Shortages to last four to six weeks.
QUICK FACTS:
- High demand for groceries combined with soaring freight costs and Omicron-related labor shortages are creating a new round of backlogs at processed food and fresh produce companies, leading to empty supermarket shelves at major retailers across the United States, Reuters reports.
- Growers of perishable produce across the West Coast are paying nearly triple pre-pandemic trucking rates to ship things like lettuce and berries before they spoil.
- U.S. retailers are now facing roughly 12% out-of-stock levels on food, beverages, household cleaning and personal hygiene products compared to 7-10% in regular times.
- On Tuesday, Albertsons—the second-largest supermarket chain in North America after Krogers—said that costs have gone up on ingredients, packaging, transportation and labor, reports Barron’s.
- On the company’s third-quarter earnings call with investors, CEO Vivek Sankaran said the latest spike in Covid cases is prolonging some out-of-stock items.
- Sankaran said on the call that shortages could last four to six weeks.
WHAT PRODUCE COMPANY’S ARE SAYING:
- Shay Myers, CEO of Owyhee Produce, which grows onions, watermelons and asparagus along the border of Idaho and Oregon, said he’s been holding off shipping onions to retail distributors until freight costs go down. “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.”
- Birds Eye frozen vegetables maker Conagra Brands’ CEO Sean Connolly told investors last week that supplies from its U.S. plants could be constrained for at least the next month due to Omicron-related absences, Reuters reports.
BACKGROUND:
- The situation is not expected to abate for at least a few more weeks, Katie Denis, vice president of communications and research at the Consumer Brands Association said, blaming the shortages on a scarcity of labor, according to Reuters.
- 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.
- In the U.S., recent snow and ice storms that snared traffic for hours along the East Coast also hampered food deliveries bound for grocery stores and distribution hubs. Those delays rippled across the country, delaying shipments of fruits and vegetables with a limited shelf life.
