A new round of backlogs is being seen right now at processed food and fresh produce companies alike at a time of soaring freight costs and labor shortages related to the pandemic. The result is empty supermarket shelves at major grocery retailers throughout the nation.
The CEO of Birdseye frozen vegetables parent company Conagra brands, Sean Connolly, told investors that he expects supplies from American plants to be constrained for at least the next month. He said that Omicron-related job absences were also a factor.
Meanwhile, the CEO of Albertsons supermarket chain, Vivek Sankaran, said that he sees supply chain challenges continuing for the next four to six weeks as efforts to plug supply chain gaps fall short.
Across the West Coast, produce growers are reporting paying trucking rates that are nearly triple those seen before the pandemic for shipping foods like berries and lettuce before they spoil. The CEO of Owyhee Produce, Shay Myers, said he has not been shipping onions to retail distributors from his location on the border of Oregon and Idaho due to the high freight costs and will avoid doing so until they drop.
He reports that transportation disruptions caused by storms and a lack of truck drivers during the last three weeks have caused freight costs for vegetable and fruit producers to double over the already-inflated pandemic prices they had been paying.
He said: "We typically will ship, East Coast to West Coast – we used to do it for about $7,000. Today it’s somewhere between $18,000 and $22,000."
On social media, shoppers have been complaining of bare meat and pasta aisles in their local Walmarts, while chicken was nowhere to be found in an Indianapolis Meijer store. And toilet paper is once again in short supply in some areas. A Palm Beach Publix recently ran out of toilet paper and other home hygiene products, and some Costco stores in Washington state have placed purchase limits on toilet paper again.
Lack of labor contributing to shortages
The vice president of communications and research at Consumer Brands Association is blaming the shortages on a lack of labor. According to Katie Denis, around 120,000 workers are currently missing from the consumer packaged goods industry. Although many are citing illness as Omicron strikes the U.S., vaccine mandates are certainly making the problem worse.
Denis reports that demand during the past five months has been at the same level or even higher than the demand noted when the pandemic was in its early days in March 2020. Many consumers are stocking up on groceries as they stay at home in hopes of stemming the spread of Omicron. According to the National Grocers Association, many grocery stores are operating with less than half of their workforce capacity.
One American grocery distributor, SpartanNash, said that it is growing more difficult to get processed foods like cereal and soup from food manufacturers. The Consumer Brands Association reports that food products' out-of-stock levels are currently running at 15 percent, with household cleaning and personal hygiene products experiencing 12 percent out-of-stock levels compared to the 7 to 10 percent seen during normal times.
Similar problems are being seen in other countries, like Australia, where many grocery store employees are out of work because of the virus and limits are being placed on the purchase of certain types of goods in hopes of preventing storages.
The recent snow and ice storms seen on the East Coast of the U.S. are also causing problems with deliveries to grocery stores and distribution hubs, with delays rippling across the country and putting produce with a limited shelf life at risk. And with many capable and willing workers being grounded by employer vaccine mandates, this problem could continue for quite some time.
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