Panic purchases can create shortage illusion

Panic purchases can create shortage illusion
Despite panic buying by consumers of products such as toilet paper and paper towels, members from industry maintain that there is currently no supply shortage. Photo: freepik.com

As is now well recognized in communities throughout the state, the COVID-19 outbreak and response has provoked panic purchases by Washington consumers of items such as toilet paper and paper towels, with empty store shelves suggesting a supply shortage.

However, numerous industry members say it’s instead a delayed response to unexpected demand, weak links in the supply chain – or a combination of both.

A recent survey by the Association of Washington Business of its members revealed that 47 percent of manufacturers who responded said they’ve experienced supply chain disruptions. Others point to a drop in freight imports from China.

“What I’ve been hearing from members a lot…is it’s not as much a supply problem as a demand problem, as people are buying more of products they normally don’t buy,” Washington Council on International Trade President Lori Otto Punke said. “A surge in demand (is) a disruption to the supply.”

Yet another reason for the delay is a bottleneck that is resulting from limited infrastructure capacities, even as production increases.

Washington Policy Center Small Business Center Marks Harmsworth told Lens: “our capacity is there for normal demand. When people are taking twice as much, you don’t have the capacity to get it to the store quickly.” He added that industry can shift production toward in-demand items to help meet demand, such as a Mukilteo furniture company that is now making face masks. Or, producers can also maximize their production capacity. “If you’re (only) producing at 75 percent…you ramp up to where it lands on the shelf,” he said.

That’s the case with Georgia Pacific’s pulp and paper mill located in Wauna, Ore., which produces bath tissue products. The recent surge in purchases has doubled demand for these products compared to January, and the mill is now operating at full capacity.

Further, Public Affairs Manager Kristi Ward said they aren’t running out of the needed raw material. The challenge is “you can only load and unload trucks so quickly.”

And on the trucking side, chain disruptions can often be caused by severe traffic congestion, accidents or bad weather shutting down critical mountain pass highways. Although the roads are now clear for truckers to operate on, the flow of freight activity also still depends on whether manufacturers and their end customers continue to operate.

Washington Trucking Association (WTA) President Sheri Call told Lens that “we’re in a situation where demand for freight is there for certain segments – especially for consumer goods and medical supplies. Companies that are strictly serving manufacturing …(their) trucks are basically going to be sitting idly.” She added that “those that are close to the manufacturing supply chains are probably experiencing the biggest struggles right now.”

Foreign shipments from major trading partners such as China constitute yet another link in the chain that can cause disruption. Burlington Northern Santa Fe (BNSF) reports that it has experienced a drop in shipments from Asia, though that is expected to change. In the meantime, the company states on its website that “we have well-established plans to ensure that rail service is maintained throughout any workforce disruptions.”

WTA Vice President Brandon Beetham specializes in the intermodal trucking business sector that tracks imports. He told Lens that the number of scheduled “blank sailings” – instances where ships cancel a scheduled port trip – has dropped from 19 in March to only six so far in April

He said that doesn’t indicate how full those ships will be when they arrive. In an email, he wrote that “while we need to be cautiously optimistic, this is hopefully a start of returning to somewhat a normal environment.”

Call said “how much (cargo) we experience is going to be key” to the effects on truckers and the rest of the supply chain.

For BNSF, Public Affairs Director Courtney Wallace wrote that the company “stand(s) ready to handle any increases in volume in the North American supply chains once conditions have improved and will provide updates as necessary to our employees and customers.”

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