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Food Distributors Can't Keep Up with Massive Labor Shortages

Labor Shortages
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EDITOR NOTE: Some signs of the great American economic collapse are subtle and very technical, like the Fed’s QE policies. Others are right in our face, like the fact that food suppliers are being hit by post-pandemic labor shortages and can't keep food on the shelves. Some of the problems are with production, while others are in the supply chain. Either way, these shortages are going to become more and more noticeable at the grocery store this fall and point to a major economic and social catastrophe coming soon. Many people who recognize these signs are sticking up on non-CUSIP gold and silver to protect themselves if/when the worst-case scenario happens. 

(Bloomberg) -- Some of the largest U.S. food distributors are reporting difficulties in fulfilling orders as a lack of workers weighs on the supply chain.

Sysco Corp., North America’s largest wholesale food distributor, is turning away customers in some areas where demand is exceeding capacity. The company also said prices for key goods such as chicken, pork and paper products for takeout packaging are climbing amid tight supplies. In particular, production has slowed for high-demand, labor-intensive cuts like bacon, ribs, wings and tenders, Sysco said.

“There are certain areas across the country that are more challenged by the labor shortage and our volume of orders is regularly exceeding our capacity,” Sysco Chief Executive Officer Kevin Hourican said in a letter to clients earlier this month. “This has, unfortunately, led to service disruptions for some of our customers.”

An analysis from DecaData, which tracks retailer transactions with shoppers and manufacturers, shows that retailers are bumping up against manufacturer capacity as they stockpile ahead of the holiday season. In July, the incidence of suppliers limiting or putting a cap on orders from customers was more than double what it was in January, its data show.

Another major distributor, United Natural Foods Inc., is having trouble getting food to stores on time. The company said the labor shortages, as well as delays for some imported goods like cheese, coconut water and spices, are causing the problems.

“We anticipate additional supplier challenges in the short term with gradual improvement through the fall and winter,” a United Natural Foods representative said. The company’s top priority is to support customers “by working diligently to recover and bring their shelves back to normal inventory levels as quickly as possible.”

U.S. companies across industries are reporting a dearth of workers amid sweetened unemployment benefits, stimulus payments and a pandemic that has reduced the appeal of in-person employment. Houston-based Sysco is aggressively hiring warehouse workers and truck drivers and offering referral and sign-on bonuses along with retention money for current staff.

The entire food sector is seeing “massive labor shortages,” said Benjamin Walker, senior vice president of sales, marketing and merchandising at Baldor Specialty Foods, a New York distributor. “Service levels are the lowest I’ve seen in my 16-year career, and it doesn’t seem like it’s going away anytime soon.”

Finding truck drivers is “next to impossible,” he said, while freight costs are rising daily. The company’s orders are arriving late and consequently facing delays in being sent to customers. On the outbound side, on-time deliveries are still above 50% but have fallen from the usual rate of more than 90%.

“We all thought it would be over by now. It’s just one thing after another,” he said. “This is going to be the norm for a while.”

Original post from Finance Yahoo

All articles are provided as a third party analysis and do not necessarily reflect the explicit views of GSI Exchange and should not be construed as financial advice.

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