Similarities & Differences in Global Auto and Meat Supply Chains

Supply chain economics and shifting global trade patterns offer parallel influences and key price drivers within the murky business of the highly concentrated food trade.

Remember when used car prices soared during the pandemic, in some cases even trading higher than new vehicles? According to A Map of the New Normal by economist Jeff Rubin, few global supply chains were found to be as fragile as the auto industry’s during the pandemic and economic lockdowns, resulting in wild price moves.

Normal price discovery mechanisms stop functioning when industries transition – perhaps quite abruptly when something like a global pandemic occurs, or gradually as has been happening since. Built to enable just-in-time deliveries and the lowest possible labor cost in manufacturing, global supply chains have been forced to adjust in recent years to a steady stream of events changing market access, resulting in inflation.

The global meat supply chain is another example where “just-in-time delivery systems suddenly became just-too-late or no deliveries at all.” Restaurant closures suddenly flooded wholesale distributors with meat, eggs and dairy that could not all be redirected in time and was disposed of, leaving every other node – from finishing to weanling barns, packing plants to hatcheries – stuck with millions of live animals with nowhere to go.

Feeding them past their set time to ship proved unaffordable for meat supply chain businesses (not to be confused with family farms). Globalizing the meat industry created a small number of massive companies, operating highly specialized facilities to house and process very large numbers of animals in short periods.