How a Hypothetical Second Mandated Shutdown Could Affect Supply Chains Across the United States
On January 20, 2020, the CDC confirmed the first case of COVID-19. The diagnosis was given to a 35-year-old male in Washington State. This incident marks the start of a pandemic that impacted the entire world and essentially every aspect of it. This article is meant to specifically discuss the impact of COVID-19 on the economy and supply chains across the United States. Following the first reported, confirmed case of COVID-19, more and more cases popped up and the necessity for mandated, nation-wide shutdowns emerged. Although no one could predict the impact a potential shutdown would cause on supply chains, industry leaders assessed their contingency plans for moving forward, with the worst-case scenario in mind. As COVID-19 hot spots manifested around the nation, California was officially the first state to mandate a lock down on March 19. New York followed suit on March 22. With two of the most booming states operating at limited means, fear became reality for supply chains across the nation. By early April, all but a few states had declared a “State of Emergency” and mandated a “stay at home order.” We could go on and on regarding the shut down and the effects it would have, but this article will focus on the following: industries affected the most, how C.L. Services helped our clients during this time, and how a second shutdown could affect supply chains.
Since early March, U.S. consumers have panic-shopped, creating an increase in demand for food, beverage and cleaning supplies. Grocery stores across the nation witness their shelves consistently depleted by early-morning shoppers, striving to be the first ones in the door to get their year-supply of Charmin. We also saw a spike in red meat prices. Heck, I was unable to purchase a steak for almost a month due to the mad rush. Distributors selling to large grocery chains saw an increase in demand, whereas the distributors selling to restaurants saw an unprecedented decrease in demand as many restaurants were forced to close their doors. During sales calls, I spoke with multiple prospects in the restaurant distribution industry and heard similar stories from most. “Our business has been cut in half” and “The person who handles transportation has been furloughed.” One of our largest clients, who distributes for a household chain restaurant, saw their business shrink by nearly 20%.
For many retailers, the pandemic has resulted in the largest supply chain disruption they have ever faced. The challenge was the retail supply chain. Their distribution networks are simply not built to push such a high volume of product through at such a fast rate. The bottleneck really became that final mile, from the distribution center to the store, because the demand at the store level was so high.
How C.L. Services Helped:
Though the problem is certainly unfortunate for all parties involved and we are all still inevitably dealing with the harm and scare of the COVID-19 pandemic, I would be remiss to not explain the hand that C.L. Services, as a 3PL, has been able to help during this time. I personally helped ship 500,000 masks to Denver in June. We also shipped masks to New York City during their most detrimental phase yet. Our Food & Beverage clients, who have their own private fleet, saw a major decrease in demand for their fleet, causing their trailers to become idle. C.L. Services was able to generate negotiations where we utilized said idle fleets on some of our other customers’ freight, generating revenue for our customers’ fleet they wouldn’t have seen otherwise. For the retail industry, we put together a lot of secondary supply plans for retailers to add additional capacity, to stage more drop trailers, and other ideas of that nature. Through these examples and more, we were able to help accelerate replenishment at the store level.
Effects a Second Shutdown Could Have:
Obviously, no one truly knows the impact a second shutdown would have on supply chains, so allow me to speculate a little. Many clients are still barely able to stay afloat, and employees are continuing to be furloughed and laid off. For these companies, a second shut down would be nearly impossible to overcome. On a carrier level, a second shutdown would further shrink capacity by pushing smaller to medium sized carriers out of the marketplace and larger carriers would once again be forced to lay off or furlough drivers and run at limited capacity. With less capacity, rates will spike leaving shippers in a vulnerable position.
This is a strong example of why C.L. Services’ employees take our relations with carriers seriously, so that when things get tough for our shippers, our carriers will loyally have our back, which will then take away this burden on our shippers. May we all cross our fingers and hope for this horrible pandemic to pass sooner rather than later. For now, it is still best to prepare for the worst so we can be prepared to help carriers and shippers, which is exactly what we plan on continuing to do
Business Development, C.L. Services