U.S. grocery shortages deepen as pandemic dries supplies

Jan 14 (Reuters) – Rising demand for groceries coupled with rising shipping costs and labor shortages linked to Omicron has created a new round of backlogs in processed food and fresh produce companies, emptying supermarket shelves at major retailers in the US. All over the United States.

Perishable produce growers across the West Coast were paying nearly three times pre-pandemic trucking prices to ship things like lettuce and berries before they spoiled. Shay Myers, CEO of Owyhee Produce, which grows onions, watermelons and asparagus along the Idaho and Oregon borders, said he has been delaying shipping onions to retail distributors until shipping costs come down.

Myers said that transportation disruptions in the past three weeks, caused by a shortage of truck drivers and recent storms that have closed highways, have doubled shipping costs for fruit and vegetable producers, in addition to the pandemic’s already high prices. “We usually ship from the East Coast to the West Coast – we used to do it for about $7,000,” he said. “Today it is between $18,000 and $22,000.”

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Sean Connolly, CEO of frozen vegetable maker Conagra Brands (CAG.N), told investors last week that supplies from its U.S. plants may be restricted at least next month due to absences linked to Omicron.

Earlier this week, Albertsons (ACI.N) CEO Vivek Sankaran said he expects the supermarket chain to face more supply chain challenges over the next four to six weeks as Omicron impacts its efforts to fill chain gaps. supply.

Shoppers on social media complained about empty pasta and meat aisles at some Walmart stores (WMT.N); Meijer’s in Indianapolis had a chicken bare; a Publix in Palm Beach, Florida, was out of toilet paper and household hygiene products while Costco (COST.O) has reinstated purchase limits on toilet paper at some stores in Washington state.

The situation is not expected to subside for at least a few more weeks, said Katie Dennis, vice president of communications and research for the Consumer Brands Association, and she blamed the shortage on labor scarcity.

She said the consumer packaged goods industry is missing about 120,000 workers, just 1,500 jobs were added last month, while the National Grocery Association said many of its grocery store members were working at less than 50% of their working capacity.

Product shelves are seen nearly empty at a Giant Food grocery store as the United States continues to grapple with supply chain turmoil in Washington, US, January 9, 2022. REUTERS/Sarah Silbiger

US retailers now face roughly 12% stock levels on food, beverages, household cleaning and personal hygiene products compared to 7-10% in normal times.

The Consumer Brands Association said the problem is most acute with food products where stock levels run at 15%.

SpartanNash, a US grocery distributor, said last week that it has become increasingly difficult to get supplies from food manufacturers, especially processed items like cereal and soup.

Consumers continued to stock up on groceries while at home to reduce the spread of the Omicron variant. Dennis said demand over the past five months has been as high or higher than it was in March 2020 at the start of the pandemic. Similar issues appear in other parts of the world.

In Australia, the Woolworths Group, the operator of the grocery chain, said last week that more than 20% of employees in its distribution centers are out of work due to COVID-19. In stores, the virus has caused at least 10% of employees to stop working.

The company, on Thursday, reintroduced a limit of two packs per customer of toilet paper and pain relievers across the country both in-store and online to deal with staff shortages.

In the United States, recent snow and ice storms that have trapped traffic for hours along the East Coast have hampered food shipments bound for grocery stores and distribution centers. These delays spread across the country, delaying the shipment of fruits and vegetables with limited shelf life.

While farmers with perishable products are forced to pay inflated freight rates to attract limited truck supplies, producers like Myers are choosing to wait to ease the backlog.

‘Canned goods, soft drinks, chips–these remained,’ he said, ‘for they were not prepared to pay double or triple fare, and their things had not spoiled in four days.’

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Additional reporting by Praveen Paramasivam. Editing by Vanessa O’Connell and Diane Craft

Our Standards: Thomson Reuters Trust Principles.

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