After two weeks of warnings, why is there still no rubbing alcohol at our local ShopRite? Why is the Acme in the next neighborhood so low on chicken, and Giant’s paper-goods aisle so barren?
America’s digitally controlled distribution system has unexpectedly made it harder to quickly switch deliveries from shuttered restaurants and retail stores to grocery stores so people can buy what they want there.
So says Jeffrey Tucker, head of Tucker Co. Worldwide Inc., a Haddonfield-based logistics firm whose staff of a few dozen matches producers, consumers and cargoes.
“Feeling comfortable going to the store and getting things we need is two to three months away, at best,” he warns.
Coronavirus closures have been a disaster for restaurants and specialty retailers — and a boon for truckers and grocery store chains. “For the past two weeks, all of a sudden, demand is really high for trucking,” says Tucker. "A lot of that is because of panic buying. The freight transportation system is working overtime, trying to replenish groceries.
“We as a country are probably going to be eating the same amount of food, but we are not going to be buying that food generally from restaurants. Grocery stores are going to have a significant increase.”
There’s so much demand for grocery labor that United Food and Commercial Workers Local 1776KS, which represents 35,000 grocery, drugstore, food processing and health-care workers, last weekend negotiated temporary wage premiums averaging 10 percent to 20 percent. These are for jobs with former starting wages around $12 an hour and average pay of $20 an hour, local president Wendell Young told me.
The union, which includes workers at Acme, ShopRite, Giant Eagle, Fresh Grower, Rite Aid and other chains, also won emergency sick-leave and leave-work protections and workplace sanitation designed to keep customers and staff farther apart. Wegmans, Amazon and other nonunion food suppliers have also rushed to boost wages temporarily to get the workers they need for the rush.
That helps keep market doors open, but it doesn’t get chicken into stores faster. On Tuesday, Perdue Farms CEO Randy Day told CNBC viewers he’s had to retool his plants to repackage chicken into Styrofoam and plastic supermarket trays instead of the corrugated boxes used for restaurant supply. Perdue estimated that it would take “two to three weeks” until he could meet grocers’ demand.
Tucker said that’s due to the shipping revolution of the last few years: No longer are there giant piles of food products that could be wrapped for stores or restaurants as needed. Instead, the industry has been pre-packaging at the factory: “We had just enough inventory, in just about everything, to handle the next few days. It was a beautiful way for the country to stay lean and weather economic storms so we no longer find ourselves in a recession with inventory no one’s buying.”
And yet that strength has now become a weakness. Paper and corrugated-cardboard companies “are going crazy right now, building corrugated like there’s no tomorrow. Everyone is changing the packaging” to mail-order boxes and grocery-style wrappings.
When will rubbing alcohol reappear on grocery shelves? Tucker said he’s been trying to help a client make hand sanitizer. "They needed "50,000 kilograms of ethanol or isopropyl alcohol to start.’ " He called isopropyl makers and found them all contracted to chemical companies; it’s a basic industrial ingredient. He turned to ethanol makers and importers. “They all said Archer-Daniels-Midland,” the Chicago grain-processing giant, “is the number one manufacturer of ethanol,” but only made enough for the pre-cornoavirus market.
“So the market all of a sudden overnight has gone wild for hand sanitizer and alcohol and hand wipes There has never been a moment when Americans wanted these products more than now. It has created a spike in demand that is immeasurable” and will take more time to meet.
“So this beautiful high-efficiency system ... has been completely upended by this large spike in demand. And that turns out to be a really significant threat to the economy, in the short term.”
Thanks to smartphone apps such as DAT Load Board for Truckers (and sites like DAT.com and Truckstop.com, which show truckers what companies are paying, owner-operators have more leverage in negotiating rates than when they lacked this information.
Like hospital workers, the drivers and warehouse workers are heroic. Drivers out there three weeks ago are still out there today; they haven’t been home,” Tucker said.
Should the federal government do more to help? “We need leadership from Washington to set the tone. The Secretary of Transportation has to take a far more assertive role. and the Department of Homeland Security,” he said.
“And I don’t think all the governors or their staffers understand that every single thing they own got to them by truck. Unless Grandma stitched them a quilt."
He cited Pennsylvania’s abortive policy -- made and rescinded last week -- to close Interstate rest stops and turnpike service areas, while Western states kept them open..
You can’t have a 50-state patchwork of regulations if you are going to get your products. Pennsylvania got truckers so irate, it risked having truckers say 'No’ to hauling freight to Pennsylvania. You make boneheaded, misinformed decisions and decide you are going to be more restrictive than the states around you, you are going to pay the consequences.”
America needs to respect its truckers especially now, Tucker concluded: “Drivers right now have a lot of power. They are incredibly good, patriotic people." But as the Pennsylvania highway restroom dispute showed, when they feel provoked they will pressure top officials, hard and fast.