US & Global Economic Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights on how major events are impacting different parts of the US and global economies.

Food Industry: Transportation & Logistics Challenges in the Supply Chain

What if there are not enough truckers to bring crops to processors or stores?

What if there are not enough commercial flights (a key transport channel for perishable items) running from South America?

What if border crossings are limited, and the movement of produce and other perishables from fields outside of the US slows?

These are some of the supply chain concerns that keep food retailers and food processors awake at night. Logistics are an increasing concern as the coronavirus pandemic moves around the world.

Regulatory solutions have included dedicated lanes for movement through border crossings and relaxed driver hour limitations for those carrying essential products. However, driver losses due to illnesses or quarantine will be tough to overcome since the commercial driver cohort includes a lot of older workers and new commercial drivers cannot be trained overnight.

Airborne freight shipping will likely remain costly while there are fewer commercial flights in operation worldwide. Shipments of goods often ride in the cargo holds of passenger flights, but those are in limited supply now as travel is largely restricted to essential movement. This will limit imports and possibly product selection and will likely result in food price increases.

For more information, see our sister publisher Packaged Facts’ coverage of the Food industry, including Global Food E-Commerce. Relevant information from The Freedonia Group includes such reports as Global Bulk Packaging, US Rigid Bulk Packaging, Global Commercial Refrigeration, US Commercial Refrigeration, and Global Pallets, as well as Global Food Processing Machinery, which also includes COVID-19 market impact analysis. Additional information from Freedonia Focus is available in these reports: Freight by Truck, Air Transport Services, and Water Transport Services. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Food & Beverage    

Food Industry: Waste & the Supply Chain – Surplus & Shortage at the Same Time

Food waste – considered a leading environmental problem even before the coronavirus pandemic – has become an even bigger problem in recent days. Raw milk is being dumped and produce is rotting in the fields, all while many grocery stores have limited supplies and have instituted limitations on how many containers of milk consumers may buy per trip.

What’s the problem? A large part of the food supply chain is oriented around the foodservice industry – restaurants, school cafeterias, and other locations that are suddenly seeing sharply limited need in light of school closures and stay-at-home policies that have temporarily barred on-site restaurant dining.

Important government support measures would include:

  • government purchases to redirect supply to food pantries and school meal distribution programs
  • loans to enable food processors to redirect their operations to retail products
  • support for farmers who have to dump excess product because limiting output during the pandemic is not possible without leaving the food supply vulnerable to insufficient production when eating trends normalize

One private sector response, which provides more work for underemployed foodservice staffers, is selling groceries through foodservice outlets. Firms such as Panera Bread and Subway have started to offer take-home groceries in addition to prepared food.

Suppliers, processors, and retailers will all need to remain flexible, including shifting packaging purchases from bulk and large-scale containers to smaller containers needed for individual and family purchases at the retail level. This will require packaging companies to shift their own production  operations  to make enough smaller packaging options available.

Another kink in the shift from foodservice operations to more retail sales is that retailers are struggling to keep up with demand at their warehouses and in stores. In an attempt to work through a solution of labor needs, Sysco (a leading supplier to the foodservice industry) made a deal with Kroger (a major retail grocer) to allow its furloughed workers to temporarily work at Kroger distribution centers.  

For more information, see our sister publisher Packaged Facts’ coverage of the Food industry, including The Organic and Clean Label Food Shopper, Affluent Food Shoppers, Global Food E-Commerce. Relevant information from The Freedonia Group includes our influential coverage of the Packaging industry, which encompasses reports on Global Bulk Packaging and US Rigid Bulk Packaging, as well as the Meat, Poultry & Seafood Packaging report, which includes a new addendum with COVID-19 market impact analysis and an estimated market size for year 2020. Capital goods analysis is found in Global Food Processing Machinery, which also includes COVID-19 market impact analysis. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Food & Beverage    

Seafood Industry Facing Challenges from In-House Dining Shut-Downs But Has Opportunities to Appeal to Home Cooks

April 10, 2020 - The seafood industry is seeing challenges during the coronavirus crisis. Many food industries are balancing losses in the foodservice market against gains in the retail as consumers shift their food spending away from restaurants to stocking their home refrigerator, freezer, and pantry.

However, the seafood industry has typically relied heavily on foodservice, with more than two-thirds of the value of consumer spending on seafood occurring at restaurants, caterers, and others. Higher value versions (e.g., scallops, lobster) are particularly hard-hit by the loss of sales to this sector. The worldwide industry is further hampered by economic slowdowns in key global seafood-consuming nations such as China, Italy, Japan, and Spain.

Seafood sales are more challenged on the retail side than many other foods:

  • Many consumers are not in the habit of cooking seafood.
  • Some home cooks consider seafood more difficult to cook properly.
  • Picky tastes among children may keep families from buying and serving seafood to the family at large.
  • Seafood is often more expensive than other proteins, which will prevent consumers who are concerned about their budgets in an uncertain economic period from buying it.

However, consumers still view seafood as healthy. Additionally, more time spent at home is leading some home cooks to experiment with recipes they might have considered to be too complicated or time consuming before. Falling prices associated with an oversupply may also convince consumers to increase seafood purchases made through retail outlets.

Marketing efforts to bolster sales could include emphasizing the healthful benefits and nutritional content of seafood, as well as providing chef-driven instructional videos and recipes. Products that are free of artificial flavors, colors, and preservatives take advantage of current clean eating trends. However, ready-to-eat and recipe-ready products accommodate consumer desire for convenience.

For more information, see our sister publisher Packaged Facts’ coverage of the food industry, including The Organic and Clean Label Food Shopper, Affluent Food Shoppers, Global Food E-Commerce as well as The Freedonia Group’s reports on Meat, Poultry & Seafood Packaging, which includes a new addendum with COVID-19 market impact analysis and an estimated market size for year 2020, and Global Aquaculture.

  Consumer Goods      Covid-19      Food & Beverage      Packaging    

Face Masks: Production Shortages & Export Restrictions

On Thursday April 2, the Trump administration invoked the Defense Production Act requiring 3M to prioritize sales of its face masks to the US Federal Emergency Management Agency over other customers.

Before the COVID-19 crisis, 90% of 3M’s N95 mask capacity had been going to industrial customers. However, the CEO of 3M has already noted that the company has shifted sales so that 80% of its US sales now go to healthcare facilities in the hardest-hit areas, while the other 20% go to federal agencies such as FEMA. The concerns were that 3M – which sells US-made masks to Canada, Mexico, and Latin America (including countries where it is the sole supplier of N95 masks) – would not be able to fulfill the needs of domestic and global customers. However, restricting supply to other countries may lead to retaliation and shortages in these or other areas.

The US is only responsible for about 30% of the global production of medical disposable equipment in value terms. While the US is, overall, a net exporter of these products, that status does not hold across all individual product categories. Particularly in a time of crisis, the US must cooperate with all markets within global industries, which is part of what could make the demand that 3M reappropriate its existing and expanding capacity deeply problematic. Canada, which buys US-made face masks from 3M, is a key supplier of wood pulp, a primary material used to make N95 face masks as well as test kits and gloves. Global supply chains demand cooperation to function smoothly.

As of Sunday April 5, Canada’s Prime Minister Justin Trudeau did not yet have plans to retaliate and expressed hope that the supply situation could be addressed through diplomatic channels instead.  

For more information, see The Freedonia Group’s US Disposable Medical Supplies, Global Disposable Medical Supplies, Global Nonwovens reports. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Covid-19      Textiles & Nonwovens    

US Home Building Declared Essential by Department of Homeland Security

Building and construction professionals across the nation were cheered by the recent decision by the Department of Homeland Security (DHS) that home building was an “essential” business. While individual state and local authorities can issue regulations more closely defining what is an essential business, the inclusion of home builders by the DHS in its list of essential industries means that – in many jurisdictions – the erection of new single-family and multifamily housing units can continue.

This declaration underscores the importance – even in a time of pandemic – of the home building industry to the US economy. In addition to the millions of jobs the industry provides, the US faces a lack of affordable housing, something which can only be remediated by the construction of new homes and apartments. Integral to the recovery of the US economy after the COVID-19 pandemic subsides will be the addition of new and affordable to nation’s housing stock.

While construction of new homes will continue in many parts of the US, state and local governments across the country are working to limit the spread of coronavirus on job sites by requiring:

  • social distancing between workers
  • limited numbers of subcontractors on a job site at any given time
  • periodic temperature checks of workers
  • frequent cleaning and sterilization of tools and equipment

For more information about the US home building industry, see The Freedonia Group’s coverage of the Construction and Building Products industries.