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"Supply Chain Crisis Threatens To Spark Thousands
Of Empty Shelves At Retail Stores This Fall"
by Epic Economist
"The supply chain crisis should be gone by now. But instead, businesses are having trouble sourcing products and consumers are seeing more empty shelves right as we approach the all-important holiday shopping season. Fresh data released by software provider Retail Insight reveals that more than four-fifths, or about 82%, of shoppers say they have struggled with items being ‘out of stock’ at brick-and-mortar stores this year. Researchers note that this marks an increase of 11 percentage points compared to the same time a year ago, and say supply chain disruptions are threatening customer loyalty and seriously hurting businesses’ bottom lines.
Meanwhile, the research also exposed that U.S. companies are pointing to an array of supply chain problems in the third quarter. About three in five, or 57%, cited the increased cost of food production as one of the main reasons for empty shelves, while a further 56% pointed to rising operational costs, including manufacturing, energy, labor, and transportation, as the biggest factors impacting stock availability.
Product shortages were found to pose a greater threat to grocery stores. The data highlights that more than a quarter, or 27%, of shoppers said they would question their loyalty to a grocer if out-of-stocks became a regular occurrence.
To make things even more complicated, the U.S. trucking industry is now in dire straits. Since global shipping peaked during the pandemic, the transportation sector has been facing a protracted slump. Many trucking companies have gone out of business since the last year, a phenomenon the Federal Reserve is calling “freight recession”. In the past year alone, the downturn in the freight market has affected financial companies with exposure to the industry and resulted in losses to the tune of $780 million.
Every freight recession pushes already teetering trucking companies to the brink of bankruptcy, and this time, it wasn’t any different. The biggest collapse so far this year led to the liquidation of truckload carrier Yellow, the largest trucking company to ever file for bankruptcy. In July, the shutdown of the Yellow Corporation led to one of the largest mass layoffs in recent history, and Rachel Premack, from FreightWaves, says that the job cuts left the market with 22,000 fewer truck drivers right ahead of the peak shopping season, which is expected to result in shipping cost increases. As a consequence of Yellow’s bankruptcy and closure, it's likely that the average rate for customers in the less-than-truckload space will jump by up to 50%, and those increased costs are predicted to be passed down to consumers.
For their part, U.S. consumers are starting to freak out. A new CNBC and Morning Consult survey just reported that virtually all Americans are cutting back on their spending in some way right now. Over the last six months, increased costs have caused 80% of consumers to cut spending on nonessential goods, like entertainment, home decor, clothing, appliances, and more. Concerningly, two-thirds of respondents reported spending less on essential items, like groceries, utilities, and gas.
No matter how hard we work, and what official inflation numbers say, our buying power isn’t keeping pace with the price increases we’re facing on a constant basis. Unfortunately, the latest supply chain disruptions will only aggravate matters in the next few months. If you haven’t started to prepare for the shortages a price hikes yet, we advise you to do so while you can, because nearly every aspect of life is going to be far more expensive in the year ahead."
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