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The food retail sector and fleets that support it are headed for a particularly busy holiday season, experts say.
The coronavirus pandemic brought with it major supply chain disruptions and increased demand. Thanksgiving and the later holidays are likely to see that high demand compounded by seasonal trends and changes in consumer behavior, such as more online shopping.
“Hopefully, we’ll be better prepared, but in the same regard we’re not at the point where we’re not going to run into some sort of issues,” Jon Samson, executive director of the Agricultural and Food Transporters Conference at American Trucking Associations, told Transport Topics. “The food service side will hopefully not have to shut down completely, but we’ll probably, almost definitely, see that continued uptick on the grocery side.”
Samson noted the increased demand largely will depend on the pandemic. Thanksgiving marks the unofficial beginning of the holiday shopping season and is thus easier to predict.
John Stanton noted the later holidays are more difficult to predict.
“I think it’s actually too far ahead to make any real guesses,” Stanton, a professor of food marketing at St. Joseph’s University, told TT. “I would say this, assuming that COVID is in roughly the same situation, then I would say it would probably be the same for the later holidays.”
Deloitte found in a study that food and beverages are likely to attract the third most holiday spending at 14%. Consumers also plan to stay close to home and spend the most on food and beverage for personal purchases at 63%.
“The trend that’s really having the biggest impact is food retail sales; supermarket sales are just booming,” Stanton said. “And then you have the food service side that is getting demolished. The thing is, people have been forced to learn how to cook again.”
Stanton noted the trucking industry is in a good place in terms of grocery stores. But there still are issues of capacity and driver constraints. He also expressed concern for those carriers that primarily support food services.
C.H. Robinson is projecting a $250 billion nationwide shift from food services to eating at home this year. The coronavirus also pushed more online shopping. The Food Industry Association released a report showing a 300% jump in online grocery sales.
“There is no question that there is more online shopping,” Stanton said. “We have people who probably never thought they’d order groceries online who have tried it and will probably continue to make it part of their shopping behavior.”
The Centers for Disease Control and Prevention suggests people have smaller gatherings for the holidays because of the coronavirus. But the combination of more people eating at home and smaller gatherings could further drive demand, or at least make inventory needs harder to predict.
“Thanksgiving is going to be a bigger shopping event than previously,” Stanton speculated. “Now you’re going to have all these smaller meals. Well, they’re all going to have one can of cranberry sauce, and they’re probably all going to make mashed potatoes. So there’s likely to be more total sales than you would normally expect from the Thanksgiving season. You’re going to have more total meals being prepared.”
Bain & Co. released a holiday season forecast that predicts overall sales will increase a modest 2% year-over-year. But retail categories that performed well earlier in the year will continue the trend during the holidays, including food and beverages, which was up 12%.
“Even though the CDC says to limit contact, unless you’re in a spot that’s really spiking, I think people are starting to get tired of the separation,” Samson said. “It will be interesting to see whether you have one large party or three separate parties and they end up purchasing more.”
Truckstop.com Chief Relationship Officer Brent Hutto warned the freight industry already is navigating significant demand going into the holiday season. Truckstop.com normally gets about 400,000 loads a day on its board. The past couple of months have been at or above 800,000 daily loads. The current load count for refrigerated is about double its five-year average.
“There’s usually a seasonal bump,” Hutto told TT. “We’re already so high with goods being shipped and some of those goods being food that the prediction is, it’s not going to go any higher but it won’t go any lower, either.”
C.H. Robinson has cautioned that the expected increase in grocery retail demand could be unprecedented. The global logistics company is promising to leverage its supply chain expertise and technology to help retailers with its transportation management system, Navisphere.
“C.H. Robinson has been uniquely positioned to help the food retail and trucking industries adjust to and navigate disruption caused by consumer demand because our size and scale allows us to be agile to the needs of our customers,” Mark Petersen, vice president of North American surface transportation at C.H. Robinson, told TT.
C.H. Robinson ranks No. 7 on the Transport Topics Top 50 list of the largest logistics companies in North America.
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