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Thursday, December 9, 2021

Food to become the Next Supply Chain Crunch as People Hoard

As per news from Bloomberg, Public school-going children in Denver are facing a milk shortage.  A local market in Chicago reported running short of boxed items and canned goods. 

There is no shortage of food.  It is in plenty, but the transport logistics are unable to support the rising demands after the economy accelerated after the pandemic. 

After nearly eighteen months since the pandemic upset daily life, the supply of basic goods at grocery stores and restaurants in the U.S. is affected due to intermittent delays and supply shortages. 

Vivek Sankaran, CEO of Albertsons Cos, never imagined that they would be discussing the supply chain problem in October 2021.  He echoes other retailers who are crying as they face shortages across categories.

Disruptions at milk plants suppliers in Denver affected shipments of a half pint’s cartons. At other times cereals, juice and tortillas face disruptions. 

The Denver Public School Executive Director of Food Services, Theresa Hafner, said, “We have been suffering from supply shortages of different food items ever since the school reopened after the pandemic.  Different items shortage continues to pop up, and it seems that one is playing the whack-a-mole game.”

In recent weeks, Dill Pickle Food Co-Op in Chicago ran out of dry goods as its two leading distributors could not send the orders in full.

According to General Manager I’Talia McCarthy, the pandemic forced panic buying, which saw Groceries running out of many items.  But after the pandemic, though the food industry rebounded, the delta variant and slow pace of vaccination saw the supply chain problem resurface. 

According to NeilsonIQ, the shortages this time is not as acute as last November during the peak pandemic. The on-shelf availability has stabilized in supermarkets. Still, the key metrics are down, and the total on-shelf availability rate is 94.6 % which is lower than 95.2 percent in August this year. 

Many suppliers brace up for shortages and hiccups to last, and they are planning accordingly.  The frozen meat producer, Saffron Road, is now keeping about four months of supplies instead of the earlier one or two months. The Founder and CEO, Adnan Durrani, says, “People are hoarding.” According to him, in the next six months, prices will increase. 

Chicken Tender for marketing was canceled by A&W Restaurants as its suppliers could not provide the extra poultry stocks. The chain, which operates out of 560 locations in the U.S., instead went with new items Chilli cheese fries.   Though supplies are improving, the chains only get around 80% of their orders. The chain has been promoting other items instead of focusing on the shortages. 

Food producers feel the supply chain problems have become their headache. One of the biggest U.S.  farm Cooperatives, Land lakes Inc., says that its members produce enough milk at their diaries. There is no shortage at their end. “The supply chain is the issue is due to shortages of drivers, workers, and congestions at ports,” Yone Dewberry, CEO, said in a mail.  

Meat processors tell similar tales.   A consulting economist with National Pork Producers Council, Steve Meyer, said, “One supplier could not send the products as there was a shortage of Styrofoam trays. 

Another problem is the labor issues that are affecting meat plants. Plants are unable to function at full capacity utilization due to a shortage of workers and Transporters.  One U.S.  meatpacker tried to lure new employees with Apple watches indicating worsening labor problems. So, grocery store customers find it challenging to get boneless hams as meat production facilities were boning, trimming, and curing do not have workers to do this job.

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Kiara Dawson
Kiara Dawson comes from an Engineering background, with a specialization in Information Technology. She has a keen interest and expertise in Web Development, Data Analytics, and Research. She trusts in the process of growth through knowledge and hard work.

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Business Upside eMagazine
Business Upside eMagazine
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