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Business

US grocery shortages increase as the pandemic dries up supplies




January 14 (Reuters) – High demand for groceries combined with sky-high shipping costs and Omicron-related labor shortages create a new round of backlogs at processed food and fresh food companies, leading to empty supermarket shelves at major retailers across the United States.

Growers of perishable produce all over the west coast pay almost triple pre-pandemic truck prices to ship things like lettuce and berries before they are destroyed. Shay Myers, CEO of Owyhee Produce, which grows onions, watermelons and asparagus along the border with Idaho and Oregon, said he has been waiting to send onions to retail distributors until shipping costs go down.

Myers said transport disruptions over the past three weeks, caused by a shortage of truck drivers and recent highway blocking storms, have led to a doubling of shipping costs for fruit and vegetable producers, on top of already high pandemic prices. “We would usually ship from the east coast to the west coast – we used to do that for around $ 7,000,” he said. “Today it is somewhere between $ 18,000 and $ 22,000.”

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Birds Eye producer of frozen vegetables Conagra Brands (CAG.N) CEO Sean Connolly told investors last week that supplies from their US factories may be limited for at least next month due to Omicron-related absences.

Earlier this week, Albertson’s (ACI.N) CEO Vivek Sankaran said he expects the supermarket chain to face more challenges in the supply chain over the next four to six weeks, as Omicron has put a dent in its efforts to close supply gaps. .

Shoppers on social media complained about empty pasta and meat aisles in some Walmart stores (WMT.N); a Meijer store in Indianapolis was swept bar for chicken; a Publix in Palm Beach, Florida ran out of bath paper and home hygiene products while Costco (COST.O) reintroduced toilet paper purchase limits in some stores in the state of Washington.

The situation is not expected to subside until at least a few more weeks, said Katie Denis, vice president of communications and research at the Consumer Brands Association, blaming the shortage of labor.

The consumer-packaged goods industry is missing about 120,000 workers, of which only 1,500 jobs were added last month, she said, while the National Grocer’s Association said many of the grocery store members operated with less than 50% of the workforce.

The production shelves are almost empty in a Giant Food grocery store while the US continues to experience disruptions in the supply chain in Washington, USA, January 9, 2022. REUTERS / Sarah Silbiger

US retailers now face about 12% sold out at stock levels on food, beverages, household cleaning and personal hygiene products compared to 7-10% in normal times.

The problem is more acute with foods where sold-out levels run at 15%, said the Consumer Brands Association.

SpartanNash, an American grocery distributor, said last week that it has become more difficult to get supplies from food producers, especially processed goods such as cereals and soups.

Consumers still have to refill groceries while looking down at home to curb the spread of the Omicron variant. Denis said that demand in the last five months has been as high or higher than it had been in March 2020 at the beginning of the pandemic. Similar problems are seen in other parts of the world.

In Australia, grocery chain operator Woolworths Group said last week that more than 20% of distribution center employees are off work due to COVID-19. In stores, the virus has put at least 10% of employees out of action.

On Thursday, the company reintroduced a limit of two packages per customer across toilet paper and painkillers across the country, both in-store and online to deal with the lack of staffing.

In the US, recent snow and ice storms that caught traffic for hours along the east coast also prevented food deliveries on their way to grocery stores and distribution hubs. These delays swept across the country, delaying the shipment of fruits and vegetables with limited shelf life.

While growers with perishable products are forced to pay high shipping rates to attract limited trucks, manufacturers like Myers choose to wait for the backlog to ease.

“The canning, the soda, the chips – these things sat, because they were not willing to pay double, triple the shipping, and their things do not get bad in four days,” he said.

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Additional reporting by Praveen Paramasivam; Edited by Vanessa O’Connell and Diane Craft

Our standards: Thomson Reuters Trust Principles.



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