The shortages are undermining companies’ ability to put products on store shelves. “Constraining some of the manufacturing throughputs within that supply chain does not help,” says Alex Hempel, senior director of the retail supply chain at Orbis Corporation, a reusable plastics and metals provider based in Oconomowoc, Wisconsin.
Shippers working to get products onto grocery store shelves have had to wrestle with an array of challenges in 2022. Shortages ranged from truck drivers to raw materials to shipping containers to plastics. Most of the imbalances aren’t new, but they have converged to create ongoing headaches for anyone who works in food logistics. One example is labor. The Great Resignation made headlines in 2021, but since then, many food manufacturers still haven’t been able to retain enough manpower. “Labor turnover is still high at the distribution and manufacturing levels, and that’s driving a lack of productivity,” says George Eversman, executive vice president of business development at Dot Foods, a foodservice redistribution company based in Mt. Sterling, Illinois. “Processing plants can’t keep up with demand, especially in protein categories.” Even if companies are able to maintain an appropriate headcount, they may have to contend with a paucity of plastics and aluminum. Plastic resins, for example, were in short supply for 10 months straight in 2021, according to the Institute for Supply Management.
Even shortages elsewhere in the world are impacting the domestic food supply. Take grains and oils, for example. In a normal year, Russian and Ukrainian exports account for roughly one-quarter of the global wheat supply, and nearly three-quarters of the world’s sunflower oil, according to the U.S. Department of Agriculture. Wheat prices spiked by 40% following the conflict between Russia and Ukraine, shows data from the CME Group. From February to May 2022, the price of Hard Winter wheat rose from $8 to $11 per bushel. Most U.S.-based companies don’t source these commodities from Eastern Europe, but they still feel the effects of scarcity wrought by regional turmoil. “More markets are competing for the same supply sources, which leads to a rise in costs,” explains Dr. Madhav Durbha, vice president of supply chain strategy at Coupa, a business spend management platform based in San Mateo, California. “Companies are feeling an impact, whether they are sourcing specifically from a war-torn region or not.” On top of limiting the current supply, geopolitical tensions have even compromised the ability to produce grains. Russia typically supplies 23% of the world’s ammonia and one-third of the world’s natural gas, two of the primary ingredients in fertilizer, according to data from the Fertilizer Institute. Regional hostility is reducing fertilizer exports, which could jeopardize crop yields and even trigger export bans. “Russia has stopped most of its fertilizer exports, and Ukraine can’t get many exports out,” says Dr. Elliot Rabinovich, AVNET Professor of Supply Chain Management at Arizona State University Carey School of Business. “That could ripple throughout the world as more countries impose restrictions on their own agricultural exports.”
For instance, some shippers don’t have adequate packaging to furnish sports drinks and bottled water products. “The latest data says that shortages are trending up in water and sports drinks, largely driven by packaging,” says Scott Shaw, consumer products supply chain lead at Durham, North Carolina-based Clarkston Consulting. “While the plastic is secondary to the product, it’s driving the shortage right now.”
U.S. companies, such as Dot Foods, that are working to get food products to grocery shelves are dealing with multiple supply chain challenges, including a shortage of warehouse labor.
June 2022 • Inbound Logistics 89
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