There are many people, many voters, simply stunned at how the Democrats are trying to use the COVID-19 economic emergency to add unrelated ideological elements to the Coronavirus Aid, Relief, and Economic Security Act.

Senator Tom Cotton walks through some of the items the Democrats are demanding before they will allow economic relief to U.S. companies and workers. MUST WATCH:

The White House COVID-19 task force will be holding an update to deliver information to the public and answer questions from the media.  Anticipated start time 5:30pm ET

U.S. Attorney General Bill Barr is expected to join this briefing and there may be a myriad of new consequences outlined, raised and discussed as the coronavirus mitigation effort begins to enter the third month.  The ripple effects are almost beyond comprehension.

Fox News Livestream – Fox Business Livestream – PBS Livestream Link

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Week #3 of the COVID-19 impact continues.  The supply chain is being modified hour-by-hour.  You may not recognize it, but your feedback matters; your feedback shapes decisions…

Several factors have increased retail market demand for fresh food and non-perishables. People stocking up, kids out of school, some panic shopping (example toilet paper) and now curfews & quarantines have people purchasing more for ‘meals prepared at home’.

Add in closed restaurants and the demand on retail food markets is severely stressed. With that in mind what are you experiencing in your city, town or neighborhood market? Use the comment section to share your experience. How is the supply chain responding to the increased demand in your area? Has the panic buying settled down?

THE BIG PICTURE

The aspect that most models are missing, is the pressure on the supply-chain will not soon end. The restaurant sector (‘food away from home’) appears to be operating at far less than half capacity (perhaps as low as 25%) due to coronavirus restrictions. As long as those food consumers remain shifted into the retail supply chain (food at home), there are going to be long-term shortages due to capacity constraints and distribution limits.

Processing/Manufacturing – – – Distribution – – – Retail Stores

To gain an idea of the scale of the challenge here’s some big picture analytics.  There are approximately 50,000 retail outlets for grocery sales nationwide with about 250 large scale distribution centers (warehouses) regionally placed.

If you take an average across all grocers, a conservative estimate for one product category, hot dogs, each retail store would need roughly 20 cases for a resupply (all brands).  That’s one million cases of hot dogs across all retail outlets.  [50,000 stores at 20 cases each]

However, the distribution centers would also need 1 million cases, for a replenishment average of 2.5 to 3 days later.  Additionally, within 7 days (from the original delivery date) another 1 million cases would have to arrive from the manufacturer(s) to resupply the distribution centers.

That’s a total production demand for ‘hot dogs‘ of 3 million cases per week across all brands.  240 to 360 individual packages selling (twice weekly) at the store level across all grocery outlets; throughout the country.

3 million cases of hot dogs equals 600 semi tractor-trailers with 5,000 cases each, nationwide in the logistical supply chain. [200 trailers per stage: retail (day 1), distribution (day 2.5/3.0), manufacturing (day 7)]  That’s 600 tractor trailer loads, for one product category, nationwide.   [Easter is April 12th, Memorial day May 25th]

That’s a very conservative supply chain estimate in one product category.

That’s just hot dogs.

Now, take the same baselines and consider the logistics of 100 cases of paper goods at the current level of need (retail all outlets), resupply (all distribution), and manufacturing:

100 cases needed per retail outlet (50,000) equals a 5 million case fill on day one.  An additional five million cases on day 3 (from distribution), and an additional five million within seven days from manufacturing.  That’s 15 million cases needed.

LOGISTICS: At 800 cases per trailer, 15 million cases of paper goods means 6,250 semi-trailers (retail), 6,250 trailers all distribution within three days, and 6,250 semi-trailers from manufacturing to distribution within seven days.  A total of 18,750 trailer loads of paper goods (towels and toilet tissue) within one week; nationwide.

♦ It is impossible for the current manufacturing supply chain (all outlets) to start from a ZERO baseline in stores and generate 3,000,000 cases of hot dogs, delivered by 600 tractor trailers, in a week.

♦ It is impossible for the current manufacturing supply chain (all outlets) to start from ZERO baseline in all stores and generate 15,000,000 cases of paper goods, delivered by 18,750 tractor trailers, in a week.

• CEREAL – It also seems impossible for the current retail supply chain (all outlets) to start from ZERO and generate 12,000,000 cases of cereal (all brands), delivered by 6,000 tractor trailers in a week.  (80 cases per store, equals 2,000 trailers/2k per – total supply chain)

• SOUP – It seems impossible for the current retail supply chain (all outlets) to start from ZERO and generate 6,000,000 cases of soup (all brands), delivered by 2,400 tractor trailers in two weeks 14 days. (40 cases per store, equals 800 trailers – total supply chain)

[Note for distribution of non perishable “pasta” and “rice” the sector mirrors soup.]

Bottom Line – There are going to be long term retail supermarket shortages until restaurants re-open.  Yes, the total food supply chain is ok, but the retail sector of the supply chain is grossly overwhelmed.  Math is math and too few are doing it.

Because it’s a proprietary sector with lots of competition and few ways for a big picture overview of the total supply-chain landscape, individual executives are not being forthcoming about the potential for the scale of disruptions.

Easter is April 12th and Memorial Day is May 25th.

Most consumers are not aware food consumption in the U.S. is now a 50/50 proposition. Approximately 50% of all food was consumed “outside the home” (or food away from home), and 50% of all food consumed was food “inside the home” (grocery shoppers).

Food ‘outside the home’ includes: restaurants, fast-food locales, schools, corporate cafeterias, university lunchrooms, manufacturing cafeterias, hotels, food trucks, park and amusement food sellers and many more.  Many of those venues are not thought about when people evaluate the overall U.S. food delivery system; however, this network was approximately 50 percent of all food consumption on a daily basis.

The ‘food away from home‘ sector has its own supply chain.  Very few restaurants and venues (cited above) purchase food products from retail grocery outlets.   As a result of the coronavirus mitigation effort the ‘food away from home’ sector has been reduced by half of daily food delivery operations, possibly more.  However, people still need to eat.

That means retail food outlets, grocers, are seeing sales increases of 25 to 50 percent, depending on the area.  This, along with some panic shopping, is the reason why supermarkets are overwhelmed and their supply chain is out of stock on many items.

There is enough food capacity in the overall food supply chain, and no-one should worry about the U.S. ever running out of the ability to feed itself.  However, the total food supply chain is based on two segments: food at home and food away from home.

The seismic shift toward ‘food at home‘ is what has caused the shortages, and that supply chain is not likely to recover full service of products again until the ‘food away from home’ sector gets back to normal.   No need to panic, but there will be long-term shortages.

At the top of the food supply there is ample product and capacity.  Its the diversion of customers to the retail grocery sector causing the shortages.

Large chain-stores were impacted first and worst as their proprietary supply chain, and their automated replenishment systems, are more vulnerable to such wide-scale disruption. Their resupply is based on eight week averages; all of the technology that builds the technological framework of that resupply-chain is useless now.  However, smaller regional markets, less than 25 stores or mom-and-pops, are/were impacted less due to their use of wholesalers for distribution and a faster response time.

However, in this phase-3 those wholesalers will now enter a period where they are in competition for resupply with the large retail outlets…. so we are entering the phase were smaller stores, and independents, are going to have more trouble getting product.

The fresh-meat, poultry and produce sections are the first disrupted (short term) but least disrupted long-term (recovering now).  The reason is simple, the raw material isn’t needed in the restaurant supply chain; those products are right now in the process of being shifted to manufacturing, protein processing, and eventually into the retail food supply chain to end up in your local supermarket refrigerated store cases.

With the increased diversion, increased production and increased distribution, inside of two weeks we should see fresh meats, chicken, pork etc. (protein sector) return to normal in your area supermarket.

Produce is both nationally and locally sourced, so that supply chain was never as much at risk of disruption; it is, quite simply, just overwhelmed on the distribution side.  With the restaurant sector demand reduced the produce operations will recover quickly as soon as supply chain diversion and distribution increases.  Less than a week and the produce section in your local supermarket should be solid.

However, the frozen foods, frozen pizzas, frozen meals ready to eat (RTE) and specifically processed lunchmeats and cheeses will continue to suffer from supply chain issues.  The reasons are not complex.  Processed food has a production capacity.  Think about Oscar Meyer, Tyson, Hormel, etc. they can only process a maximum amount within their manufacturing facilities.  [China owns Smithfield, so China controls that company]

To the extent that extra shoppers means extra consumers wiping out frozen foods, lunch-meats, bacon and cheeses, the manufacturing side of the retail food system will be limited by their capacity.  That sector is not going to change and long-term supply chain issues will continue.  However, on the good news side, we should be able to buy lunch meats at the in-store deli counters because that bulk delivery processing sector will have more production capacity.

So if you’re looking for bologna (or similar), and the it’s not available pre-packaged in the traditional case, try looking for it in the deli section.  It will be more expensive, but such is life with coronavirus.

In addition to the shortages in frozen foods, processed lunch-meat and dairy items, the non-perishable goods will also have wide-spread outages.  Again, this is a store issue (phase-1), distribution capacity issue (phase-2), and will now become an upstream production capacity issue in phase-3.

Bread, canned goods, rice, cereals, pasta, flour, sugar, bottled water, etc. are selling beyond the capacity of the traditional supply chain to keep up with demand.

Traditional emergency food recovery and distribution models (think hurricanes) are designed for short-term disruptions to the restaurant sector that provides 50% of food outside the home; and, as a result, short-term increases to at home food needs.  Those emergency and recovery models have contingency plans for short-term regional bursts of specific non perishable products into specific areas.  This ain’t that.

The current supply chain disruption is a severe reduction in the availability of ‘food outside the home‘ for a sustained period.  Losing the entire sector is very unusual, unprecedented, unforeseen in scale; and there is no national contingency plan for a nationwide demand on all retail supermarket food products simultaneously.

Once these warehouse fulfillment centers run out, every retail outlet in the country is pulling from the same upstream supplier network.  Again, there’s no need to panic, the total food supply is not short, we all just need to adjust our shopping habits and get a little creative.

What do things look like in your neighborhood?

Are things improving?

Treasury Secretary Steven Mnuchin discusses the steps the White House is taking to mitigate economic pain and suffering being felt by businesses and workers.  The U.S. economy has essentially been shut down In an effort to deal with the spread of the Chinese coronavirus; there are worries that parts of the economy will never recover if a rescue package doesn’t quickly reach businesses and workers. [Important Conversation]

Mnuchin helped design a relief bill to protect the economy and U.S. workers, and ensure the economy is able to restart quickly. Democrats are blocking proactive the emergency bill to take advantage of the crisis with demands unrelated to economic needs.

Democrats are blocking Senate Bill S.3548, The Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act.   House Speaker Pelosi is instructing Senator Schumer not to support any relief bill unless it includes: cancellation of college student debt, union protections, tax subsidies for windmills/solar, and new airline emission standards.