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TREASURY

Supply shift from food services to supermarkets brings new risks for transaction banks

Plugging gaps in fractured supply chains is central to maintaining trade and food security.

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In the UK, supermarkets have started to remove purchase limits on essential items as food hoarding behaviour abates.

Yes, online delivery slots remain elusive, but perhaps the fact that shelves are stacked with toilet roll and tinned tomatoes once again is a sign that panic buying in the UK due to the coronavirus pandemic is starting to slow.

The recent unprecedented demand for food supplies from supermarkets, however, is not sufficient to cover the slump in demand from restaurants, cafes, hotels and bars that have been forced to shut due to Covid-19. 

Travel restrictions, which limit the movement of goods and services, also mean that fresh produce cannot always get to its intended destination.

Farmers across the globe complain that fruit and vegetables are being left to rot and milk is being thrown away because of distribution challenges.

Maintaining resilient supply chains in this new environment is one of the biggest challenges transaction bankers face today.

"The coronavirus pandemic has disrupted domestic and international supply chains across the globe. No one is immune," says Vinay Mendonca, managing director and global head product, propositions and structuring, trade and receivables finance at HSBC.