‘SPAM will always come’
How Guam and the CNMI manage to bridge the gap amid supply chain crisis
Almost two years into the pandemic, the world is still experiencing its impact and it is more than we can handle. The one on deck right now is the supply chain in the U.S. mainland, where the pandemic issued an outsized impact.
The problem started to worsen early this year as ships experienced prolonged stays at sea due to a lack of manpower to receive cargo containers at the docks, stevedores to release the goods and cargo truck drivers to deliver the goods to their final destinations. The quarantine and sanitizing process for the goods further added to the delay.
During last year’s lockdowns, many depended on online shopping. Because many Americans were home-bound and bored, online shopping became their therapeutic escape. This led to an increase in demand.
The glitch in the supply chain has resulted in delays in the delivery of goods and services. This multiplier effect is mostly felt at the bottom. When a small business such as an auto repair shop cannot get parts, they cannot keep the shop open.
Economists say the supply chain dilemma is likely to go on. With employment stabilizing, people have money in their pockets, thus consumerism will go back up.
To solve the problem, the Biden administration launched the Supply Chain Disruption Task Force in June that opened talks between the government and private sector leaders to take steps in speeding up the shipment of goods and distribution. To date, operations have been expanded 24/7, doubling the number of hours where cargo containers will be released from ships and out of the docks.
How are Guam and the CNMI affected by the supply chain disruption? Both territories—geographically isolated from the continental U.S.— are 90 percent dependent on imported goods.
John Ochoa, a resident of Yigo, said he hasn’t noticed empty shelves at the stores on Guam. “Things seem pretty well stocked in all the stores. But it could also be just the items that I am looking for,” he said.
On Saipan, Maria Valenzuela admitted that she went panic-buying when news of Covid-19 first broke in January last year. “I thought if the manufacturers were to close down in the mainland due to the pandemic, no supply would be shipped to Saipan. So, I bought food, household items, water, etc. Every day, I would spend $200. I finally became content when I filled my cabinets,” said the San Vicente resident.
Fortunately, the Northern Marianas has not seen any supply shortage. “Our grocery stores run with good stocks. It baffles me sometimes. But when I really think about it, I’d rather be baffled than see the supply chain crisis in the mainland happen on our small island,” Valenzuela added.
Guam’s import industry is a major contributor to its economy. Almost 80 percent of commodities come from Japan, Singapore, South Korea and Hong Kong and only 23 percent from the U.S. mainland.
“Since the start of the pandemic, there has been and will continue to be intermittent supply chain disruption,” said Kathy Calvo, Pay-Less Supermarkets Inc., which operates eight locations on Guam. “However, and for the most part, Pay-Less has been able to fill the gaps with other similar products or with different brands. In addition, the container delay issues are primarily from Asian and Australian destinations.”
Calvo said product shortage typically originates from manufacturers that deal with issues such as labor, reduction in product variety and stock-keeping units.
Pay-Less has been proactive by expanding its line of suppliers to avert any issues such as supply shortage or limited allocation by manufacturers. “We purchase from both local and off-island vendors including UNFI and C&S in the U.S., as well as suppliers from Asia, the Philippines, Australia & New Zealand,” Calvo said.
So far, Pay-Less has not been affected by the supply chain crisis in the U.S.
“We are not currently experiencing any significant product shortages, but occasionally see it with paper products, soft drinks, canned goods, bread, eggs, both chilled and UHT milk, pet food, baking goods, cleaning supplies and some over-the-counter medicine. The majority of the time, we have product availability,” Calvo said.
When getting into a supply shortage situation, Calvo said receiving information from the supplier ahead of time allows her company to source from other vendors to fill in the gap or seek replacement brands for the interim period.
“We do the best we can to get through this situation, with the support of our staff, buyers and management team, we continue to be aggressive and resourceful in finding products so that our customers are taken care of. We will continue to offer alternatives if a particular item is not available,” Calvo said.
In the CNMI, distributors and retailers are on top of their game as well.
“Our containers are sailing generally on schedule from the Port of Long Beach,” said Dennis Yoshimoto, general manager of Micronesian Brokers, Inc. “Containers from the mainland generally arrive on time but complete selections are lacking. Our suppliers, however, are still having difficulty producing all the items we order due to labor and material shortages.”
Micronesian Brokers is the CNMI distributor of a host of brands such as Anchor, Frito Lay, Colgate-Palmolive, Dial and Gerber, among others.
“We feel the improvement out of U.S. ports but supply chain issues from Asia-Pacific may continue into 2022. The Asia-Pacific port congestion issues are worsening,” Yoshimoto said. “Containers from that region sometimes cannot make it onto connecting vessels and end up stranded until space is available. Goods from the U.S. should not have a problem. We hope that once our backup orders from Asia-Pacific suppliers arrive, we will have sufficient supplies to carry us through Christmas and into January 2022.”
James Lee, beverage sales manager at Marianas Pacific Distributors, said t he company, which distributes Budweiser and Busch, is well stocked up and inventory is strong. The company does not see a problem going into the first quarter of 2022.
Being in the middle of the Pacific makes Guam and the CNMI vulnerable to any supply shortage crises. This, among many other reasons, motivates Guam and CNMI companies to plan ahead.
“We're still good through the Christmas season because we put a lot of our orders in, knowing that every year around this time there are always issues with shipping and truckers,” said Marilyn Marron, sales manager at D&Q International Distributors, which brings in Campbells, Nestle Juicy Juice, Hormel, Kraft and Bumble Bee Seafoods.
“Truckers go on a strike usually at this time because they have leverage. I guess it is their way of negotiating for something better, or so we have learned from past circumstances,” she said.
“Having many things considered, we've always kind of amped up during this time. We always increase to make sure that we have at least a couple of months' backup and inventory. There are currently many problems with supply chains because of the demand in the U.S., but it doesn't stop us from getting stuff, which still trickles in. Spam will always come,” she added.