By Christian Whittle
A recurring theme of the coronavirus pandemic has been the breakdown of global supply chains. In the U.S., factory shutdowns, material shortages, and a dwindling labor force created a slew of bottlenecks in 2020, pushing inflation rates to record highs. Shortages and logistic crises impacted many industries, but few saw the pandemic’s widespread impact on the nation’s supply chains like those that work in the “cold chain.”
The “cold chain” refers to the temperature management of perishable products from the point of slaughter or harvest to the final consumer. Most Americans may not realize it, but the value and volume of products handled by Alliance members are enormous.
“We’re talking hundreds of billions of pounds of food that go through our member networks every year,” Lowell Randel told Consumers’ Research. “Chances are food in your freezer went through one of our member facilities.”
Randel is the Senior Vice President of Government and Legal Affairs for the Global Cold Chain Alliance (GCCA), a family of trade associations in temperature-controlled logistics. Members include cold chain businesses like warehouse manufacturing and maintenance, transportation and distribution, and education and training.
Because the strength of the cold chain is so essential to American life, the pandemic presented incredible challenges that had to be quickly resolved. A priority for the GCCA at the beginning of the pandemic was to keep members operational, explained Randel.
“That was the number one challenge, working with policymakers to say, ‘look, you’re designating essential businesses… we’ve got to be on that list’,” said Randel. “Thankfully, that went smoothly. I think they recognized that you’ve got all of this food that has to continue moving through the food supply chain, and if you don’t allow these folks to operate, then you’re in trouble.”
The next issue was sanitation and health. Randel explained that the problem of getting Personal Protective Equipment and cleaning supplies was short-lived.
“We saw supply chain disruptions in that part of the economy but those smoothed out by the middle of 2020, and we don’t really hear about those challenges so much,” said Randel. “Certainly, there are added costs involved, and it places an added strain on the companies, but I think those have evened out from an availability standpoint.”
However, significant problems remain for the cold chain, especially in U.S. ports. An immediate effect of the pandemic was a breakdown of port logistics, creating supply chain bottlenecks for shipping expected to last through 2021. Dozens of vessels in places like the Ports of Los Angeles and Savanah were forced to wait weeks before they could unload cargo, and a shortage of containers has rocked the retail world. All this brings added costs to GCCA members, said Randel.
While port congestion is a major issue for the cold chain, Randel told Consumers’ Research labor is the number one problem for GCCA members. At first, GCCA members only had to deal with the occasional employee quarantining, but the shortage of workers worsened as the pandemic dragged on.
“That challenge [to find workers] grew when the federal government put out these large additions to unemployment benefits,” said Randel. “That made it much harder for our members to get people to come back to the job, and not just our members, but our members’ customers as well.”
Many GCCA members struggling to find workers turned to using temporary workers or offering incentives like paying for transportation. The availability of truck drivers has suffered the most, as existing labor laws and the pandemic lockdowns put a major constraint on the number of truck drivers in the U.S. The problem may worsen, warned Randel.
“The vaccine mandate that President Biden announced is weighing heavily on our members,” Randel explained. “This is regardless of how you feel about the vaccine, this is just about labor availability, and we know that there is a segment of the population that is very reluctant to take the vaccine. Many of our members are concerned that vaccine mandates will make it that much harder to either retain or find labor.”
Despite the concerns over vaccine mandates, Randel is encouraged by the federal government’s support of the cold chain during the pandemic. Early on, federal officials focused on fortifying the nation’s food supply chain.
“In the past, we were largely operating under the radar, and that’s because the food supply chain was strong. It was very efficient and effective, and people didn’t think about it. The pandemic really put a spotlight on the supply chain, and I think that’s a good thing. Now we’ve got policymakers thinking about how we harden the supply chain for the future,” said Randel.
Part of the effort to harden the supply chain includes a U.S. Department of Agriculture (USDA) review. Randel said $4 billion was allocated to the department, and GCCA members are anxiously waiting to learn how the USDA will utilize those dollars.
“It’s a matter of putting together the details on how they are actually going to implement programs,” said Randel.
While the industry awaits more federal support, Randel believes consumers will have to deal with elevated prices for the foreseeable future, especially for food. Fortunately, disruptions in the cold chain are unlikely to cause prices to spike any time soon, Randel explained.
“There is a lag between our increased costs and any cost recovery from our members’ customers,” said Randel. “In many cases, they’re in longer-term contracts for services, and it won’t be until that contract is up when they would recalculate what the terms would be. In many cases, our members have been operating with many increased costs that they haven’t always been able to recover by altering their pricing structure. Where we are in the supply in the chain and the fact that we don’t own and sell the product… we can’t really pass that cost along in the same way that a manufacturer of a food product can.”
Overall, despite the enormous challenges brought on by the pandemic, Randel said cold chain operators are optimistic about recovery. The impact from the pandemic could have been a lot worse, and the crisis demonstrated the strength and agility of the supply chain system.
“I’m hopeful that some of these government initiatives and task forces and working with our members will help mitigate some of those challenges. I think there will always be the potential for case-by-case challenges, but the underlying system is strong and will get stronger,” said Randel.