The COVID-19 pandemic has exposed the fragility of global supply chains. The dramatic demand shifts — down then up — have caused strain and even breaks. As manufacturing tries to catch up with demand, here are a few of the ways stress is showing up in the global agricultural supply chain. ~By Sara Schafer and Jennifer Shike
PANIC BUYING
One of the major problems with supply chain failures is panic buying, which exacerbates shortages, says Dennis DiPietre, economist with Knowledge Ventures. “Pork in cold storage is well below normal and not being quickly re-stored,” he says. “This means Christmas hams could be in very short supply, not only from an inability to purchase, but also from failures in distribution networks related to employee shortages.”
The panic buying phenomenon is transforming retail and manufacturing, adds Mike Steenhoek, executive director of the Soy Transportation Coalition. “Companies do not want to be caught flat-footed again,” he says. “They want to increase their inventory to maintain operations. This is adding more demand for moving freight throughout the glob-al supply chain.”
TRANSPORTATION TROUBLES
The stress in the supply chain is not limited to one mode of transportation, Steenhoek says. “The images of dozens of ocean vessels in queue at a port are compelling, but challenges are in each link of our supply chain — rail, trucking, barge, distribution centers, etc. If each link of the chain is overly subscribed, mitigating stress on one link will pass onto another link already under considerable stress.”
CONTAINER CONUNDRUMS
With high demand, owners of shipping containers are being pressured to ship containers of consumer goods or component parts from China to the U.S., unload them, return them to China — then repeat.
“There is an unwillingness to deviate from this route to be loaded with agricultural or other U.S. products,” Steenhoek says. “The spot rate to ship a container from China to the U.S. West Coast is $16,004. The rate to ship a container from the West Coast back to China is $1,020. This stresses U.S. ag exporters who use containers.”
WORKFORCE WOES
The shortage of labor is evident in nearly every sector of the global supply chain, and the issue has a long tail. DiPietre recently spoke with a major supplier/processor of bacon and ham that has upped their starting salaries by 50%.
“Yet they still are 25%-plus short on a full workforce,” he says. “The higher-than-normal salaries raise costs and bring in people who need to be trained, delaying fully competent and efficient execution of the plant. Unfortunately, many of them, attracted initially to the high-sounding hourly rate, decide this isn’t for them and leave sometime soon after training, forcing the whole process to start all over again.”
