While the COVID-19 threat continues to linger, the ongoing pandemic hasn't stopped producers and shippers from thinking ahead – many are optimistic that business will slowly heat up in the summer months. In early June, cold chain suppliers appear to be on the road to recovery as capacity is growing and restaurants begin to reopen.
"The feedback from major food manufacturers is that it's not going to be a tsunami of recovery but a gradual rebuilding of new product sales," said Steve Taylor, AIT Worldwide Logistics' director of sales – food logistics. "The food-services side of the industry won't see a sharp ‘V' type of recovery; our hopes are more on a ‘U' shape."
FreightWaves market expert and analyst Zach Strickland and Taylor discussed the gradual recovery of food manufacturing on this episode of Cold Chain Update, presented by AIT Worldwide Logistics.
Taylor attributed the food-service industry's resurgence largely to state governments easing business restrictions throughout the country. He noted one of AIT's largest restaurant customers has reopened 1,100 of its locations.
Positive signs can also be found in the retail grocery sector, which he said is still experiencing a boom with volumes 200-300% larger than normal. Taylor added that retail manufacturers have seen backlogs subside as they've been able to more accurately forecast demand projections.
Inversely, COVID-19 has left the protein supply chain frozen in its tracks. According to Taylor, demand for meat has remained steady but production has tailed off. The U.S. Meat Export Federation recently reported that production is down roughly 40%.
SONAR's BEEFLB.USA visualizes the decline as commercial production of beef has dropped significantly since mid-March. The chart measures the monthly production of slaughter beef, commercially measured by millions of pounds. April's rate of production slipped from a seasonal average of around 2.3 billion pounds to 1.82 billion pounds as of April 26 (the latest data available).
SONAR's BEEFLB.USA pinpoints the steep decline in beef production as starting in mid-March.
Chicago-based AIT Worldwide Logistics is a global supply chain management company with more than 60 locations worldwide providing sea, air and ground solutions in nearly every industry.
"As a forwarder, we are focused on getting the product to the customer as quickly as possible," Taylor said. "AIT has partnered with a couple of commercial carriers and has chartered aircraft to keep up with the high demand of personal protective equipment (PPE) and high-tech equipment coming out of Asia. This has opened an abundance of capacity going back into Asia that we've been able to utilize for our protein and produce customers."
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