Val Zanchuk, CEO of Graphicast Inc. in Jaffrey, doesn’t want to be a weak link in the supply chain, but he can’t get supplies fast enough, and now the backlog to fill customers’ orders has reached nearly a year.
Consider his attempt to replace an ailing furnace built in Germany. The replacement was supposed to arrive in July but the supplier’s supplier couldn’t get parts, so it was shipped two weeks late. Then it got held up in Belgium because of a Covid outbreak on the ship. When it finally arrived in Newark, it sat for weeks on the ship because there weren’t enough workers at the port to unload it, and then at a warehouse because there weren’t enough truckers to drive it away.
“We were in a panic situation,” said Zanchuk, before the furnace finally arrived in mid-October. Without that third furnace, “we were struggling to keep up with demand. We couldn’t melt things fast enough.” As a result of such things, “you just become part of the slowdown in the chain.”
Graphicast is not alone, and hardly anybody in New Hampshire is to blame. The state is at the tail end of the supply chain. Its port, the smallest on the East Coast, is only big enough to handle bulk products, like oil and salt, not the freight containers that are being piled up in major ports like Los Angeles and New York. Even Boston is a relatively minor player, though it is trying to upgrade.
The major train terminals are outside the state. Indeed, nine out of 10 pounds of all freight enters the state via truck, and that industry is suffering the same shortages of both labor and supplies as everyone else. There is currently a 60,000-to-80,000 driver shortfall, expected to grow by another 100,000 in the next decade.
“We have 80 drivers, and we could use at least another 30 tomorrow,” said Sean McKenna, president and owner of Manchester Motor Freight.
The supply chain in New Hampshire is complex, just like anywhere else, and so are the causes of the current shortages. But there is an overall stress that causes everything else in the chain to buckle.
There was the sudden pandemic shutdown and border closings, and then a relatively abrupt attempt to reopen the economy while the pandemic was still going strong at least some places in the world. And there simply were not enough people in the workforce — partly because of the pandemic — to handle the sudden surge. As a result, prices have risen on many raw materials, including the costs involved in shipping itself, such as for ship containers and truck rentals, which have skyrocketed.
The cost of sending a container from China to California has jumped from roughly $2,000 pre-pandemic to as much as $25,000 in early 2021. This is also true to a lesser extent on the Atlantic Seaboard. So while even though the cost of salt — as a seasoning for cooking or for safety on winter roads — has remained the same, the cost to get it to Portsmouth Harbor has gone up. Dry bulk shipping rates, for instance, increased from $18,000 a day in 2019 per vessel to the current $34,000 a day.
The need for coal is mainly driving the salt shipping quandary, according to William Creighton, president of Granite State Minerals in Portsmouth. As utilities cut back on oil and natural gas worldwide, they need backup power, like that produced at the coal-burning power plant in Bow, on those peak days. But the same ships that carry coal also carry salt.
Similarly, rising shipping prices have fueled an increase in gasoline and home heating oil. With the shortage of truck drivers to get it to the last mile, you can expect huge home heating bills this winter, with the possibility that some customers might literally be left out in the cold.
“Speaking for ourselves only, we have 100 percent surety of supply,” said Jason Grower, the Manchester-based regional director of operations for the South Portland, Mainebased regional fuel company Dead River. “The issue is going to be the cost.”
Supply is limited for all sorts of materials, and thus they have become more costly across the board.
“The costs are way up on stainless steel wire, up 25 percent,” said David Greer, CEO of Wire Belt Company of America in Londonderry, which makes equipment used in the production of fast food for restaurants and frozen sections of grocery stores.
The price of everything is going up, said John Dumais, president of the NH Retail Grocers Association, including “wrapping paper, boxes and trays and the actual produce itself,” he said. Suppliers can’t even get enough aluminum to can beverages. The exceptions are fruits and vegetables because much of it is locally sourced, he said.
One candy retailer, who is preparing hot fudge for Christmas, “can get jars, but can’t get the lids for the jars. It’s just bizarre,” said Nancy Kyle, president of the NH Retail Association.
Both were complaining at an Oct. 29 listening session with U.S. Sen. Jeanne Shaheen on those supply chain woes. The event was held at United Parcel Service’s customer service center in Manchester near the airport, though it was hard to even hear over the din of goods being unloaded. At one point, while moving out of the way to let delivery trucks go by, the senator noted that the truck was from Enterprise, not UPS.
“We ran out of vehicles — everyone is hunting for them,” said Rich Murray, who is the Northeast District labor relations manager for UPS. “We are busier than last year, and we thought the pandemic made us busy. But rentals are pivotal, and people are pivotal right now.”
But while Shaheen was asking for suggestions for federal legislation, not many were forthcoming. When a Teamsters official suggested overseas production should be brought back to the United States, Dumais pointed out, “We don’t have the labor to make it here. We have to look at the whole supply chain, which is huge.”
“Huge” may be an understatement. Even tiny New Hampshire has some 72 million tons of freight flowing to, from and through it each year, worth some $107 billion, according to a transportation report published in 2019, the latest data available.
This is a much larger figure than $12.4 billion in international trade ($5.5 billion exported and $6.9 billion imported) reported last year in New Hampshire. That’s because we get more of our goods domestically than internationally, and a lot (nearly 30 percent) of the goods are just passing through.
About 90 percent of those goods are carried by trucks (according to 1995 figures, the latest with such a breakdown), and nearly 20 million tons of that are inbound, with about a quarter of that coming from Massachusetts. And more than two-thirds of the Massachusetts traffic is actually picking up goods from rail depots at Ayer and Worcester.
There is some rail freight in New Hampshire, but it only accounts for 6 percent of that 72 million tons of weight and 5 percent of the total dollar value. And almost all of it is going through the state to other destinations. Fewer than a million tons are dropped off at nine depots, like coal for the Bow plant and rock salt in Walpole.
Manchester Motor Freight is one of those trucking companies that picks up cargo at those Massachusetts depots, as well as in Albany, N.Y. There are no huge pileups there, McKenna said, which is one of the reasons he prefers rail to ports, but his trucks have had to wait around because containers are getting stuck in Chicago.
The main way he experiences supply chain “snarls” is the shortage of trucks and truck parts.
“We recently had to replace a bumper which had to be sourced from Quebec. It’s a common part for a commonmake Freightliner, and it was really tough getting that part.”
Then there is the shortage of drivers. They “are very much in demand,” he said. “It’s an aging workforce. The average driver is 56 and 57.”
There’s been a driver shortage for years, said Robert Sculley, president of the NH Motor Transport Association, but this year it got much worse. It’s not just that the workforce is aging out. It’s hard to get drivers to replace them. One reason is that you can’t drive a tractor-trailer across state lines until you’re 21. By that time, “they are long on their way to doing something else.”
There is also a lack of trucking schools in New Hampshire, as well as testing facilities. That’s why Sculley gives credit to Gov. Chris Sununu, who’s using federal grant money to invest $4.6 million to establish more testing sites.
Sculley is also hoping that the increased pay truckers are getting right now will attract more people to the industry.
Even less cargo comes in on ships directly to New Hampshire, the smallest port on the East Coast, where about 1 percent of eastern shipping traffic is handled, almost all inbound. Last year, ships carried about 2.8 million tons, half liquid bulk and half dry bulk. That’s the same amount as five years ago.
“We don’t have the capacity to take containers,” said Geno Marconi, director of the New Hampshire Port Authority.
Boston is making a bid for more traffic with Massport working on $850 million upgrade project so it can handle larger ships. But demand is so high now that some ships are bypassing Boston for New York and New Jersey ports, meaning that some truckers from New Hampshire have a longer haul.
Air freight accounts for less than a percent of all the freight handled in New Hampshire, but that freight accounts for nearly 8 percent of the total value. Only two airports in the state are set up to handle cargo, and Portsmouth International Airport at Pease is mainly used for oversized items, like large printing presses, for instance. Most of the air freight goes through Manchester-Boston Regional Airport, and it is measured in pounds, not tons. So far, it appears the airport is on track to match the record 211 million pounds of cargo unloaded last year, said Ted Kitchens, the airport’s director.
Kitchens said that the airport is handling current traffic smoothly, but there is not much room for growth. All of the warehouses are spoken for and are near capacity before the holidays, so the airport is working with a developer to triple the warehouse space available and spend about $12.9 million (95 percent of it from the federal government) to add three aprons to the existing five to unload cargo.
If there were delays in Christmas deliveries last year, it wasn’t the fault of the airport, said Kitchens. Still, he and many others suggested that everybody order their holiday goods early this year.
“It’s a good time now to get a frozen turkey,” suggested Dumais of the Grocers Association, “because they may not be around on Thanksgiving.”
These articles are being shared by partners in The Granite State News Collaborative. For more information visit collaborativenh.org.
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