Empty shelves not “supply issue”
Food chain is strong, experts say; blame panicked consumers
The aisles of empty shelves in Denverarea grocery stores and supermarkets might signal otherwise, but Richard Mizell, whose company helps fill those shelves, is adamant that the food supply chain is in good shape.
“It’s not a supply issue. It’s not that we’re running out of anything,” said Mizell, safety director for Load To Ride
Transportation Inc. in Denver. “Right now we’re catching up.”
Catching up has meant changing up some of what the company’s 100 trucks haul across the country as stores work to restock toilet paper, paper towels and food that people have been grabbing up as quickly as it appears. Colorado stores have shortened the hours they’re open to the public to replenish.
The runs on paper products and whole cases of meat and other goods have accelerated as coronavirus cases have spread, as restaurants have cut service or closed and more people hole up at home.
Load to Ride doesn’t usually ship a lot of food or toiletries, but last weekend it had three trailers full of toilet paper.
“That was very abnormal for us, but right now the supply chains are so overloaded, trying to get the product in, that, instead of using their normal carriers, people are just pretty much putting ev
erything out to bid,” Mizell said.
The company is getting 10 to 20 requests for service from businesses in particular areas where Load To Ride trucks make deliveries and are ready to pick up more freight. The normal number of requests is three to five. Employees along banks of computers at the company’s north Denver headquarters were busy fielding calls and checking the latest data Wednesday morning.
“Nobody expected this, so nobody planned for it,” Mizell said. “There wasn’t stock sitting back there on shelves waiting to go.”
The general consensus is that the food supply chains, including those for meat, chicken and poultry, are strong, said Gregg Macaluso, faculty director for the master’s supply chain program at the University of Colorado Leeds School of Business. Indications are that reserves of frozen food in warehouses exist as well as channels for the flow of fresh food, he added.
“The current issues in retail stores seem to be related to panic or concern purchases,” said Macaluso, who thinks it’s a good idea that grocery stores cut their hours to provide time to restock the shelves. A replenished inventory could help ease shoppers’ anxieties, he added.
King Soopers shortened its hours last week to provide more time to refill the shelves. Safeway and Albertsons stores will be open 7 a.m. to 8 p.m., closing four hours early, spokeswoman Kris Staaf said.
“It allows us to dedicate more time to cleaning and sanitizing the store and restocking,” Staaf said. “It also gives employees a little bit more down time.”
When it comes to durable goods, the supply chain is more global and the U.S. could see bottlenecks for a while, Macaluso said. In a briefing Wednesday for people in academia and business, McKinsey and Co., a worldwide management consulting firm, said production and related transportation services were at 65% to 100% of previous levels in China, depending on the area and the product.
Since cases of the new coronavirus started occurring around Jan. 1 in the port city of Wuhan, McKinsey said China experienced a 21% drop in retail sales, a 90% drop in passenger car sales and a $60 billion decrease in consumer spending on food and beverage.
“They indicated the ports are very congested with things that have not moved,” Macaluso said.
Short-terms shocks to the supply chain should correct themselves in the next week or so, said Jack Buffington, an assistant professor of supply chain management at the University of Denver’s Daniels College of Business.
“The bigger fear I have is with the medical supply chain,” Buffington said.
There isn’t enough supply to meet the growing demand for such items as gowns, masks and other protective equipment for medical workers and respirators, he added.
Harry Kazazian, CEO and chairman of Exxel Outdoors, has experienced supply-chain pain because components of the products the Broomfield-based company makes come from Asia. Some of its outdoor recreation equipment and apparel are manufactured there.
Just as factories he works with in China are starting to crank up again, Kazazian said he’s preparing for more disruption because of declining demand in the U.S.due to the coronavirus.
“Every day I call China, I call some of the factories to say “What’s going on, what’s happening?’ And I will tell you that the factories in China are starting to get slowly back online,” Kazazian said. One of the factory owners recently told Kazazian life is starting to return to normal.
“He was trying to reassure me,” Kazazian said. “Honestly, every day I wake up and I’m trying to figure out what I have to do to get through the next day or the next week.”
The factory in Alabama where Exxel Outdoors manufactures sleeping bags is still operating. The company just opened a new office in Broomfield, but most people are working at home.
Exxel, which has about 120 employees in the Denver area, will do what it can to avoid layoffs in any downturn, Kazazian said.
“We’re committed to our workers, committed to being a family. Making that kind of move early would be the total opposite of what our core values as a company are all about,” Kazazian said.
An upside is that outdoor recreation, including camping and fishing, are somewhat recession proof, he added. He said he relayed reports of the current increase in campground bookings to his staff.