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Supply
Chain by the Numbers |
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- Oct. 21, 2021
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Prices on Grocery Shelves Soaring; Huge Spike in Out-of-Stocks Predicted for Holiday Shopping; US Manufacturing Sector Stalling; Truck Driver Shortage Sets Record High |
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4.5% |
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| That was the increase in average prices for food consumed in the home in September compared with the same month of 2020. According to a Wall Street Journal article this week, when prices for an item increase by more than 5%, consumer behavior begins to change. The rise in prices on grocery shelves is being driven by higher input and logistics for manufacturers. For example, the world’ largest food company, Nestlé, says its costs of goods sold will increase by around 4% this year – and that’s with some cost hedging that will fade away before long. Procter & Gamble now expects to spend $2.1 billion more on transportation and raw materials such as pulp and resin for the fiscal year ending June 2022 – and is raising prices as a result. Meanwhile, billionaire investor Paul Tudor Jones said Wednesday on CNBC’s Squawk Box that inflation is “the No. 1 issue facing Main Street investors, and it’s pretty clear to me that inflation is not transitory. It’s probably the single biggest threat to certainly financial markets and I think to society just in general.” |
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| That was the level of US manufacturing output in September, as is calculated each month by the Federal Reserve Bank. That was actually down a 0.7 percentage point from August, manufacturing sector momentum has stalled, though the number was up 4.8% versus somewhat weak September 2020 levels. The September numbers is still well below the 105 level reached in February of 2020 just before the start of the recession. Still, it means that current manufacturing levels are still below the baseline year of 2012 (index = 100) now almost a decade later. And the index remains well off its all-time peak of 110 set in late 2007. |
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80,000 |
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That is the current count of truck driver shortage US, a record high, according to a CNN interview this week with Chris Spear, CEO of the American Trucking Associations. That's a 30% increase from before the pandemic, when the industry already faced a labor shortage of 61,500 drivers. The driver shortage is one of the key factors in the back-up at US ports, as there are not enough trucks to move containers from terminals to warehouses or train hubs. While as we know there is not any real fix for this, Spear believes younger drivers are a key answer to the driver gap. The bipartisan infrastructure bill awaiting action in Congress would allow 3,000 drivers between the ages of 18-20 to undergoing training, permitting them to drive tractor-trailers across state lines. Currently, drivers must be 21 on Federal highways, though many state allow younger drivers for intra-state carriage. |
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That is the expected year-over-year rise in out-of-stocks for internet items, representing a 360% rise over 2019. That according to a report this week from Adobe Analytics, though SCDigest isn’t sure how such a forecast would be built or measured after the fact. For example, it this for all product categories, or just certain consumer goods products? Regardless, the apparel category is forecast to have the highest out-of-stock levels, followed by sporting goods, baby products and electronics. “We’ve never seen levels like this before,” said Vivek Pandya, lead analyst at Adobe Digital Insights. Adobe expects US digital sales from Nov. 1 to Dec. 31 to hit at least $207 billion, which would represent a 10% increase from 2020. Digital sales could climb as much as 15% year over year, according to Adobe, in certain scenarios and dependent on how things progress with the Covid-19 pandemic.
