Coronavirus shopping demand tests US supply chains

Mnuchin: Task force focused on supply chain issues

Treasury Secretary Steven Mnuchin discusses the impact coronavirus is having on the economy and China’s opening back up.

U.S. supply chains and retail outlets will be put to the test in the coming weeks as Americans stock up on essential supplies amid the worsening coronavirus outbreak.

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Grocery chains and pharmacies have struggled to keep items ranging from sanitization products to toilet paper to certain types of food in stock in recent days, raising concerns about their availability in the weeks to come. The trend could worsen as the outbreak requires authorities around the country to shut down businesses, workplaces and schools, according to Philip Palin, an author and expert on supply chains in catastrophe scenarios.

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“Mandatory workplace closures—even those that try to explicitly exclude healthcare and grocery supply chains—will quickly and seriously undermine the capacity of all supply chains, many workers in essential sectors will choose not to work or find it not possible to work,” Palin wrote in a post for Supply Chain Quarterly on Monday. “Consumers will respond to this threat signal by increasing their already unsustainable pull on many products and services. Where consumer demand is highest, the effects will be worst.”

Some grocery store chains have already taken steps to conserve their supplies of key products. Wegmans, Walgreens and Publix are among the companies who have opted to limit store hours, while many other retailers, including Target, have enacted purchase limits to keep products from going out of stock.

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Amazon said Monday it will hire an additional 100,000 workers to bolster its fulfillment and delivery capabilities amid a coronavirus-related shopping surge. Delta Air Lines unveiled a charter operation to fulfill cargo shipments during the crisis.

A sign on a shelf at a QFC grocery store in Kirkland, Wash., advises shoppers Tuesday, March 3, 2020, that all hand sanitizer products are sold out. (AP Photo/Ted S. Warren)

Still, the retail industry has indicated a level of concern about supply chains. In a letter to President Trump, the Consumer Products Group, a trade association whose members include General Mills, Clorox and Procter & Gamble, outlined a series of recommendations.

The group asked the Trump administration to set aside funding in future response bills to “mitigate supply chain disruptions and manage food, personal care, hygiene, cleaning, disinfecting and sterilization input shortages” and to create an “Office of Supply Chain” to identify and address difficulties.

Trump urged Americans on Sunday not to unnecessarily stock up on groceries, noting that he has spoken to several industry CEOs about how to address the problem.

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“You don’t have to buy so much,” the president said. “Take it easy. Just relax.”

The National Retail Federation, another trade association, noted that “retail supply chains remain strong” but warned customers to avoid the urge to hoard supplies.

“If you don’t need an item in the next two weeks, leave it for someone who does," NRF President Brian Dodge said in a statement. "Hoarding and stockpiling creates unnecessary gaps between the time that someone who truly needs a product can find it back on retailers’ shelves. This is particularly important for our most vulnerable neighbors – the elderly and those who are struggling with other health issues.”

As of Monday afternoon, U.S. authorities have reported more than 4,200 confirmed individual cases of coronavirus and at least 74 deaths, according to a Johns Hopkins University database.

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