It is clear that General Mills and other food companies continue to grapple with ways to deal with what has become a chronically difficult truck freight situation. The company said freight spot prices in February were near 20-year highs. Ultimately, though, it was not the freight supply tightness that prompted the share price selloff. Instead, investors were signaling skepticism over whether General Mills and other companies in the food sector would be able to recover the appreciating freight costs through price increases.
For his part, Jeffrey L. Harmening, General Mills chairman and chief executive officer, said the company had been caught somewhat off guard by how steeply freight and other input costs had moved higher. Still, he insisted the freight challenges were now being addressed through logistics network enhancements and net price realization moves. “It is not something that can't be managed,” he told an investment analyst. The episode underscores how important it is for ingredient suppliers, bakers and other food companies to get ahead of the curve in order to minimize problems emanating from the persistently thorny freight situation.