CAHFS Weekly Update: Local, national, international supply chain distributions
Margaret Sirolli, DVM
Margaret Sirolli, DVM, MPH


Regional Supply Chain Disruptions

Global supply chain disruptions are making a local impact on regional farmers resulting in delayed shipments and increasing prices. Minnesota producers are ranked 4th in the nation for agriculture exports, with soybeans, pork, and corn as the top 3 exported products, generating over $6 billion in 2019. Supply chain challenges to offload containers with goods for import along coastal ports are resulting in local export challenges. 

This past summer, some Minnesota soybean producers were forced to shut down operations for several weeks due to full warehouses and lack of available shipping containers. Containers that previously would have been sent from coastal ports inland to collect farm exports, are now rushed back to Asia empty, to meet surging US consumer demand. When local producers can secure a container, pricing may have changed dramatically. In an interview with MPR News, Chris Wiegert, chief sustainability and business development officer for regionally based Healthy Food Ingredients stated, “Every time we call somebody for pricing, it’s changed anywhere from up 50 percent to 400 percent.”

In September, over 70 national agricultural organizations, including Mankato-based Specialty Soya and Grains Alliance, sent a letter to President Biden regarding the current export situation, highlighting the negative impact to trade and a 10-40% loss in export value due to volatile shipping costs. The organizations wrote in support of the Ocean Shipping Reform Act of 2021 which was recently introduced in Congress. The letter also pushed for immediate action to facilitate agricultural exports, including increased interagency coordination and incentives for ocean carriers to fully utilize existing capacity. In mid-summer, executives were estimating shipping challenges to last several weeks. Now, many say supply disruptions will last well into 2022. The effects of extended export challenges for local producers increases the risk of negative impacts on their livelihoods and potential mental health implications, already stressed in a year of drought and inflation. Furthermore, the disruptions can extend globally to regions around the world that could use those exports to feed populations living with crisis-level food shortages.




National Supply Chain Disruptions

Disruptions in the global supply of goods transported around the world are expected to drastically impact the US holiday season and extend well into 2022. Transportation challenges with shipping containers, port availability, trucking, railcars, and labor shortages are all contributing factors to the disruptions seen across all sectors in the US. The top 5 product categories imported into the US are machinery (including computers), electrical machinery, vehicles, pharmaceuticals, and mineral fuels. 

As of Sunday October 10, 87 cargo ships were waiting to be unloaded along the west coast of California in the Long Beach and Los Angeles harbors. This equates to nearly half a million 20-foot shipping containers of goods destined for US homes, manufacturing facilities, retail, and food production. Many ships are waiting weeks to unload, tying up containers that could be refilled with more goods to meet surging demands. While the logjam off the coast of California is extreme, similar situations are occurring at all US ports. The bottleneck is compounded by logistical challenges with labor shortages in the US trucking industry, decreased US railcar capacity, and a nationwide warehouse vacancy rate at only 4.8%.

Pharmaceuticals have been one of the top 5 imported product categories since 2015. An estimated 80% of pharmaceutical ingredients used in US medications originate in China or India, and a staggering 97% of antibiotics and many over-the-counter and generic drugs used in the US are manufactured in China. In addition, the US imports approximately one fifth of the food consumed nationwide. Food manufacturers also import food packaging materials and various ingredients, from spices, oils, and dairy products, to be incorporated in final products produced domestically. Many US companies are adapting by changing forecasted production to focus on core products, advising customers to cancel marketing promotions, imposing purchasing caps, and some are securing their own shipping vessels at significant cost. Costco, Target, and Walmart have all moved to chartering their own cargo ships to better manage shipping challenges. The impact of extended supply chain disruptions in both the pharmaceutical and food industries could lead to significant challenges for US public health.

Yahoo Finance
Washington Post


Global Supply Chain Disruptions

The global supply chain is ensnared in a web of complex factors leading to disruptions in a broad variety of industries worldwide. These disruptions are resulting in global supply shortages, rising costs, exhausted laborers, and potential food insecurity. Ultimately, the COVID-19 pandemic has laid bare the vulnerabilities of a ‘just-in-time’ distribution system the world has grown to rely on when domestic production is unable to meet demand, maintain inventory, or efficiently manufacture. 

Approximately 80% of manufactured goods are transported around the world by sea. Most of these goods, everything from textiles to food products to pharmaceuticals to automotive parts, are transported in shipping containers on large cargo ships. Early in the pandemic, COVID-19 illnesses shut down many major ports responsible for a large portion of the goods exported to the world. As COVID- 19 movement restrictions ease and vaccine availability increases, the surging demand for goods has outpaced supply chain capabilities, resulting in everything from port congestion, to packaging shortages, to distribution logistical nightmares. Global manufacturers and trade organizations are warning that the ripple effects of supply disruptions will significantly impact business operations into 2022.

In addition to surging global demand for goods, labor shortages and a decrease in shipping capacity has resulted in skyrocketing shipping rates that are ultimately passed on to consumers. In the last year, the cost to charter a container ship has increased 10X. Such changes have put developing nations at a significant economic disadvantage, the effect of which negatively impacts populations already grappling with less resources and crippling food shortages. Meanwhile, the FAO reported that global food prices reached a ten year high in September 2021. The United Nations reported in August that over 41 million people are now at risk of famine without humanitarian interventions. Global supply disruptions threaten to exacerbate this public health crisis.




Margaret Sirolli

Margaret Bowman Sirolli is a current Veterinary Public Health and Preventive Medicine Resident within the Center for Animal Health and Food Safety. Dr. Bowman Sirolli completed her veterinary degree at the Virginia-Maryland Regional College of Veterinary Medicine in Blacksburg, VA and her MPH through the Executive Program with the University of Minnesota’s School of Public Health. Dr. Bowman Sirolli previously worked with the US Food and Drug Administration, two global food companies, and most recently with the Minnesota Department of Health on a COVID-19 Response Team. Her areas of interest are One Health, scientific communication, and food safety.