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Panic Buying Frenzy Push Supply Chains To A Breaking Point As Supermarkets Scramble With Shortages

26 Views· 14 May 2022
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The panic buying frenzy is back again. In the United States, fear of empty shelves is leading consumers to stockpile groceries ahead of new price increases. Meanwhile, in China, shoppers are rushing to hoard supplies before new movement restrictions are introduced. At this point, the supply chain disruptions everyone is already painfully aware of are doing everything from starving babies to shooting up the price of every single consumer good. Port congestion and shipping delays are making things considerably worse, and this week’s data indicates that the chaos has truly just begun.
Americans are getting increasingly alarmed when they see what’s going on at their local supermarkets and grocery stores. While 30% to 40% of products are currently out of stock in several states, price tags continue to go up. And even though shoppers have been trying to adapt their budgets, it’s getting harder and harder to make their dollars stretch.  Over the past year, grocery prices surged roughly 10%. This week, food producers warned that those prices could spike another 35% in the months to come.
Many factors are contributing to the higher prices: fuel is getting significantly more expensive to farm and deliver products around the nation. Wrappers and packaging costs are also going up. Congestion at ports and shipping delays are keeping retailers’ inventories at record lows, and more recently, a new wave of panic buying has been complicating the shortage outlook and helping to fuel more price increases.
As we head into the summer, Americans have begun panic buying some essentials again, which include milk and dairy products, meats, especially chicken, some canned goods, flour, pasta, and baby formula.  In fact, this fresh wave of 'panic buying' may also be influenced by some shoppers who buy in bulk in hopes of re-selling scarce items for a higher price online. However, depleted inventories are making some shortages hit a crisis point. Big-name retailers such as Walgreens, CVS, and Target have reintroduced limits on how many products customers can buy depending on stock levels. Industry experts are telling us that these issues can get a whole lot worse due to a diesel fuel shortage that is threatening to cripple an already fragile supply chain as truck drivers become unable to deliver goods across the country.  
At the same time, on the other side of the globe, Beijing residents are rushing to supermarkets to stock up on essentials as Chinese officials send mixed messages about placing the capital under stay-at-home orders. On Thursday there were rumors online that authorities were about to impose a strict lockdown, which has prompted many to rush to food stores and stock up. Beijing residents are afraid that they may face draconian measures similar to those that have trapped most of Shanghai's 25 million people at home for over a month -- after what was initially described as a days-long shutdown. According to one online tracker, "Everyone is stocking up," said Sui Xin, 41, while he filled his cart with eggs and instant noodles.
Manufacturers are being forced to wait longer to get the raw materials they need. The congestion in China also means that there are fewer containers available for the rest of the market, which makes it harder for producers to ship their products to customers. Inventories of finished goods have surged to the highest level in about a decade, as products pile up in warehouses due to weak demand and the difficulty of finding trucks to move them.
The latest PMI survey was released on Saturday, and it showed that factory activity slumped to the worst level since February 2020. A mass slowdown in manufacturing means that the supply chain problems are only the tip of this dark iceberg. The reality is that if this trend continues for much longer, the US supply chain will be paralyzed by shortages and disruptions for much longer than we dare to imagine.

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