Omikron, winter weather and logistics problems empty US shelves

In North America, consumers are once again finding empty shelves in their local supermarkets. Covit-19 is one of the main reasons for this problem. “The recent wave of Omigron infections has exacerbated the current labor shortage,” said Brad Rubin, a San Francisco-based food and agriculture business consultant. “Employees across the supply chain face a large number of sick people, who suffer from logistics and handling delays. With limited inventory, the so-called ‘short-term’ inventory system can cause delivery problems.”

Then there is the weather. The cold climate in the Midwest and Northeast of the United States is also a supply challenge. “On top of that, the main supplier of packaged lettuce and leafy greens has trouble recalling many products due to the risk of listeria contamination,” Rubin added.

He notes that there is a supply chain at the mercy of both the weather and the virus. “As long as there is a labor shortage, transportation costs will continue to rise because logistics companies pay more to hire employees to carry out their contract duties,” Rubin explains. “If the virus continues to prevent people from harvesting, processing or exporting, these problems will persist for a long time. However, I hope they can gradually return to normal in the spring.”

The role of imports
The time of year also plays a role. “In the United States, most fruits and vegetables are produced between May and October, which means fruits and vegetables are imported during the winter months,” said David Branch, a food and agriculture business consultant in Wells Fargo. “Half of the $ 12.3 billion of fresh fruit imported in 2019 came from Mexico, while a quarter ($ 8 billion) of imported vegetables came from Mexico.”

The lion’s share of the new goods imported from Mexico are shipped to the United States by truck, while the rest is shipped by sea. “Increasing congestion and driver shortages in ports on the west and east coasts continue to have an impact on the availability of new products in the United States,” the branch said.

He added that two-thirds of the United States imports fresh fruits and one-third fresh vegetables. “Imports of this size are in demand throughout the year for new products and some fruits and vegetables are not grown commercially in the United States, including bananas and other exotic products, so must be imported,” the branch said.

Brad Rubin on the left and David Branch on the right

Will it be hoarded again?
Does this mean that the scenes that were there at the beginning of the epidemic will come back again and again and consumers will start hoarding again? Retailers need not have learned from this challenging period in the spring of 2020.

“Some stores have set purchase limits. For example, Costco limits the number of units a consumer can purchase a particular item,” Rubin said. “In other regions, including California, new products are widely available because most of it comes from within the state. However, suppliers control retailers and force consumers to shop early in the morning to get what they need. We have a lot of food in the system. Currently the biggest problem is the transportation and manpower required to load the goods. “

This means that in some cases consumers will see empty store shelves filled with other items. “For stores that offer products, how important they are in buying and receiving products is important,” says Rubin. “Product resource diversification is a good business strategy, and I think large food chains can reduce their risks through a distribution strategy that protects more products for consumers.”

For more information:
Sarah Hatch
Wells Fargo
[email protected]
www.wellsfargo.com