What's Causing the Ammo Shortage?

If you’re out of bullets and the bad guys have breached the wire, there is a genuine reason for concern. If you want to take the kids to the range and don’t have enough ammo, that’s a problem. Bird seasons are on the wane, and if you don’t have enough of the right gauge and shot, that too is a problem! Come to think of it, with one last quail hunt in the offing, it’s a problem I’m wrestling with. Our local dealers’ shelves are almost empty, and my shotshell cupboard is nearly bare. Better make every shot count!

Despite many faults, I am not a conspiracy theorist. I do not accept that manufacturers are in collusion to limit supplies, deprive us of ammunition, or raise prices to inflate their bottom lines. Quite the opposite: All traditional domestic ammunition manufacturers, joined by new suppliers and hitherto-unknown import brands are doing everything possible to increase supplies and get ammunition to us, the consumers. Read: They’re making it as fast as they can!

This does not apply equally to all calibers. Oddballs that I shoot, like .250 Savage and .470 Nitro Express, may remain scarce longer than .308 Winchester and .45 ACP. Manufacturing is not without hiccups; there have been COVID-required quarantines, causing plant and production line shutdowns. This applies to almost all industries, and there are ripple effects. Few ammunition brands manufacture all four components of a metallic cartridge (primer, case, propellant and projectile). When one component runs short, product is delayed.

Despite the challenges, by expanding production and adding new suppliers, ammunition production is up and is exceeding by millions of cartridges the quantities produced in previous years. And yet, shelves remain empty, and prices are skyrocketing to stupid levels. Must be a grand plan, right? No. The simple answer – demand.

No industry can be prepared for a sudden, unprecedented, exponential increase in demand. Even if manufacturers had seen this coming, preparation would have meant storing vast inventory – a very costly measure. Then, when demand returns to near-normalcy, the manufacturers would have to scale back, preferably without closing doors or cutting jobs. As well, manufacturers and dealers alike risk getting stuck with excess inventory that will need to be sold quickly and probably at a loss. That isn’t happening with ammunition right now, but supply-and-demand is a teeter-totter, and the risk will be there when supply catches up with demand. Hunting buddy Gordon Marsh, a storefront and e-commerce retailer, tried patiently to explain some of this to me on a recent deer hunt. Gordon noted, “Consumers never complain when a manufacturer, dealer, or distributor is forced to sell product below cost and lose money!”

Jason Hornady of Hornady Manufacturing explained, “In the past year we’ve had a half-dozen events that have driven sales of firearms. The industry has done a pretty good job; estimates are that every manufacturer is up 30 to 50 percent. The reality is: No one can afford to have an extra, idle factory sitting around waiting for these scenarios. There is no factory that doesn’t want to make as much as it can. We get all kinds of nasty comments about how we should stop making T-shirts and make more ammo. We don’t make our own T-shirts, and even if we did, those machines cannot be converted to make ammunition.”

Despite huge efforts, there is escalating demand, there are shortages, and prices are soaring. Let’s examine these. Demand and shortages go together. There is a finite supply, which developed to meet typical demand. This is not the first time there’s been a “run” on firearms and ammunition, but we haven’t seen anything like this.

Public concern is a major factor. An unprecedented number of new gun owners have joined our ranks. Ammo shelves are pretty thin and so are gunshop display cases, even the used-gun racks that I haunt. Reports suggest there are at least 7 million new gun owners! I see this as a good thing: Millions more voting-age Americans exercising their Second Amendment freedoms. However, for me, it’s not enough to just own firearms, I want everyone to enjoy shooting and become proficient. But, suppose each new gun owner purchased two or three boxes of ammo? That’s an increase of demand measured in hundreds of millions of cartridges, and maybe more than a billion.

Our new gun owners are a factor, but hoarding may be a bigger concern. Oh, yeah, I’m guilty! Early on, I bought 1000 rounds each of 9x19 and 5.56mm. I didn’t need it, haven’t shot it, and wish I’d bought 20-gauge quail loads instead! I didn’t consider the effect if everybody felt compelled to buy more ammo than needed. The ammo supply chain generally runs from manufacturer to distributor to dealer to consumer. I’m a consumer, but I talk to folks at all levels up the chain. The consistent message: “Don’t buy more ammo than you need!”

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I’m not prepared to tell anyone how much ammunition should be on hand for home and personal defense, or to attain and maintain proficiency. I’m also not about to tell how many shotshells I expend for every quail in the bag. There will come a time when supply catches up with demand. The more of us who have the mindset that we must have some huge stash of ammo, the longer we’re going to live with shortages and high prices.

So, when ammo is available, why are consumers paying exorbitant prices for it. The short answer: Some of us are willing to!

With COVID challenges, costs have gone up and prices have increased, but, at the manufacturer level that is maybe 10-15 percent. From there, the supply chain is complicated. Ammunition generally goes from manufacturer to distributor, then to retail outlet and to consumer. At the manufacturer level, firearms prices are controlled by a thing called “Minimum Advertised Price” (MAP): Distributors and dealers will be penalized if they get caught marketing firearms below the manufacturer’s minimum. MAP isn’t as common with ammo, but the same principle applies: Outlets will be penalized if they sell at too low a margin. The intent is to keep the playing field sort of level. Note: There is no maximum advertised price!

As of now, when supply is short and demand is long, some folks are willing to pay more to obtain a product. In a market economy, prices are ultimately controlled by what customers are willing to pay. So, if a box of 9mm ammo retails at $25, but people are willing to pay $50, then that’s what it’s worth. With increased demand and interruptions in the supply chain, both dealers and distributors are receiving less ammunition than before. A brick-and-mortar dealer has fixed overhead (space, utilities, payroll). Instead of receiving, say, 100 boxes of ammo to sell this week and pay those expenses, he may receive 10, but still needs to make adequate revenue from that smaller supply.

Another buying outlet today is the internet, with a lot of sales conducted as auctions. In both direct and internet sales, there are opportunists cruising, trying to purchase quantities of ammo, to be immediately resold at profit. On the internet, they may use “bots,” or programs to expand their ability to search for ammo. In direct sales, many outlets are limiting ammo purchases to one or two boxes, trying to spread the limited supply to as many customers as possible. There are reports of scalpers showing up with a couple dozen human “bots,” employees, friends, and relatives, in order to clean out a store’s limited supply for resale at higher prices.

Headquartered in Shreveport, Sports South is America’s largest sporting goods distributor, handling a large percentage of all ammunition sold.  Their Ronnie Whitten told me, “A factor driving pricing up and causing delay to consumers is the additional time added while ammo is shuffled to final sale locations after purchase by opportunists and bots. Distribution cost has gone up because of increased loss in shipments, increased labor cost in hazard pay, plus freight surge surcharge by FedEx and UPS. Distributors and manufacturers are being approached by dealers and opportunists offering to pay more in order to get extra and to get priority in allocation. A few distributors and manufacturers are giving in to these requests; some distributors gouge just like dealers do. We choose to play the long game and keep our price structure consistent, but these things cause dealers to pass along their increased costs, which raises prices to consumers.”

It’s a complex landscape, and it’s not going to get better for a while. Some manufacturers have suggested they may not fully catch up until 2022! Please keep that in mind while searching (and overpaying) for ammo. Now, if I just could scrounge a couple more boxes of bird loads!