The Friday Report: March 30th, 2018

The Food Home Delivery Industry is On Fire!

Restaurant meal delivery is anticipated to balloon from $43 billion in 2017 to $76 billion in the next four years according to a report from Cowen and Company.  Online orders and use of technology in ordering meals from a Smartphone seems to be fueling the increase.  Today’s consumer wants convenience, speed and healthier food options.

With an array of food delivery apps available at consumers’ fingertips and a plethora of technology involved with online ordering and delivery, the race to the face of hungry consumers is on.  On-demand food delivery startups have boiled over, with more than three dozen getting initial funding since 2011.  Restaurants tend to like the extra sales but often are finding it to be a challenging adjustment to that of dealing with the typical in-house order.  Last year alone, $2.5 billion from venture investors overflowed into on-demand delivery companies.

In another market segment, consumers proved that they are starving for convenience and time savings.

Meal kits including Hello Fresh and Blue Apron represent a market segment that have evolved to become a $5 billion business in 2017, according to market research company Packaged Facts.  Consumers report that they like the idea of wholesome home-cooked meals and value having recipes, cooking tips and fresh food pre-packaged for their convenience.  According to a report by Nielsen, nearly one in four adults purchased at least one meal kit last year and 70% continued to purchase them after their initial purchase.  The study included both home delivery meal kits as well as those picked up from grocery stores.

Anticipated 2018 Supply Chain Risks

In 2017, supply chain disruptions were largely due to natural catastrophes including hurricanes, wildfires and earthquakes.  Estimates project that 2017 may be one of the most costly in history for the property insurance industry.  The effect of Hurricanes Maria and Harvey, for example caused a tidal wave of disruption through supply chains.  From medical and pharmaceutical manufacturers in Puerto Rico to petroleum, coal and chemical manufacturing as well as oil and gas extraction in Houston and the surrounding areas, natural disasters resulted in product shortages, delays in manufacturing and other deleterious effects.

Are you ready for 2018?  View 2018 hurricane season predictions here.

Additional supply chain risk come from factors such as economic unrest or uncertainty as well as man-made events including cyberattacks, product defects and civil unrest.  Cyberattacks occurred with increased frequency in 2107 and included the Equifax data breach.

Huge Pressure to Increase Truck Driver Pay in 2018

With market conditions continuing to improve in 2018, industry insiders report that there is increased pressure to increase driver pay.

A February 2016 report indicated that the pay for truck operators has not kept up with inflation since 1980.  This has resulted in 33% lower wages for truck drivers over that period and a loss of effective purchasing power over at least the past 10 years.

According to Driver Pay Analyst Gordon Klemp who is also the President of the National Transportation Institute (NTI), truck driver wages are approximately half of what they were in 1979 before the industry was deregulated. Low rates of driver unemployment and use of electronic logging devices to reduce administrative burden are factors increasing pressure on increasing driver pay.