Snodgrass, chief financial officer of Graniterock, a major supplier of building materials to Watsonville, paid $ 2.5 million for the spring delivery of 10 mixer trucks. He’s still waiting.

Their difficulties illustrate how congested the global supply chain is. Pandemic disruptions and labor shortages exacerbate problems with the complex way in which products are made from components manufactured around the world. A single bottleneck – like the current struggles of automakers for key computer chips – can create a significant bottleneck for an entire industry.

“These are issues that have always existed, but the pandemic has revealed a lot,” said Trent Willis, president of ILWU Local 10, the Oakland longshoremen’s union.

Downstream, all of these delays will mean higher prices and longer waits for consumers. It won’t mean a throwback to the early days of the pandemic when store shelves were stripped of the essentials. You can still buy a laptop, exercise bike or jeans, if you are flexible on the brand. However, if you have a specific model at heart, you can experience delays of up to several months. And there may be one-time shortages of certain products, ranging from cars and home appliances to home decor.

It is not only a factor hindering the production and movement of goods.

“Every part of the supply chain has reached its maximum capacity,” said Jim McKenna, CEO of the Pacific Maritime Association, which represents the ocean carriers and terminal operators that operate at the 29 West Coast ports. “It’s a global problem, and there is no easy way to solve it. The volume is relentless and it is expected to continue until the first part of 2023. It is far from over.

Benjie Casino (left), Cosmo Creek (center) and Susanna Hnilo team up to build a Christmas tree in Balsam Hill.

Scott Strazzante / The Chronicle

Why the increase in demand? During the pandemic, homebound consumers are buying many more things and embarking on renovations, moving away from spending on services like restaurant meals and movie tickets.

The reasons for the delays are legion: coronavirus epidemics in factories and docks. Inventory shortages due to closures at the start of the pandemic. Difficulties in increasing production after shutdowns. Labor shortages in factories, ports and trucking. Transitions to next-generation products, such as 5G and new microprocessors. Shortages of shipping containers, railcars and trucks. Overloaded warehouses. The inflexibility of just-in-time production.

“There’s a zillion of these things happening,” Harman said. “Everything destroys the system because there was no slack. “

The Bay Area is hardly spared.

Unlike Southern California, where more than 70 ships are anchored in San Pedro Bay, crammed with cargo awaiting unloading, the Port of Oakland proudly proclaims that it cleared its backlog in July, in part. thanks to a working agreement between the Pacific Maritime Association and ILWU which added several hundred new longshoremen. The San Francisco Coast Guard sector confirms that there are no large idling cargo ships in the bay or offshore (other than tankers).

“Ships today are getting bigger with more cargo,” said Bryan Brandes, Port of Oakland marine director. The standard container ship traveling between Asia and the West Coast holds more than twice as much as it did 20 years ago. It takes longer to unload the cargo from each ship and then reload it with exports. “This is why the agreement to bring more workers to Oakland was important,” he said.

But the Port of Oakland, along with those of San Francisco, Richmond, Stockton, Sacramento, Benicia, Redwood City, Eureka and Crockett, together account for just 13% of the West Coast’s freight, according to the Pacific Maritime Association,

By far, the lion’s share – 66% – is shipped via LA, Long Beach, and San Diego, where backlogs are on an epic scale.

The ripple effect of all backups will be felt for months.

“This will delay the next phase of construction,” said Rundel of the Build group, which builds high-density shopping malls, offices and residential projects.

View from the top of a crane of unloaded cargo containers at the SSA terminal in the Port of Oakland.  The port says it cleared its backlog of ships in July, in part thanks to a labor agreement.

View from the top of a crane of unloaded cargo containers at the SSA terminal in the Port of Oakland. The port says it cleared its backlog of ships in July, in part thanks to a labor agreement.

Carlos Avila Gonzalez / The Chronicle

Meanwhile, he tries out tricks to alleviate issues, like buying supplies early and stockpiling them. But that adds to the costs.

“We are feeling inflationary pressures,” Rundel said. “The price of lumber and rebar has doubled in the past year. We have no money in the budget to absorb these costs.

Some key building components, such as HVAC systems and electrical parts, are currently experiencing critical shortages, he said.

Graniterock, which operates its namesake product 40 miles south of San Jose, is also an entrepreneur. In addition to the 10 concrete mixer trucks that are months behind, Snodgrass is concerned about the company’s annual order for 40 GM Sierra pickup trucks.

“Because of the chip shortage, GM is putting the pickups on the allocation, so to get 40 of them, we’ll have to order 80,” he said. Semi-tractors are also delayed.

One of his employees just bought a Chevrolet Silverado Trail Boss, paying several thousand dollars more than the sticker price, though he’ll have to bring it back to the dealership later to have chips added for them. features like radio steering wheel control and auto stop / start switch.

The result will be that the company will drive its 700 vehicles longer than it otherwise would have. But it could find itself in conflict with regulations, as the missing 10 mixers were needed to bring its entire fleet up to state emissions standards.

“This will delay and increase the cost of the projects,” Snodgrass said. “We will try to pass the possible costs on to the project, but it is difficult to pass on the cost of a van or a concrete mixer. “

Balsam Hill has increased its prices by 20% to partially offset its higher shipping costs and is juggling shortages of items from its fall catalog, which it posted last month.

It’s worse than dominoes, ”said Harman of Balsam Hill. “It’s like a hook. The cat pulls out a piece of it, you try to fold it back, but it’s just a complete disaster.

Carolyn Said is a writer for the San Francisco Chronicle. Email: csaid@sfchronicle.com Twitter: @csaid

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