Forbes logo

The Supply Chain Is In Crisis.

Please consider sharing…

How Do We Move Forward?

Food retail supply chains are undergoing shocks and logjams that are raising prices and disrupting fill rates. Last week we took a deep dive into one aspect of this, what is behind the hesitancy of workers to fill the many job openings in the retail and wholesale food sector. This week we look at structural issues with logistics, commodity prices and what is wrong with the current set of practices that led us to this mess. 

In terms of logistics, ocean-going freight rates have skyrocketed over 460% in the last 12 months. These shipping costs have been impacted by soaring pandemic demand, particularly the promised rapidity and convenience of online shopping, especially with increased automationrapid delivery firms and micro-fulfillment expansion. With many working class consumers temporarily flush with spending cash from stimulus checks and child tax credits, demand has stayed relatively high for consumables. This has compounded pressure on backed up ports with several weeks’ worth of container ship traffic in port, too few ships, too few dockworkers, a shortage of semiconductors slowing down new truck production, and too few truckers to handle the existing freight. The millions of consumer products manufactured in China can’t magically appear in warehouses without efficient shipping infrastructure. And with a handful of firms controlling 80% of global shipping, the Biden administration is looking to take anti-monopoly actions to bring prices down, but that will not have immediate impacts.

Read full article here…

Please consider sharing...

Similar Posts