In late March 2021, Steve King, president and CEO of the American Pet Products Association (APPA), predicted supply chain disruptions and delays in the pet industry — including raw materials such as some pet food ingredients and aluminum for cans — along with attendant. Higher costs, throughout 2021 and into the first quarter of 2022.
Let’s hope this projection was not overly optimistic.
On August 30, 2021, a record number of container ships – 44 ships – were waiting to enter two of California’s largest ports, breaking the previous pandemic-causing record of 40, set in February 2021. In other words, the situation is getting worse bad. While the pet food industry appears to be coping well so far with ongoing disruptions and shortages, what short- and long-term outlooks do brands, producers, and suppliers need to plan for?
COVID-19, labor shortages and holiday buying are making matters worse
While rising consumer demand for all kinds of goods, including pet food, led to initial delays and scarcity in the early days of the pandemic, now labor shortages, other COVID-19-related disruptions and holiday buying surges are the main reason behind backing up, According to the Marine Exchange of Southern California, it was cited in a Business Insider article by Hannah Toy, Grace Kay, and Shane Kane.
California’s two ports, Los Angeles and Long Beach, account for about a third of all US imports, so when many ships have to wait an average of 7.6 days to enter port and unload their cargo, it exacerbates their problems. It has been upsetting the global economy, and most industries, since the start of the pandemic. “The normal number of container ships in the berth is between zero and one,” said Kip Lottet, CEO of Marine Exchange of Southern California, in an article also published in July on Business Insider.
Global situation: “significant disruption to the supply chain”
The title of the July Insider article began, “US shipping crisis won’t go away…” Indeed, it’s certainly not just new COVID-19 outbreaks in the US in China earlier this year, which temporarily closed ports there that It accounts for a significant portion of global shipping capacity; One, in Ningbo, is the third largest container port in the world, according to Peter S. Goodman and Keith Bradshire in an article for the New York Times. To be sure, the giant cargo ship that settled in the Suez Canal in March 2021 certainly did not help.
“The world has learned a painful lesson in how economies overlap across vast distances, with delays and shortages occurring almost everywhere,” wrote Goodman and Bradcher, who referred to the situation as the Great Supply Chain Disruption.
Another exacerbation: the fact that, prior to the pandemic, many companies had adopted the principles of lean production to cut costs and increase profits, resulting in meager inventories that could not provide any kind of protection for the confluence of factors driving the COVID-19 crisis, including rising consumer demand. and labor shortage and shipping problems.
Thus, “normal life may be another year or two away,” Goodman and Bradcher quoted Adam S. Posen, a former member of the Monetary Policy Committee at the Bank of England and president of the Peterson Institute for International Economics in Washington.
Pet food and pet owners are flexible
“Just as the health crisis has proven stubborn and unpredictable,” Goodman and Bradcher wrote, “the disruptions in international trade have lasted longer than many expected because shortages and delays in some products made it impossible to make others.”
Fortunately, pet food is not dependent on other products, although it often competes with the human food supply chain for some of the same ingredients and materials. Even with ingredients being used mainly or only in pet foods, such as some meat or poultry meals, many companies have been able to find alternatives to fill the gap – despite the crazy scramble it can spur in terms of reformulating products and re-labeling packages. . And while producer and supplier costs are certainly higher than pre-pandemic costs, most consumers who own pets appear willing and able, so far, to absorb higher prices, judging by the continued growth of pet food sales.
Conclusion: Water in front of pet food certainly doesn’t offer a smooth sailing, probably not for another year or so. But, as consumers continue to buy more of its offerings, the industry remains remarkably resilient.
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