North America’s largest wholesale food distributor forced to delay, pause service to various customers

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North America’s largest wholesale food distributor, Sysco, has had to delay or pause service to a "limited number of customers" in various locations around the country due to unprecedented labor shortages. 

To combat the issue, the company is "aggressively recruiting delivery partners and warehouse associates," with the goal to restore service to impacted customers as soon as possible, a Sysco spokesperson told FOX Business in a statement. 

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Although Sysco expects this to be a "temporary situation" the company told investors during its fourth-quarter earnings call that the labor market has been "very challenging." 

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SYYSYSCO CORP.78.54-0.65-0.82%

During a call with investors earlier this month, Sysco CEO Kevin Hourican noted that the company was able to hire over 6,000 associates in the second half of fiscal 2021. However, Hourican said the company still needs to increase its workforce due to the fact that "business recovery is happening faster than we had modeled." 

"It is a very tight labor market out there and we are working extremely hard to ensure we can fill all of our warehouse and driver positions," he told investors. 

Malibu, California USA – November 27, 2020: Sysco delivery truck. (iStock / iStock)

In addition to the labor shortages, Hourican noted that product shortages are also "undoubtedly putting some pressure on our cost to serve at this time." 

During the call, Hourican couldn't predict exactly when inflation will normalize although he told investors that he was "confident" that the company will "see a return to a more balanced supply and demand equation in the future, which will return inflation to more normal levels." 

Sysco said Wednesday that the company has been facing price increases in categories like poultry, beef, paper and disposables.

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However, Sysco isn't alone. 

United Natural Foods Inc., which is another major distributor, told Bloomberg that it was also struggling to meet demand, citing labor shortages and challenges with importing certain goods. 

The company projects "supplier challenges in the short term with gradual improvement through the fall and winter, a spokesperson for the distributor said. 

For now, the company says its "working diligently to recover and bring their shelves back to normal inventory levels as quickly as possible." 

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