The Friday Report: July 9, 2021

Labor Shortages Driving Supply Chain Disruptions

It seems as if nearly every day now we are hearing about supply chain disruptions.  What are the primary drivers of this problem?  Notably, labor shortages and transportation impediments.

Ports in various locations around the world are experiencing considerable congestion, leading to a slowdown in the movement of goods on and off ships.  Delays and long waiting times in ports equate to a loss of shipping capacity and more backorders.  Ships slowed down in ports of Los Angeles/Long Beach and Oakland and cannot return quickly to Asia to pick up and transport more goods.

The shortage of manufacturing factory labor is at the start of the problem in the supply chain.  Moving goods from factories to warehouses, fulfillment centers and distributions centers requires truck drivers.   Both warehouse workers and truck drivers are also now in short supply.  In addition, there is a shortage of local delivery drivers, retail sales personnel and installers.

The labor shortage is driving up costs as businesses are offering more incentives, higher wages and benefits to job seekers and are reducing or eliminating sales promotions and other discounts to consumers.

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Misunderstood Food Labels Driving 21% of Food Waste to U.S. Landfills

According to a 2013 study produced by the Harvard Food Law and Policy Clinic and the National Resources Defense Council, the average American family disposes of between $1365 and $2275 worth of food annually.  Did you know that forty percent of the food produced in the United States ends up in landfills or is otherwise wasted?  The U.S. food labeling system is obtuse, using verbiage that consumers interpret to mean that food products will spoil and become unsafe to eat on a specific date.  This causes American consumers to consider the food unsafe to eat so they throw it away.

According to the U.S. labeling vernacular, the term “expiration date” on products does not correlate to food spoilage.  Here is how food labeling began in the United States.

Following World War II, product manufacturers began posting date codes on cans as an indication to supermarkets as to when to rotate their stock.  These date codes were not designed to provide consumers with information.  Marketers caught on to the fact that consumers were interested in having an indication on food labels as to the level of freshness of the food and leveraged food labels as a selling point. 

Over time, the federal government failed to standardize food labeling.  Food label terminology varies considerably from state-to-state.  Other terms used on food labels, “best by”, “sell by”, “best if used before” usually do not correspond to the safety of the actual food product.

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U.S. Convenience Store Retailers Report “Significant” Supply Chain Disruption

Two surveys conducted by the National Association of Convenience Stores (NACS) of America-based convenience retailers and their supplier partners revealed that noticeable disruption in the supply chain has continued through mid-2021.  Of those surveyed, two in five convenience retailers reported “significant” disruption across the supply chain during Q2 of 2021.  86 percent of those surveyed indicated that at least 10 percent of their orders were disrupted. 

Here are some of the results of the survey:

• 72% of retailers reported supply chain disruptions of packaged beverages, 67% with beer specifically.
• 38% of suppliers indicated they encountered “significant” disruption involving the materials needed to produce goods
• 76% of retailers encountered labor shortages
• 72% or retailers experienced delays involving hardware or store equipment

For more information, please continue reading here.