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HomeSourcingProvide Chain Weekly Wrap-Up 07/08/2022-07/14/2022

Provide Chain Weekly Wrap-Up 07/08/2022-07/14/2022

Mexico’s beer shortage worsened due to supply and demand problems

In recent times, beer makers have struggled to source cans and glass bottles for their products, but now, robust demand is causing further issues for the industry. During the pandemic, sales of beer rapidly declined, but now, purchases are on the rise. This is contributing to supply chain problems including higher prices and empty spaces on supermarket shelves.

Over time, distributors have watched brands of beer including Heineken and Dos Equis disappear due to a lack of available bottles. The lack of choice for consumers has meant that prices are on the rise, with the cost of Corona beer manufactured by Grupo Modelo increasing by 24% over the space of a few weeks. Consumers have noticed the lack of supply and have started to panic-buy, hurting the supply levels even more.

Experts from the Mexican Independent Craft Brewers Association have warned that there is also a shortage of malt. Director Cristina Barba Fava said “aside from the shortage of aluminum and glass, there’s a shortage of malt. Our products continue to be available, but they’re more expensive. We’ve found a way around the lack of bottles and cans, but we’re talking about an increase of 20 to 25% of our costs.”

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Asian countries are being pushed to diversify energy supply chains

Together with the International Energy Agency (IEA), the United States has expressed concern for global energy supply chains, urging Asian countries to take action. The U.S. and the IEA want countries in Asia to diversify supply chains for energy and critical minerals so dependence on Russia and China decreases for everyone.

Since the Russian invasion of Ukraine, more countries have considered moving away from fossil fuels and are considering green energy sources. However, China currently accounts for 80% of the global supply chain of solar technology and by 2025, this will grow to 95%. The IEA is worried about these figures, warning of the danger of relying on one single country for energy, since the reliance on Russia for energy has caused significant problems this year.

U.S. Energy Secretary Jennifer Granholm said that “I worry that China has big footed a lot of the technology and supply chains that could end up making us vulnerable, if we don’t develop our own supply chains”, implying that like-minded nations should develop their own supply chains to increase energy security and overall, everything should be diversified.

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State-level labor rules put American supply chains at risk

Approximately 70,000 truck owner-operators in California’s transport industry are thrown into uncertainty because of a piece of legislation called Assembly Bill 5. The rules mean that employers have to treat independent contractors as hired employees if they serve the same core function. The change has brought about lots of confusion for truckers and is putting supply chains at risk.

Disruption because of this is highly likely, as the industry relies on contractors who ordinarily have flexibility with their work. The California Trucking Association (CTA) has warned that the new rules may force drivers to stop working until the necessary changes are made to comply with the law. Since 70% of truckers serving key ports such as Los Angeles are owner-operators, AB5 will be making changes to their operations.

This comes at a busy time, where retailers are stocking up for holiday goods. As well as this, dockworkers and rail workers are also in negotiations about their contracts, so a strain to another method of transport could be quite damaging. Due to the uncertainty surrounding the AB5, the Biden Administration is looking to secure more detailed information and a plan of action from California, according to a White House official.

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BtoB Central Staff
BtoB Central Staff
Btobcentral is dedicated to business news.


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