Supply Chain Brief: Delays, Workforce Decline, Shortages, and Price Hikes
The USDA announced declining wheat quality and production. Drought conditions in the Northern Plains and Pacific Northwest have caused a 40% decline in wheat harvests. Corn harvests are also seeing a weekly decline over the summer. Durum wheat, (the type used in pasta), is forecasted to produce 37 million bushels this year, compared with 69 million bushels last year. Spring wheat, (the type use in bread and cakes) is forecasted at 345 million bushels, down from 586 million bushels last year.
Shipping ports are seeing delays at 4x normal operating timeframes. On average 10.5 billion tons of goods are delivered by trucks. A shortage of an estimated 100,000 certified (CDL) drivers is delaying deliveries and causing spoilage.
This shortage equates to 525,000,000 less tons of goods reaching destinations. A federal database showed that since the start of 2020, 70,000 driver applicants failed drug screening, causing them to be dismissed.
Flooding in a key technology industry in China has caused mass evacuations and halted production and delivery of essential tech and metals. During the flooding an alloy manufacturer suffered an explosion. This single company produces 60,000 tones of alloy rods, high-silicon aluminum alloy, and titanium products.
Meat packing workers are so understaffed that the U.S. House passed a bill back in March that extends the work visas of immigrants working in the farming and meat industries (those in the H-2A program). Now a push is being made to remove the cap on the number of visas that can be extended. The H-2A program typically aids in worker shortages of seasonal agricultural processors but the limited assistance doesn’t provide relief for the year-round pork industry which is already constrained causing price hikes and decreased exports.
The National Association of State Meat and Food Inspection Directors said the greatest threat to the meat packing supply chain is a labor shortages, in part due to COVID-19, saying availability of workers “was affected by employees who became sick or infected, absenteeism caused by fear, and sometimes state or local health agencies.”
Debrief: Expect bread prices to increase. Expect common food staples to be in short supply. You’ll still be able to get most vegetables, fruits, and goods but some trips to the grocery could be unsuccessful. Asian imported shipments continue to see delays due to both vessels being held up at departures ports during typhoon season. Domestic supplies are suffering from both quality and quality decreases due to extreme droughts and the inability for farmers and producers to get viable goods into the market before expiration. This is due to rail and hauler delays caused by manpo…
Source: Grayman Briefing
