The Moderna vaccine is on its way! The Moderna vaccine has been approved by the FDA, giving the U.S. two different vaccines to help prevent the spread of COVID-19. The Moderna vaccine utilizes the same mRNA base technology as Pfizer’s, but due to slight differences in the vaccine structure, the Moderna vaccine can be shipped at much higher temperatures.
I wrote in our last newsletter how I believe that the Moderna vaccine will worsen reefer capacity constraints that are already felt throughout the country. Conventional reefer trailers are able to reach the -20 Celsius temperature required by the Moderna vaccine, implying some degree of competition with typical refrigerated freight. However, the vaccine distribution effort will likely require team drivers and temperature validation technology—i.e., a continuous record of the trailer’s temperature—that goes well beyond the offering of most food and beverage haulers.
On the national level, ~45% of contracted reefer freight is being rejected by carriers, indicating that reefer capacity is extremely tight on a historical standard. Supply chain managers at consumer packaged goods (CPG) companies can expect to experience inflating costs for the foreseeable future.
After packaging, the shipments will be sent to FedEx and UPS’s air hubs Memphis, Tennessee and Louisville, Kentucky where the shipments will then be transported by reefer carriers to various locations across the country before finally arriving at local dosing centers. I highlighted that reefer capacity is extremely tight on a national level and it is even tighter out of Memphis with roughly six out of ten contract loads being rejected.
If you are a reefer operator, it is advantageous for you to position yourself in the Memphis and Louisville markets as there will be plenty of opportunities for loads to maximize yield. The rollout of this vaccine will take months and will crunch capacity in these markets which will lead to a rise in spot rates.
If you are a shipper out of these two cities and you require refrigerated trailers, you will need to plan for steep transportation costs due to a lack of reefer trailers in the market and drivers understanding that pricing power is heavily weighted in their favor.
Tyson Foods makes an effort to right a wrong. Meatpacking employees have faced tremendous hardships caused by the rapid spread of the coronavirus along with time off from work due to factory shutdowns.
One incident that has been brought to the national scene and I have written about is the outbreak that occurred at the Waterloo Tyson Foods plant where managers were accused of betting on how many employees would eventually be infected with the coronavirus. Tyson Foods has now fired seven plant manager employees following an independent investigation into the allegations.
Although Tyson Foods has taken action against the employees that were involved in this horrible behavior, it isn’t completely out of the woods yet. New York City Comptroller, Scott Stringer, is calling on the Securities and Exchange Commission (SEC) to investigate Tyson Foods for making misleading disclosures regarding the coronavirus outbreak.
“There is human cost to Tyson’s failures — preventable deaths, hospitalizations and sick workers,” Stringer said in a statement regarding the deaths associated with the Tyson Foods plant. “These failures have material impacts on its business operations that carry serious risks for shareholders.“
I believe that this example of mismanagement is a wake-up call for supply chain managers and executives in general that when a tough situation arises, it pays to do the right thing. This is applicable not only from an employer standpoint but also from a financial perspective. It does appear that the COVID relief bill proposed today has language to temporarily prevent COVID related lawsuits, it is unclear whether this will prevent the SEC from taking action.
Coca-Cola to trim global workforce by 12%. Coca-Cola announced on Thursday that they are slashing 2,200 employees globally, 1,200 located in the United States, amid a broad restructuring plan. Coke expects that these cuts will amount to between $350-$550M in annual cost savings and will be conducted by a combination of layoffs and buyouts. Fortunately for bottling employees, they are not going to be affected by these job cuts.
Coke’s restructuring plan amounts to slashing their master brands by over half from 430 to 200 to streamline their supply chain to focus on products that are experiencing the highest growth rates.
I expect that next year streamlining supply chains and cutting down on underperforming product lines will be a significant trend. Unfortunately, there is a possibility that supply chain workers will eventually get caught in the crosshairs of job cuts.
