While Covid-19 and the economic shutdowns needed to help curb the spread has affected every industry in one way or another, shippers in the food space have had one of the most difficult journeys of all. Spikes in demand and low volumes in stores forced food shippers to adapt quickly to respond not only to in-store demand, but also the influx of e-commerce that followed.
Freight Waves, in partnership with Redwood Logistics, produced an excellent white paper, detailing the findings of a survey of shippers explaining the events of 2020 so far and their shifted expectations around shipping costs, their retail vs. e-commerce business mix, sales growth, and their outlook for the remainder of 2020 and beyond.
The beginning of the pandemic saw a surge in demand for consumer-packaged-goods (toilet paper, paper towels, wipes, etc.), beverages, and all varieties of food (fresh, frozen, canned). Mixed messages from elected officials, media reports, and stores not placing purchasing limits led to empty shelves, but demand and supply quickly returned to holiday type levels, then gradually returned to normal seasonal levels. For food shippers though things were especially strained. Main clients such as restaurants, schools, and hotels were shut down. This caused many to build an online presence on the fly and build a business to consumer model.
In fact, the Covid related business to consumer model has supercharged the rise in e-commerce that we have been seeing for some time. The white paper estimates the e-commerce shift has been pulled 3-5 years forward. Based on credit/debit card spending, online retail spending has increased a whopping 73% year over year. Further, while brick and mortar retail began to open back up, spending there has not come at the expense of online shopping. For food suppliers, though hotels and restaurants have opened back up to some extent, their long term future remains in doubt. Shippers must prepare for a higher percentage of sales coming from online.
Though hopefully, the worst of Covid is behind us many of the changes in how people work, shop, and live are here to stay. As such, shippers should still prepare for higher transportation costs due to elevated demand.