COVID-19: The Reasons Behind Longer Shipping Times

Sure, I could begin this blog by talking about the COVID-19 Pandemic and how we should all stay inside and isolate; And I could talk about the inevitability of a Wave 2 in the Fall. I could talk about ways to combat the spread of the virus and I could tell you over and over to WASH YOUR DAMN HANDS. But frankly, I find all that to be depressing as shit.

Instead, what I want to talk about are the effects this virus is having on supply chains and why your guaranteed 2-day shipping is now suddenly, an uncertainty. Plus, what better way to start off a blog about supply chain topics than with something that every day consumers can relate to NOW? Here is what I will cover:

1. Ridiculous Demand

2. Supply Shortages

3. Delivery Times

Ridiculous Demand – Or Is It?

Just admit it! You know damn well that you’re guilty of it. Do it for me; admit that you have gone to the grocery store with the intention to buy as much of a certain product as the store has in stock (up to the level your bank account can afford, of course). I’m not afraid to admit it; because when the apocalypse rips through the country and I have enough water to last through it; don’t come begging to me for a bottle. My barricade of toilet paper and paper towels will surely keep out even the thirstiest of the undead and if they try…my arsenal of cleaning supplies should vanquish the remainder easily.

Now, I’m exaggerating obviously, but these are the thoughts racing through the mind of consumers as they visit the store, risking contamination. The average American is used to making at least 2 trips to the grocery store per week pre-COVID, and now that number is down to one 1 trip or less (keeping in mind only the people treating the pandemic preventatively). Fear of falling victim to the illness causes many to remain in the comfort of their homes, waiting for the most opportune time to venture out. And that means that when they do leave, say, to restock on water, they are going to load the cart to the ceiling just to avoid having to come back in a week for another grocery run.

BUT…the important thing to keep in mind about increased demand in grocery stores, is that even though people are buying in higher quantities, it does not mean that they are also using at an increased frequency or amount. Put it in the perspective of the human body; the body’s digestive system does not just miraculously ramp-up production of shit, does it? So therefore, toilet paper will be used at its normal rate. I work in inventory, where I am constantly analyzing what products my company has in stock and where it is needed. I look at customer forecasts and production needs and oftentimes when I am making decisions about how much I should send; I send more than immediately needed because I anticipate that it will be needed in the future.

I keep seeing articles and LinkedIn posts with pictures of empty shelves advising others to only buy what they need to allow for those “less fortunate” to do the same, but I do not share that opinion…and that isn’t what’s happening. We are in the midst of a pandemic, which means that certain commodities (such as water, canned goods, and cleaning supplies), will be in higher demand; it’s inevitable. Additionally, there is the small percentage of people that need A TON of soap, because after doing it for years they have realized that…yes…now that it IS a matter of life or death…that maybe…JUST maybe…they should wash their fucking hands!

But…increased order quantities and new customer acquisitions aside…

The argument is that people with lower economic freedom or less space within their home are unable to stockpile like someone making 100k with a big house…but yet they still share the same fear and preventative mentality. They might not be able to buy 18 cases of water, but they are still buying at a higher quantity than normal. People see the pictures of bare shelves and inherently think that the visual signs of increased order quantities mean that there is a shortage of supply, but like I said…USAGE DOES NOT CHANGE, and the people that are buying more will buy that quantity less times. Ultimately, it works out the same economically, especially with companies beginning to enforce stockpile restrictions

on certain “Hot” products.

I will agree that some people are being ridiculous in their quest to buy every single package of toilet paper in a store, but they alone are the problem, not the people buying more in anticipation of future use while in quarantine. A Strategic Pre-Buy accommodates for that future use and prevents risk of exposure to the virus from the grocery store, so do it! Buy the stuff! Don’t worry, because even though the shelves are as barren as the Sahara Desert…it will be replenished; that’s what a supply chain does.

Supply Shortages – Why?

Speaking of replenishment…

People making remarks like, “There’s no toilet paper because Cottonelle can’t make it that fast!” or “Giant Eagle’s suppliers are running out of product!”, should check themselves before they wreck themselves. The common presumption is that the primary reason for bare shelves in grocery stores is the factories’ inability to produce product at the frenzied rate people are buying it. But while it is true that people are panic-buying certain commodities, the problem is not with the supply…

…like at all.

The issue isn’t with the availability of the product from the supplier side, because manufacturing facilities generally have the capacity to rapidly increase their production output to meet higher-than-expected demand. Additionally…Products that are essential to daily life, like toilet paper, are in a constant state of production, where they are then stacked from floor to lighting fixture in various warehouses throughout the country.

The PROBLEM, I tell you, has nothing to do with supply, but instead with the act of physically moving the shit! Trucking runs the country…and with the growing threat of COVID-19, it is becoming harder and harder for companies to secure transportation for their product. For companies that are lacking contract agreements with their preferred carriers, they are left with the spot market and Third-Party Logistics companies (which I will talk about more in depth in the future). As for how this “Spot Market” functions; I will explain:

Basically, it is a massive pool of companies that negotiate and compete for freight. For example, if I have a truckload of product that I need to ship from Ohio into Chicago, I would post it up on a database of carriers for them to see the details of the load and call for pricing. When the phone rings, the negotiation ensues: one party wanting way too much money and the other trying to pay half of the ask price. This will go back and forth until a price is agreed upon, the documents are signed, and the material is shipped.

The negotiating power in the Spot Market largely lies with the Third-Party Representatives and the people and companies that are shipping the product. However, there are circumstances where this advantage changes; and I would say a global pandemic certainly classifies as one of those circumstances. No, a pandemic will not cause all companies to stop producing their product or entering sales orders, instead…it is doing the opposite, requiring more product and more sales orders to be created (not all industries, of course). But here’s why the carriers have THE NEGOTIATING POWER in the US right now instead of the Product service reps:

Sales and Manufacturing are increasing, but yet…I have yet to see one person drop everything for a CDL license and a trucking career, have you? Because from what I understand, a driver can only be in one place at any given moment and volatile demand has resulted in further strain on an already over-strained trucking capacity. Higher need with no increase in capacity grants the trucking companies more power in the realm of Third-Party freight.

There are hundreds of thousands of carriers and logistics companies in the United States, and many of the drivers are older men who have been hauling freight their whole lives. Drivers risk exposure every day they are on the road, and because of this, they are demanding better pricing when negotiating for freight.

Without trucking, our economy would fall into ruin because if you can’t ship your shit, you can’t sell it either. Trucks will continue to run, although the increased strain on the market and demands for higher pricing are taking a toll on delivery times and replenishment cycles. It’s not because the product doesn’t exist within the supply chain…it’s because the mechanics of a Big Rig do not allow it to travel at the speed of light.

Delivery Times- Why the Change?

Alright…Now for the BIG question that everyone has been begging for me to answer already: “Why is my Amazon Prime order going to take 7 days, when I pay for 2-day shipping?!” And I believe I already answered that question!

THERE AREN’T ANY TRUCKS.

There are, in fact, still trucks, but as I mentioned above, the volatility of demand we have been seeing has created an equally volatile truck market. Furthermore, the number of drivers in the market has slightly decreased as a result of the pandemic and if you ask me...I’m not surprised. If I were a truck driver, I don’t think I would feel comfortable driving around the country at this point in time, so I don’t blame them if they decide to call it quits or avoid certain regions of the country to keep themselves and their families safe…

Enough about trucking, let’s talk about demand again…

While the overall demand for products themselves has remained the same, how people are physically purchasing them has changed drastically. Groceries and things of that nature are still sold primarily from their homes in Giant Eagles and Krogers, but things like clothing and miscellaneous products are ALL being bought through Amazon and other E-commerce platforms that offer delivery services.

People, such as myself, who would normally do their shopping by walking through a TJ Maxx or Marshall’s are resorting to buying those same items on Amazon, causing a backlog of “Non-essential” purchases in Amazon’s delivery queue. Boredom is a key factor to that as well, because people are seemingly unable to think of productive ways to use their time. Tik Tok? Really?

But that’s a discussion for another time…

And I’ll cut this short because I think I’ve typed up a pretty good explanation of what’s going on with the shortage of toilet paper and the role that trucking plays in your delivery times, but I just want to emphasize Three Key Points:

1. Purchasing large quantities of items as a Strategic Pre-Buy during this time of uncertainty is NOT, I REPEAT…NOT!!...a stupid thing to do, regardless of what people are telling you. In fact, it is an intelligent way to handle quarantine and social distancing regulations. Where it becomes a problem, is when you are actively making the decision to disregard other people and buy every last SKU of a product in the store.

2. SUPPLY IS NOT THE PROBLEM. Trucking, or the lack thereof, is the problem in supply chains right now…with the exception being plant closures and situations of that nature. Demand is volatile, but the Spot Market for Freight is worse, trust me.

3. The switch to E-commerce for non-essential items has created a LARGE LINE of customers waiting for their orders to be shipped, along with the much longer, prioritized lines of people who ordered paper towels, food, or other household necessities.

And there you have it folks…

I hope you enjoyed this read and look out for more posts! My next segment will be about waste in Grocery chains and why stores with barren shelves might even be a good thing.

Thank you for reading.

Nathaniel Schilpp