U.S. grocery shortages deepen as pandemic dries supplies

Jan 14 (Reuters) – High demand for groceries combined with high freight costs and Omicron-related labor shortages are creating a new round of delays at processed food and fresh produce companies, leading to empty supermarket shelves at major US retailers.

Producers of perishables across the West Coast are paying nearly triple pre-pandemic freight rates to ship things like lettuce and berries before they spoil. Shay Myers, CEO of Owyhee Produce, which grows onions, watermelons and asparagus along the Idaho-Oregon border, said he has been holding off shipping onions to retailers until freight costs come down.

Myers said transportation disruptions over the last three weeks, caused by a lack of truck drivers and recent storms that blocked roads, have led to a doubling of freight costs for fruit and vegetable growers, in addition to prices. already elevated pandemics. “We usually ship, from the East Coast to the West Coast; we used to do it for about $7,000,” he said. “Today it’s somewhere between $18,000 and $22,000.”

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Sean Connolly, chief executive of Birds Eye frozen vegetable maker Conagra Brands (CAG.N), told investors last week that supplies from its U.S. plants could be limited for at least the next month due to coronavirus-related absences. 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 has made a dent in their efforts to close gaps in the supply chain.

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

The situation isn’t expected to abate for at least a few more weeks, said Katie Denis, vice president of communications and research for the Consumer Brands Association, blaming labor shortages for the shortage.

The consumer packaged goods industry is missing about 120,000 workers, of which only 1,500 jobs were added last month, he said, while the National Grocery Association said many of its grocery store members were operating with fewer 50% of their working capacity.

Produce shelves are seen nearly empty at a Giant Food grocery store as the U.S. continues to experience supply chain disruptions in Washington, U.S., January 9, 2022. REUTERS/Sarah Silbiger

US retailers now face approximately 12% out-of-stocks across food, beverage, household cleaning and personal hygiene products compared to 7-10% in regular times.

The problem is most acute with food products where out-of-stock levels reach 15%, the Consumer Brands Association said.

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

Consumers have continued to stock up on groceries while sheltering at home to slow the spread of the Omicron variant. Denis said demand in the last five months has been as high or higher than it was in March 2020 at the start of the pandemic. Similar problems are being seen in other parts of the world.

In Australia, supermarket chain operator Woolworths Group said last week that more than 20% of employees at its distribution centers are not working due to COVID-19. In stores, the virus has left at least 10% of staff out of business.

On Thursday, the company reinstated a two-pack limit per customer on toilet paper and pain relievers nationwide, both in-store and online, to deal with staff shortages.

In the US, recent snow and ice storms that stalled traffic for hours along the East Coast have also hampered food deliveries bound for grocery stores and distribution centers. Those delays spread across the country, delaying the shipment of fruits and vegetables with a limited shelf life.

While growers with perishables are forced to pay inflated shipping rates to attract limited truck supplies, growers like Myers are choosing to wait for delays to subside.

“The canned goods, the soft drinks, the chips, those things stayed, because they weren’t willing to pay double, triple the freight, and their products don’t spoil in four days,” he said.

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Additional reporting by Praveen Paramasivam; Edited by Vanessa O’Connell and Diane Craft

Our standards: the Thomson Reuters Trust Principles.

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