NEWS EXTRA
THE PRICE IS … WRONG
The cost of getting goods into the UK supply chain has been rising for months, reaching ridiculous levels. BMJ finds out how one wholesaler is coping.
CONTAINER PRICES have been on the rise over the past 18 months, where it once may have cost £1,200 for a container, it could now cost up to £10,000. According to Timco managing director Simon Midwood, whilst there may be talks of prices dropping after Chinese New Year, prices must still rise to reflect the increases coming through, such as fuel, labour increase and the price of new ships.
He says: “We are an island of importers, and in fact we don’t manufacture everything, we do rely on a huge number of imports. It’s not just our product range it hits, its everything from your point of view its toilets to sinks, but also its toys, food items and cleaning items. Whatever it is, it’s the whole of society that is getting hit by these increases.” It’s partly an increase in the cost of steel which has caused a rise in the cost of shipping, an industry that Midwood described as having probably undercharged for the past 10 years, so that there is an element of catching up on lost time and earnings. The option of using trains as an alternative means to import instead, however, is unlikely to provide a simple solution.
He says: “When you think that a container ship will be carrying 20,000-30,000 containers and you think how many containers can fit on a mile long train, it’s nowhere near that number so that’s not a viable alternative.” One of the issues is the unpredictability of it all, Midwood continues. “There’s no predictability, and it’s not as if we’re paying more and the service is better. We’re paying more, the container ships are taking
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reliability back in the market, we’ll get the customers coming back to us and be more loyal to us. So that’s why I’m feeling confident.” When talking with customers previously about the options of a price increase, or holding onto stock until the availability of cheaper options, every customer said that, as independent companies themselves, they would rather pay more than have nothing to stock.
“We’ve been dealing with some suppliers for 15 years now, they know who we are, they know we pay our bills,” Midwood says. “We’ve always made it really important to never delay a payment because actually when the chips are down, these guys support you.”
Midwood says that the biggest thing Timco has learned since the COVID pandemic began is the importance of communication. A year ago, the company decided to increase the salesforce, despite many suppliers actually doing the opposite. This, he says, has made customer communication much easier, and the feedback has been “amazing”.
longer to get to us, so lead times have gone up, which is causing problems as we don’t know when goods will arrive in the UK.” He says that there have also been companies that outright refuse to come to England due to the condition of our ports, claiming that they aren’t efficient enough to be able to process their ships quick enough, inevitably slowing the process of getting products even further.
“It takes time to come off the ship and waiting for the next ship to come in adds another two weeks on. We then have to hold more stock here to be able to try and counteract those changes, this means a bigger warehouse and more cashflow.” Midwood adds: “Our job is to try and make things more efficient, not make it more inefficient.”
This, he explains, has put more pressure on the company sales team, who have a reputation for reliable service to maintain and uphold. It is also proving difficult to build brand loyalty, he adds, as stock levels seem to be at a low
across all competitors.
“We’re not able to sell pure brands because the brands are just not in stock 100%. I’ll think that I’ve got 6 months’ stock sitting on that product and we’ll really be able to look after our customers, but a month later, the whole lot’s gone because the competitor hasn’t got the stock.” Midwood however is feeling quite optimistic about this year, due to the decisions made 12 months previously. He says: “The reality is that we are buying huge amounts of stock, we’ve committed to stock and the key is to have the stock to become a reliable supplier. Once we get the
“The reason we’ve brought more salespeople on is because the bigger groups are very hungry, and they need a lot more time spending on them. As the groups get bigger, they need more because they might have a central buyer who wants to roll it out across branches and wants programs, etc. They’re also becoming hungrier for data and for imagery and are getting good at populating their websites. He adds: “If our customers are successful then we’re successful. The salespeople aren’t just talking about a sale, they’re talking about what merchandising they can do, what e-shots or mail-shots they can do, all the supportive things we can do to make them successful.”
Looking ahead, Midwood remains positive, with a lot of new products coming in, and new ranges soon to be launched, which will help them grow and help single source for their customers,
“Our industry tends to do better during recession, even if a recession is thrown at us there is still repair work, for example. That is our niche.” BMJ
www.buildersmerchantsjournal.net March 2022
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