Tuesday 25 January 2022

Supermarkets and importers in Costa Rica feeling the headaches of the container crisis

Businesses and chambers recognize delays in the arrival of certain basic items such as oils, canned goods, as well as cookies, and chocolates for the Christmas season, due to global problems with maritime freight

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QCOSTARICA – The global container crisis is causing delays in the arrival of certain food products and affecting the assortment in the store shelves (gondolas in Spanish) of shops.

Supermarket chains, importers and business chambers confirm that the problems in world maritime transport have demanded contingency plans and in some cases complicated the supply of basic items such as oils, canned goods, and Christmas season products such as cookies and chocolates.

Supermarket chains, importers and business chambers recognize delays in the importation of certain consumer goods that affect the assortment in store shelves

At one of the main retail chains in Costa Rica, Walmart, they confirmed that the crisis made necessary plans to mitigate shortage problems but they do not (yet) speak of a shortage of products.

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Mariela Pacheco, Deputy Manager of Corporate Affairs at Walmart, confirmed that at the moment none of the company’s supermarkets have presented a shortage of products, because they work closely with their suppliers. This multinational has 281 stores in Costa Rica, among all its brands Palí, MaxiPalí, Másxmenos and Walmart.

“Thanks to our processes, planning and global presence, we have been able to anticipate and avoid the effects of a crisis that has been affecting each industry in different ways. We continue working to mitigate the impact of this problem and offer a very robust assortment of products for the Christmas season and end-of-year events,” said Pacheco.

At the Gessa Group, owners of the Peri, Super Compra and Saretto stores, Jorge Cabezas, Commercial Manager, acknowledged that due to the difficulties of freight, products such as chocolates and Christmas cookies entered the country late.

“The delays have caused the offer of products to customers to be a little out of date with respect to previous years,” he explained but stressed that in basic consumer items there is no break in supply.

Over at the La Maquina Lama, a marketer and distribution of basic food basket (canasta basica) products located in Alajuela, general manager Juan Carlos Sandoval acknowledged that all the basic basket products imported by the company have suffered a delay in reaching Costa Rica.

La Maquina Lama mainly brings sugar, rice, and beans, among others.

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“The greatest difficulties occur with oil and canned products, as they are products that come with overweight in the containers and shipping companies now select which cargo goes on board, likewise, lentil that comes from Canada has suffered delays of up to three months in the arrival and this causes shortages in supermarkets,” said Sandoval.

Iván Bulgarelli, Director of Operations at Galletas Pozuelo, said that the company is not exempt from breaks in the supply chain, but they managed to substitute some raw materials to meet local market demand.

“In the cases that it has been necessary, we have used alternative suppliers. We have also strengthened our inventories as a way to mitigate the risks that this situation could materialize,” said Bulgarelli.

Some household staples, such as beans and rice, show a reduction in imports. For example, between January and September beans, US$20 million dollars of beans entered the country, while, in the same period last year, it was US$27 million, according to data from the Central Bank of Costa Rica based on reports by Customs authorities..

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In the case of rice, a similar phenomenon occurred. The accumulated until last September amounted to an equivalent of US$46 million, compared to US$62.1 million in the same period of 2020.

In other goods there is an increase in arrivals, but not at the rate of demand, business organizations agreed. This is the case of beef, which, in the accumulated from January to September, amounted to US$33.5 million, compared to US$31 million last year.

Logistical difficulties

The container crisis causes a global disruption in the supply of raw materials and final goods.

In Costa Rica, economic activities such as the importation of vehicles, cardboard, agrochemicals, toys, and bicycles suffered from prolonged periods of lack of inventory.

Additionally, the cost of ocean freight skyrocketed as part of the high global demand.

Rodnney Salazar, director of the Chamber of Foreign Commerce and Representatives of Foreign Houses (Crecex), explained that the delays are due to lack of containers, space on ships or because they are docked in ports, mainly in Los Angeles, in the United States and in Manzanillo, in Mexico. He added that delays in the arrival of food products to the consumer also occur due to indirect effects, such as the shortage of cardboard or plastic used precisely to transport these goods.

“Due to the pandemic, people began to buy online and a very high demand for cardboard was generated because everything is packed and transported that way. Then the merchandise can be ready to be imported, but without packaging, there is a problem,” commented the director of Crecex.

Logistics difficulties affect most retailers. However, among the most exposed are small and medium-sized businesses (SMEs) because the import of goods is carried out through intermediate suppliers and not directly with producers, as in the case of large supermarket chains.

Dyalá Jiménez, director of the Cámara de Comercio (Chamber of Commerce), said that, in recent months, many associates were concerned about supply problems and the effect on the rise in maritime freights.

“Companies with more inventory, with suppliers with greater origins and with longer-term contracts, can hold or replace certain goods in the gondolas because they have direct contracts with shipping companies. Those who are suffering a lot are SMEs because they generally face fewer options compared to large companies,” said Jiménez.

Jiménez recalled that one of Costa Rica’s tools to face the current situation are free trade agreements because they have solution mechanisms to face difficulties like the current one.

Olga Vargas, executive director of the Cámara Nacional de Comerciantes Detallistas (National Chamber of Retail Merchants), said that supplier companies have problems supplying products such as rice, beans and meat, but affirmed that there is product.

“In the case of raw materials, the lack of corn causes egg production to decrease and, according to some companies, there could also be a possible shortage of tilapia and potatoes. There is also a shortage of imported condiments and spices,” Vargas stressed.

She added that many associates depend on local production in which there is no problem. However, there was an increase in prices due to the rise in raw materials, freight, fuel, and the exchange rate.

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