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An Update from Lance Hart, President of DEMDACO

Posted Jun 7th 2021

Dear Valued Partners,

I am writing to update you of ongoing developments and DEMDACO’s efforts regarding ocean freight challenges and delays as well as increased product costs. No one could have imagined the situation that we find ourselves in and there are few industries untouched by these challenges. We continue to experience ongoing increases in ocean freight charges as well as higher material and product costs from our factories.

Since January, U.S. imports from overseas are up significantly and port workers are hindered handling these increased volumes in a sustained COVID environment. This is currently causing inventory delays ranging from 10 to 20 days. Additional logistical challenges we are seeing in the market range from port congestion, container shortages and delays, worker shortages, vessel capacity, inflation on commodities, labor inflation/shortages for certain critical positions, and trucking and rail delays. These factors have led to substantial container cost increases, as much as three to four times what they were nine months ago.

We have been working hard to mitigate these additional cost pressures in the best interests of our retail partners. Unfortunately, these cost pressures show no signs of quickly abating. In fact, we are concerned they will not subside until mid-2022 if then.

While this has been a difficult decision to make, we find ourselves forced to address our pricing. Starting June 14th new orders will incur a 6.0% price increase for both Willow Tree and Portfolio products. On orders that are booked prior to June 14th, but have not shipped, DEMDACO will honor current pricing on anything that is shipped through the end ofJuly. We know that changing prices unexpectedly is difficult for you to navigate and we regret the impact this might have on you.

We are hopeful that inventory and logistics pressures return to normal. However, the current situation is dynamic and ongoing. Our Supply Chain team is working diligently, and we will continue to communicate with our partners if the situation changes.

2020 was a challenging year for everyone on a number of different levels. We want to thank you not just for your partnership last year, but also the past, present and future.

Please contact your Territory Manager or our Customer Care team (1.888.336.3226) with any questions.

Lance Hart President