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Coca-Cola CEO Concedes Supply Chain Is Now Strained

By James Brumley - Mar 24, 2020 at 1:00PM

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Although most of the beverage giant's capacity is intact, it's struggling to procure materials through normal channels.

It comes as no real surprise, with much of the world in the midst of a lockdown in an effort to contain the coronavirus contagion. Coca-Cola (KO -1.71%) CEO James Quincey confirmed on Tuesday, however, the company's supply chain is "creaking around the world." The revelation was offered in a video interview aired by CNBC's Squawk on the Street, during which Quincey added, "some of the smallest SKUs will have to be left out."

Impasses are found in all directions and at all points of most companies' supply chains. North America moved into the COVID-19 storm already with a truck driver shortage in place, but with shopping habits being altered by the outbreak, that shortage appears exacerbated. Maritime imports into the U.S. are also down, while the cancellation of international flights largely meant to ferry passengers has also reduced U.S. air freight capacity by as much as 85%.

Truck driver in the cab of a rig

Image Source: Getty Images.

Conditions outside of North America are similar. China is now easing its way back to pre-coronavirus conditions, but isn't there yet. India drastically reduced its passenger railroads' capacity last week to stem the spread of COVID-19.

Not all of these bottlenecks directly stymie Coca-Cola's operations, domestically or abroad. Many of these bottlenecks do directly impact many of its suppliers though, creating challenges to the completion of certain products.

Coca-Cola isn't the only consumer-facing company to feel the impact of the global economy's sluggishness. (AMZN 3.60%) cautioned customers on Tuesday that some non-essential purchases may not arrive until the latter part of April. Walmart (WMT 1.32%) has imposed limits on purchases of certain items like cleaning supplies and bottled water, both of which are seeing heightened demand.

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