Increasing Demand for Staple Items
With restaurants closed, more Americans are cooking at home than ever before. Not only that, but the emphasis on health has driven the tremendous uptick in fresh fruit and vegetable produce purchases. On March 1, 2020, sales of fresh produce in grocery stores was on par with that seen in 2019. However, by the end of the week of March 15, sales had increased by an unprecedented 33.9% with no end to the growth in sight, according to market research company IRI. In particular, potatoes, berries, and onions have seen meteoric rises in demand with sales increasing by 114%, 23.5%, and 68%, respectively. In the US, packaged fresh produce has become popular due to the added convenience and consumers beliefs that other customers who could be carrying Covid-19 will not have touched the end product. Covid-19 has also caused a change in milk-buying habits with an astonishing 305.5% increase in oat milk sales during just over a one-week period in April! Consumers have also been driven to purchase more eggs which has caused wholesale egg prices to triple and consumer prices to rise by an average of 94 cents from the base average of $3.01. The price of garlic has also increased by 29% compared to February as demand from Asia has soared. The strain from increased demand for fresh produce from grocery stores has caused the national food supply chain to pivot.
Pivoting the Supply Chain to Fulfill Grocery Store Orders vs. Restaurants
The restaurant industry has taken one of the largest hits during pandemics. Over 3 million jobs have been lost and sales have declined by $25 billion according to the National Restaurant Association. Many restaurants have closed their doors for both the safety of their patrons and that of their employees. This massive decrease in demand from restaurants has led suppliers and distributors to divert food to grocery stores. Still, grocery purchases cannot totally make up for the decreased restaurant food purchases and losses to the food supply chain have been estimated to be $1 billion per week despite transport and logistics companies doing their best to pivot resources. Some restaurants have tried to remain open for curbside pick-up and delivery, but with sales lower than ever, the existing bulk supply of ingredients is just too much. Much of the food goes to waste. Additionally, restaurants began to consider new ways to bring in more customers. Now, many restaurants and even chain restaurants are selling the ingredients to make their food, brought to them by the transport and logistics company that usually delivers bulk fresh produce so that they can serve cooked food to people. This shifting in the food supply has left the bulk transportation and logistics industry reeling. Normally, approximately 25 percent of the US’s food is diverted to restaurants and food service while the remaining 75 percent goes to retail and grocery stores. Orders of certain products have sharply declined in restaurants like whole chickens, butter, cheese, and ham. Meanwhile, those consumers have been rushing to get those items in grocery stores. All in all, the grocery supply chain is having to adapt more quickly and in ways never seen before.
Covid-19 Effect on Food Production Plants
Covid-19 has placed a huge strain on food production plants, especially meat production plants. Plants have large numbers of employees in often crowded conditions, leading them to be hotspots for infection. Some plants have shut down in order to get infections under control and stop the spread of the virus between employees. According to the Associated Press, 25% of U.S. meatpacking plants were closed in the last two weeks of April alone. Other food and beverage plants are adapting to the times of Covid-19 by increasing plant workers’ pay, sending non-plant floor employees to work remotely, and reducing the number of SKUs produced in order to increase the output of fewer products. Plants are also switching more production resources from food service to retail as well as restricting visitors allowed into their facilities.
What to Expect from your Transport and Logistics Company
As a pandemic, Covid-19 has affected the supply and demand of products all over the world which means that transport and logistics companies’ networks are being put to the test. Transport and logistics companies are on the front lines of the pandemic, ensuring the supply chain remains intact and consumers get the food they need. Workers in the agriculture and food as well as transportation and logistics industries have been deemed essential. This means that ports and trucking have remained open and operational despite shelter in place orders. Even so, some functions have come to a halt or have altered capacity. For example, truckers whose licenses expire will need to renew them despite restrictions or find alternatives. In the coming months, customers will need to have the same kind of flexibility the transport and logistic companies have had. Customers are advised to create and open dialogue with their suppliers and transport and logistics companies to understand where the weak points in their supply chain are. Additionally, customers should ask their 3PL service provider to start dual sourcing including bringing two or more manufacturers or carriers on board so that they can react quickly to any disruptions. Contact East Coast Transport LLC today to work with a transport and logistics company that can help you analyze, pivot, and improve your supply chain. ECT will use its unlimited resources to get your product to your customers on time, every time.