U.S. grocery shortages deepen as pandemic dries supplies -Breaking
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© Reuters. As the U.S. experiences supply chain disruptions in Washington (U.S.), January 9, 2022, produce shelves at Giant Food supermarkets are nearly empty. REUTERS/Sarah SilbigerChristopher Walljasper, Siddharth Cavale
(Reuters) – A combination of high demand and rising freight costs, and Omicron-related labor shortfalls have created a backlog at fresh food companies and processed foods. This has led to vacant shelves in major supermarkets across America.
West Coast perishable fruit and vegetable growers are spending nearly three times the cost of pre-pandemic rates for trucking to get things such as lettuce or berries shipped before they go bad. Shay Myers is the CEO at Owyhee Produce. Owyhee Produce grows watermelon, asparagus, and onions along the Idaho-Oregon border. He said that he’s been waiting for freight prices to drop before shipping onions to retailers.
Myers explained that transport disruptions over the past three weeks due to a shortage of truck drivers and recent road-blocking storms have resulted in a doubling freight cost for fruit and vegetable growers, adding on to already high pandemic costs. “We typically will ship, East Coast to West Coast – we used to do it for about $7,000,” he said. “Today it’s somewhere between $18,000 and $22,000.”
Conagra Brands, the frozen vegetable maker Birds Eye (NYSE:),’s CEO Sean Connolly stated last week to investors that Omicron-related absentees could cause supplies at its U.S. plants to be restricted for at most one month.
Vivek, the CEO of Albertsons said earlier in the week that the company expects to face additional supply chain issues over the next 4 to 6 weeks. Omicron’s efforts to close supply chain gaps has made it harder for the retailer to overcome.
On social media, shoppers complained that there was no pasta or meat in certain Walmart (NYSE:). Meijer stores in Indianapolis were empty of chicken. Publix stores in Palm Beach and Florida had run out of home and bath tissues. Costco (NASDAQ;) also reinstated limits on the purchases of toilet paper in some of its stores throughout Washington.
Katie Denis from the Consumer Brands Association, Vice President of Communication and Research, stated that the current situation won’t improve for at least the next few weeks. Denis blamed the lack of workers as the reason.
The consumer-packaged goods industry is missing around 120,000 workers out of which only 1,500 jobs were added last month, she said, while the National Grocer’s Association said that many of its grocery store members were operating with less than 50% of their workforce capacity.
U.S. retailers face about 12% shortages in stock for food, beverage, cleaning supplies, and personal hygiene products. This is compared to the 7-10% that was commonplace.
According to the Consumer Brands Association, this problem is even more severe for food products with stock shortages of 15%.
SpartanNash (a U.S. distributor of grocery products) last week claimed that it is becoming more difficult to obtain supplies from food manufacturers, especially for processed goods like cereals and soup.
As they try to stop the Omicron variant spreading, consumers have been stocking up on groceries. Denis indicated that demand has been higher or equal to what it was in March 2020, when the pandemic began. Similar problems are also being observed in other regions of the globe.
Woolworths Group, Australia’s grocery chain, reported last week that over 20% of workers at the distribution centers were absent due to COVID-19. At least 10% of the staff have been unable to work due to the virus.
On Thursday, the company was able to reinstate a maximum of 2 packs for each customer in all stores nationwide. This is done in an effort to address staff shortages.
The recent snowstorms and ice storms in the U.S. also delayed food delivery to distribution and grocery centers. These delays spread across the nation, causing delay in shipment of fruits and vegetables that have a short shelf life.
Growers of perishable products are often forced to pay high shipping costs to get limited supplies. However, Myers producers are waiting for the backlog to clear.
“The canned goods, the sodas, the chips – those things sat, because they weren’t willing to pay double, triple the freight, and their stuff doesn’t go bad in four days,” he said.
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