Logistics - the nightmare before Christmas
A perfect logistical storm is threatening to take the shine off the festive recovery. Nigel Huddleston reports on fears of drinks shortages
Of all the jobs not to have in 2021, logistics planner in a drinks supplier might be top of the list. The year kicked off with panic at UK ports as Brexit brought extra paperwork for shippers and hauliers, and testing requirements for drivers.
A worldwide shortage of shipping containers put further pressure on wine and other drinks being brought to the UK from further afield.
An exodus of EU workers and the summer pingdemic meant further problems domestically, with a shortage of lorry drivers causing some reopened pubs to run dry and threatening to create spaces on supermarket shelves.
Throw into the mix the closure of some hospitality venues because of a labour shortage and there is something of a perfect storm in the beverage supply chain.
Tom Platt, deputy managing director of Liberty Wines, says: “The shortage of lorry drivers in the UK is one of many factors contributing to the increase in wine transportation costs and longer lead times.
“Ongoing issues from both Brexit and the pandemic remain in play.
“Container freight rates are at an all-time high as supply chain disruption, equipment shortages and limited vessel capacity have intensified.
“Related production industries, such as glass manufacturers and printers, have experienced difficulties meeting demand and sourcing raw materials.
“The departure of the UK from the EU has added a minimum of two additional days for paperwork and the potential for customs-related delays.
“Our supply planning team is working on much longer lead times – six to eight weeks from Italy and Spain, where it was previously three to four – to ensure we have stock arriving on time.”
Even in the best of years, product availability and out-of-stocks are among the biggest issues facing the off-trade at Christmas, but this year could see things escalate to previously unseen levels.
Platt is confident Liberty can cope. “Our supply planning has always been rigorous,” he says, “but we have strengthened our team and invested in additional resources.
“We aren’t expecting our customers to see drinks shortages as we have increased stockholding considerably to take into account the delays everyone is experiencing.”
But Andrew Hawes, managing director of Mentzendorff, whose prestigious list includes Bollinger and the Fladgate Partnership’s port brands, thinks Christmas disruption is inevitable.
“It is highly likely that consumers will see shortages on shelves in the peak period,” he says, “and not just on drinks. This is a global situation that, in the UK, has been exacerbated by Brexit.
“The problem of moving stocks into the UK from Europe is [for Mentzendorff], relatively speaking, a greater one than UK driver shortages, which are impacting the next stage of the supply chain.
“We have all grown used to taking unlimited availability of products on-shelf for granted and, given that the UK supply chain is barely managing now, it is unfortunately probable that the inevitable sharply increased demand at Christmas will create out-of-stocks.”
He says the pressure on inbound lead times is increasing costs. “These are impacting margins as, in the short-term, we will not wish to disrupt customers by passing these costs on down the chain,” Hawes adds.
“However, looking ahead they will have to be factored in, when the outlook is clearer.”
Robert Foye, chief executive of Hardys and Echo Falls supplier Accolade Wines, told the BBC in early September that it was facing significant disruption in the supply chain. “These shortages, if they continue, could definitely impact Christmas,” he was quoted as saying.
He updates DR for this article. “At present, we are making good progress with all customers to ensure these disruptions are kept to a minimum, including in the lead-up to the Christmas period,” he says.
Foye is urging the government to respond to pleas from a number of industry sectors to introduce a 12-month Covid recovery visa to ease labour shortages.
“By moving quickly, the UK government may be able to avoid further supply chain bottlenecks in the lead-up to Christmas,” he says.
In beer, where most of the big brands are brewed in the UK, major suppliers seem less spooked by the situation, though some supplies to pubs are being hit by the HGV driver shortage.
AB-Inbev tells DR: “Like many in the industry, some of our customers may be experiencing delays due to external factors such as the shortage of drivers.
“We have been working closely with government departments, stakeholders and industry trade associations to push for a solution to this issue.”
But it adds: “We are not currently experiencing any out-of-stocks with our products.”
A Heineken UK spokesperson says: “We continue to do everything we can to get our beers and ciders to customers, and are keeping them constantly updated. We’re working tirelessly to find solutions to delivery issues.”
A Carlsberg Marston’s spokesperson adds: “We remain impacted by the ongoing shortage of qualified HGV drivers and urgent government intervention is required to address this.
“Our teams are working incredibly hard to make sure we get the beers we brew, and those we wholesale from others, to our customers as best and as quickly as we can.”
In a bid to ease the domestic driver shortages, the government has announced plans to merge the separate tests for driving rigid and articulated trucks, and axe reversing and the coupling and uncoupling of trailers from the main test, but some in the industry have concerns about the impact on road safety.
Courier firm Parcel Hero says: “Splicing and dicing the HGV test is, quite frankly, an astonishing solution to the problem. After most non-skilled EU citizens returned to their home countries in the wake of the Brexit vote, we warned the government of a shortfall of up to 100,000 drivers. Those warnings fell on deaf ears.
“Combined with the government’s dogmatic refusal to allow EU-based drivers to return under temporary skilled-worker permits, the UK’s entire supply chain is consequently on the verge of a major crisis.”
Whatever shortcuts are introduced, there are fears they may be too late to save the Christmas supply chain from disruption.
“Far from unwinding and resolving, the problems appear to be getting worse,” says Hawes at Mentzendorff. “Best advice to everyone in the supply chain – from producers to distributors to customers and to consumers – would be to plan ahead and, where possible, purchase early, as it is certainly far more likely than at any other time in memory that favourite brands and products will not be available in the run-up to Christmas.”