That supply chain light on the economics board has gone solid red and it’s threatening to melt through the panel.
This bulk food storage is how the total U.S. consumer food supply ensures consistent availability even with weather impacts. As a nation we essentially stay one harvest ahead of demand by storing it and smoothing out any peak/valley shortfalls. There are a total of 175,642 commercial facilities involved in this supply-chain across the country
Few Americans are aware of this. However, that stored food supply is the supply-chain for food manufacturers who process the ingredients into a variety of branded food products and distribute to your local supermarket. That bulk stored food, and the subsequent supply chain, is entirely separate from the fresh food supply chain used by restaurants, hotels, cafeterias etc. For almost 8 weeks the retail supply chain has been operating beyond capacity and the burn rate of raw food products is up a stunning 40 percent.
Those bulk warehouses, the feeder pools for retail/consumer manufactured food products, are starting to run low. Believe me: (1) we don’t want to find out what happens when those 800 mass storage facilities run out; and (2) the food supply chain will be a big part of President Trump’s decision-making on reopening the economy thereby re-opening restaurants, cafeterias, etc…. and switching consumption back to fresh supply.
8 replies on “More Supply Chain Problems”
There is another problem. We make petrol from oil but the byproducts of crude oil are used for making plastics, chemicals, solvents & road tar. With everyone at home, car driving is down so petrol production is also down so the byproducts are also reduced. There are stocks but some chemicals may run low. Supply chains are complex.
The “I Pencil” effect. People keep bringing stuff up that I hadn’t thought of.
We still have a problem with cheap plastics for packaging and some of the chemicals used in processing things and even cleaning the factory floors. The margin for most food is a few cents. The margin for the plastics and cleaning products is a fraction of a cent. So most suppliers moved to China. Now with the virus in chinese cities China is using those chemicals on their streets and factories and the plastics have almost stopped coming. Companies with capital in china can’t sell up and move their capital out of china. That’s simply forbidden. So the supplies are a problem. We have milk but not enough milk bottles in some places. We have bleach but no bottles for that.
In Australia we still have intermittent toilet paper supply problems. We don’t make the chemicals to turn corse paper pulp into soft paper pulp needed to make toilet paper. We also lost one of our biggest pulp mills in the wild fires. We also have the super cheap plastic bottle problem.
I thought that companies would have a problem with China allowing them to move factories out of the country. They can start new factories elsewhere but it’s not going to be cheap, quick, or without punishment by the Chinese.
“Turn those machines back on!”
The machines are all in China, because cheaper. Oopsie.
My comment was in quotes because it’s a line from the movie “Trading Places”. My comment was intended to be a humorous line about people wanting to get back to work, not specifically turning machines on.
I know.