Mar 14, 2020 - Economy

Coronavirus tests America's supply chains amid possible labor shortages

Empty freezer cases at Costco

Icon Sportswire / Contributor

Consumers are stocking up on goods as the novel coronavirus spreads, but COVID-19 itself is already testing America's supply chains and could bring possible labor shortages, The Washington Post reports.

Why it matters: There is enough nonperishable food in warehouses and production lines to last months, but the "challenge could soon be getting that food to the right places once local distribution centers are wiped out," the Post writes. Some food producers could find themselves without enough employees to manufacture, deliver and unpack groceries.

  • Retailers have aggressively worked to increase efficiencies by cutting down inventory rather than stockpiling, per the Post.

The state of play: Some grocery chains are rationing goods, like toilet paper and bottled water.

  • Amazon is mostly sold of toilet paper.
  • Hand sanitizer and disinfectant sprays have been sold out for weeks nationwide.
  • Peanut butter and canned tomatoes are sold out on Costco's website, which has also taken down the listing for its own Kirkland brand of baby wipes.
  • Instacart and other delivery services now offer "contact-free" drop-offs to customers.
  • Walmart and Target are doubling down on in store-pickup and same-day delivery.
"The replenishment cycle is going to be a real test here. Manufacturers don't sit on a lot of extra inventory, so what do you do when everything you need is depleted?"
— Sean Maharaj, managing director at consulting firm AArete, told the Post

What to watch: The U.S. imports a lot of food from China, where factories are currently closed — meaning a possible supply chain challenge. Phil Lempert, a California-based food industry analyst, told the Post "“We’re going to have two-, three-, four-month lag time until those factories get back up to speed.”

Go deeper: The emerging coronavirus economy

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