The COVID-19 pandemic has worked supply chains to the hilt, with demand for essential products spiking as people started quarantining themselves indoors. As more people looked to order-in food to their homes than go to a nearby restaurant, food consumption patterns have witnessed a considerable shift.
Supply chain visibility company project44 has come out with data that shows food shipments to restaurants and hotels were down 9% compared to pre-crisis trends. However, shipments rose by 7% in the first week of May, as more restaurants opened takeout and delivery services.
A part of the reduced food shipment volumes is absorbed by shipments to grocery stores, which peaked 94% higher year-on-year for the last week of March. The demand has come down since then, posting 25% higher volumes than pre-crisis trends.
As vaccines to COVID-19 remain elusive at this time, the change in consumption patterns might end up accelerating trends that were already emerging within urban spaces – namely, e-commerce retail and on-demand food delivery services.
“We need to get used to the new normal. Among these changes, we also observed a general decline in distribution across various sectors. However, within food distribution networks, there has been a very strong decline,” said Will Hansmann, the CTO of project44. “This basically shows that shipments into restaurants and large public facilities have decreased strongly. While the trend has bottomed out, demand continues to be weak today.”
On the other end of the spectrum, there has been little to no surge in logistics-related activity in food production and manufacturing facilities. Food producers are the primary source for both restaurants and grocery stores, and so changes in consumption patterns do not affect food production.
A drop in labor availability across farms might be a direct consequence of COVID-19. But with major row crops being harvested via mechanized means, labor shortages should not affect supply.
Inbound shipment from raw materials producers to food manufacturers is up by nearly 13% compared to the end of April and is 0.12% higher than February’s pre-crisis benchmark. This shift can be an indicator of the start of an economic rebound, with the market showing signs of dusting its lows.
“As more states and countries loosen up and open their economies, we fully expect food distribution and manufacturing to pick up from where it left off pre-crisis,” said Hansmann. “It is also expected that durable and industrial goods will begin to spike now, and with that, a gradual decline in shipments to grocery facilities.”