With the holiday break stymied by COVID-19, bad weather, flight cancellations, and two disappointing college football playoff games, I was more than ready to get back to work and get my son back to school. While getting back to work meant simply opening my computer, getting my son back school meant that the whole family had to show proof of negative COVID tests. Unfortunately, our local CVS and Walgreens were fresh out of these tests, as were the five other stores we called. Uh-oh! Had the hoarding returned? Did the ball drop and time warp us back to 2020? Before joining the throngs of people at the local testing sites, we decided we better stock up on food and supplies. Surprisingly, as we started pacing down the aisles in angst, we realized there was plenty of fruit and vegetables, meat and dairy products, canned soup and, most importantly, toilet paper. Sure, it was far less than the amount seen before the pandemic, but it far exceeded the amount seen in 2020 when lockdowns were mandated. I asked myself, What gives? Then it hit me, as I was rung up at the checkout counter.
The price on so many of the typical foods and common household items we purchase went up dramatically over the past year. In a recent article from CNBC, “Overall, the price of groceries has climbed 6.4 percent over the past year, according to November data from the U.S. Department of Agriculture. Yet meat, poultry, fish, and egg prices have grown even more over the same period, at a rate of 12.8 percent.”
While in some cases, that may be only a few cents or a couple dollars per product or item, it does make a difference to mostly lower-income shoppers. In a piece published by Duke University’s Duke Today, economist Connel Fullenkamp says, “In real terms, the purchasing power of many families has actually gone down, despite significant wage increases. We have wage increases at a pace of 3 to 3.5 percent, which is unusual for the past decade. A bout of high inflation that’s at 5 percent or 6 percent comes by and unravels that rather quickly. It does the damage in exactly the places low-income families are most vulnerable—energy prices increasing, we see rent prices going up, and we see prices at the grocery store increasing. Inflation is especially bad because it hurts the folks at the lowest end of the income distribution that are most vulnerable to inflation.” Regarding the hoarding witnessed in 2020, compared with 2022, behavioral finance expert Emma Rasiel states, “We saw a lot of hoarding and shortages last year when there were concerns about things like toilet paper and so on. So that was a pandemic-driven response. You may see something similar in an inflationary environment. For nonperishables, if people are worried the prices of those are going to go up a lot, and they’re essentials, people may stockpile them. Of course, that has the impact of creating a vicious cycle, as it becomes harder and harder to buy them.”
While the intense demand has not reached the fever pitch it did in 2020, which was a result of the lockdowns and a virus we were unequipped to fight at that time, food and beverage shippers are still struggling with the many challenges of moving inventory quickly in addition to the current inflation and unpredictable consumer behavior. Transporting food items can be challenging due to regulatory burdens, cross-border inspections, and ease of tariffs. Paying late fees for delayed orders adds further stress to the supply chain. And while these standards are designed to keep consumers safe and healthy, they are incredibly detailed and technical. It’s crucial that freight shippers in the F&B space work with a transportation provider who understands how to meet demand.
This is where RPM, a leading freight transportation provider proves their worth. RPM is one of the largest freight transportation providers in North America. Leveraging a 40,000+ carrier network, including reefer and dry van solutions, RPM fills capacity quickly and allocates the inbound and outbound network for freight-matching to find the lowest cost possible for freight shippers. I asked Curtis Tate, Food & Beverage Director at RPM what we could expect in 2022 and how RPM is able to alleviate these shortage concerns. “We stand behind our commitments with no excuses, delivering due dates to ensure vendor expectations while being a value add in capacity solutions. At RPM, we provide single point of contact to ensure communications while priding ourselves on one call to move it all. We can offset the potential supply chain problems through reverse analytics matching customer demands to our current network, ensuring no empty miles as we are able to provide floor market rates. Moving into 2022, we expect more drivers and updated equipment on the road to offset specific market rate increases per region. Carriers providing wage increases, bonuses, and various incentives will help limit the shortage of drivers and drop trailer capacity, freeing up bottlenecks in most large shipping hubs or metropolitan areas. This will also help fight inflation. Customers and brokers are getting smarter, instead of fighting the market. We are able to find better solutions through intermodal, volume, and LTL to offset higher pricing and capacity restraints.”
There is no magic ball to tell us when this current supply shortage will end or if there will be further labor shortages and driver shortages only exacerbating the issue. The best advice for food and beverage shippers is simply be prepared. Be prepared to move inventory quickly during this unstable time. If you’re a food and beverage shipper struggling with late fees, limited capacity, driver shortages, or a lack of proper equipment to ship your goods, working with an experienced team is a must. See more of our service offerings or visit RPMmoves.com.
Authored by Drew Sherman