Supply Chain Snarls Hit Disposable Cups and Lids

If businesses can get their hands on the goods, costs have increased significantly.

February 11, 2022

Coffee Cup To-Go

ALEXANDRIA, Va.—America’s crimpled supply chain has a new victim—disposable cups and lids, reports the Wall Street Journal. These to-go items are imported from overseas and are stuck in ports, plus American paper mills are dealing with labor shortages. Additionally, the extreme cold that hit Texas last year suspended resin production, and the U.S. still hasn’t caught up.

Wetzel’s Pretzels, a 350-location pretzel chain, is giving whatever cups it can find to customers, and franchise holders are being forced to scour the inventory of local restaurant suppliers and whatever is available on Amazon.

A fast-food restaurant in Baltimore has been forced to remove certain drink offerings from online menus when supplies are especially low, reserving containers for in-person customers. The restaurant also says then they do receive cups, they’re paying about 70% more for a case of 600 24-ounce plastic cups than they were last year.

One way to combat the shortage is to sell branded, reusable cups that carry a drink discount. Consumers were hesitant to use reusable cups during the pandemic, and some businesses refused to refill them, but now they are an option again.

Plastic cups are also in short supply, with the Plastics Industry Association saying labor troubles have hampered plastics plants. Shortages of both labor and inputs have pushed prices for plastic packaging products 24% higher from a year ago, federal data show. The industry forecasts a 3.1% increase in the output of plastic products, including cups.

The U.S. is dealing with record high inflation and consumer prices. The consumer price index for January, which measures the costs of dozens of everyday consumer goods, rose 7.5% compared with a year ago, the Labor Department reported. This is the highest reading since February 1982, reports CNBC.

Fuel oil rose the most in January, increasing 9.5% as part of a 46.5% year-over-year increase. Energy costs overall were up 0.9% for the month and 27% on the year. Additionally, the cost of food rose 0.9% for the month and is up 7% over the past year, and housing costs are up 4.4% over the past year and could keep inflation readings elevated in the future, says CNBC.

The increase in food and housing costs “underlines our view that a rapid cyclical acceleration in inflation is underway and, with labor market conditions exceptionally tight, it is unlikely to abate any time soon,” wrote Andrew Hunter, senior U.S. economist at Capital Economics.