Mar 14, 2020 - Economy & Business

Coronavirus tests America's supply chains amid possible labor shortages

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

Go deeper

The workers feeding America

Illustration: Sarah Grillo/Axios

As worried shoppers buy in bulk, stress is mounting for retailers, warehouses and farms — which need more labor at the very time people are being told to stay at home.

Why it matters: America isn't running out of food. But there's increasing strain on the supply chain as the workers who produce and deliver our groceries are sheltering at home, quarantined or are (justifiably) too spooked to show up for work.

Instacart plans to hire 300,000 more shoppers in coming months

Kaitlin Myers, an Instacart shopper. Photo: Denver Post/Cyrus McCrimmon

Instacart, the grocery delivery company, plans to hire 300,000 new workers to pick up and deliver orders to customers in North America over the next three months, more than doubling its current staffing.

Why it matters: Delivery services have become crucial for Americans as the coronavirus crisis forces many to stay at home. Instacart says order volume has grown by more than 150% year-over-year in the last few weeks, with the average customer basket size growing 15%.

Go deeper: The gig economy's coronavirus test

Coronavirus dents tech's supply chain

Illustration: Sarah Grillo/Axios

The novel coronavirus has just begun to shut down offices and public gatherings across the U.S., but its impact on hardware and components production in China started weeks ago, and the flow of goods out of China's factories has been slow to recover.

Why it matters: The global tech economy's just-in-time supply chain has never faced a disruption quite like this one. And while many observers are guardedly optimistic, no one knows for sure yet how this crisis will play out or what sorts of shortages the industry might still face.