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FEATURE
Will the global supply chain chaos ruin Christmas? The Irish retail supply chain is under significant pressure due to Covid, issues connected to Brexit, and container and haulier driver shortages. Fionnuala Carolan asks how prepared Irish retailers are for the festive period ahead and what the solution is to this supply crisis in the longer term?
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t’s been a bizarre few years for business by any standards and the ramifications of Covid are being keenly felt across the globe. A mixture of factors including worker shortages and port closures, pent-up demand for certain goods and a shortage of containers due to delays at ports, have all put the squeeze on supply chains. The supply chain has never had the opportunity to get back to normal since Covid restrictions have lifted and as a result, the price of shipping goods across the globe has risen substantially. One of the most tangible clues that things were not ‘business as usual’ was when M&S announced last month that it won’t be taking orders from ROI customers for Christmas dinner this year; a clear sign that there is little trust in the supply chain as the retailer would not risk disappointing their valued customers. There is widespread talk of shortages of other Christmas essentials including food, wines and toys as well. The question is how will the bigger shops overcome these shortages in order to make the most of the all-important Christmas season? According to an industry source, wholesale suppliers are predicting that they will be 30% short on what they’ve ordered this Christmas. For smaller retailers, it shouldn’t affect them too much but the bigger retailers, that sell a wider selection of Christmas products like decorations and gifts, will feel the pressure. The majority of electronics, toys, and many other popular Christmas presents are rarely produced in Ireland which is why there is so
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much focus on the international supply chain when it comes to Christmas stock.
Reason for supply chain delays Major port closures across Asia, including the closure of one of the world’s largest container ports in Shenzhen, China in early June for a few weeks due to Covid outbreaks, the massive delays that manifested because of the Ever Given shipping vessel being stuck in the Suez Canal in March for a week and a reduction in container capacity in shipping, have exacerbated these issues. Ikea has become the latest retailer to warn on supply chain problems, saying in late October that stock shortages were likely to last another year. An Ikea spokesperson said: “Keeping Ikea stores and warehouses stocked
has been a challenge. Supply chain disruptions led to a substantial drop in the availability of products that we have yet to recover from.” Clothing brand Nike cited closures of factories in Vietnam for low stock and H&M is dealing with delays to deliveries across Europe. Clothing and furniture retailer Next said stock availability had improved since September but remained challenging, with delays in its international supply chain being compounded by labour shortages in the UK transport and warehousing networks. According to Drewry Shipping, transporting a 40-foot container of cargo by sea from Shanghai to Rotterdam now costs 547% higher than the average over the last five years. Companies are desperately trying to work around the higher costs. Some have stopped exporting to certain locations while others are looking for goods or raw materials from nearer locations, says Philip Damas, founder and operational head of Drewry Supply Chain Advisors. If solutions are not found, it can’t be long before these costs get passed on to consumers.
Food shortages
M&S is unable to offer its ‘Christmas Food to Order’ service to customers in Ireland this year, but stressed that shoppers would still be able to find all their festive treats in its Foodhalls
Food products are equally affected by this. A delay in transporting coffee beans sourced in Asia is causing issues for coffee giant Starbucks and olive growers in Europe are now finding it too expensive to export to the US. Anchovies from Peru have largely stopped being imported into Europe because with the higher transport costs they’re not competitive
