OPINION: “You’ll never guess what Waitrose is missing today,” my neighbor stammered out the garage door.
“Bottled water is gone, the shelves are empty.”
“Thank goodness it always comes out of the tap” was my response, followed by “what else?” (In case something is really bothering me).
Without sounding too cheesy, the resilience of the global supply chain is a standard neighborhood cat in Britain. New Zealand has certainly felt the pressure from building materials, but be prepared for the worst to come.
* Beer, chicken and now carbon dioxide: why Britain’s shortages keep coming
* Covid is a red flag for New Zealand’s fragile supply chain, union says
* “A few tough weeks” ahead for New Zealand’s supply chain with two out of three Interislander ferries out of service
* Yes, the supply chain cranky will probably steal Christmas again
The issue was recently highlighted in the media by Professor David Rob of the University of Auckland when he spoke about the supplies of imported goods, baking ingredients, plastic packaging and even toilet paper. under pressure as the Kiwi holiday season approaches.
And that’s why Christmas came before Halloween in the UK. Supermarket shelves have big gaps every week with large signs apologizing for supply issues.
While some joke that panettone, tarts and boxes of Quality Street chocolates are being used to fill the gaps, supermarkets are issuing warnings about growing food shortages and suggesting it would be wise to stock up early to Xmas.
It’s September and we haven’t seen the Halloween ghosts and pumpkins yet, so it’s pretty baffling.
Supermarket shortages are no lie. I see them every day. In the past two weeks, there has been no cling film or trash bag for days. A global shortage of raw materials in the plastics industry is to blame, especially resin.
Try to book a UK blood test and you will get a window in about seven to 10 days. Why? Because the plastic vials they collect blood in are weak and GPs have been asked to prioritize cases.
Problems with the UK food supply chain are due to a severe shortage of truck drivers (estimated at 100,000 people). Salary offers of Â£ 70,000 (approx. NZ $ 140,000) are now being reported, along with login bonuses.
In addition, there are estimates that the entire farm-to-fork chain is short of 500,000 workers.
A combination of Brexit and Covid
Drivers disappeared in Europe during the pandemic and took on jobs from home, paid by the kilometer. Brexit causes queues at borders for truckers and additional red tape, leading to unpaid delays. The hassle of driving UK goods, along with tax rules and currency movements, have forced drivers to stay in Europe.
The blockages then compounded the problem with a huge delay in testing for the new pilots. While this sounds like a UK-centric issue, each nation faces its own unique storm combination.
New Zealand is not drastically different, with labor shortages due to border closures and a huge reliance on shipping and air freight to a remote location. Truck shortages in Dover or container shortages in Auckland point in the same direction.
Right now our economy is pivoting on the corner of a container. Our perfect storm is our lack of manpower and lack of freight. The freight shortage of our imported food and other essentials puts us at risk on one side of the balance sheet, and it’s a double whammy for exports.
We could grow our economy and increase export production, but the lack of freight could ruin everything. It is no wonder that the Australian government has just launched an âOffice of Supply Chain Resilienceâ.
Given our exposure to this risk, it’s probably time to create something similar and give it a high political priority. While some work has been done to grease the supply chain in the APEC region, it is not enough.
In the UK, the cost of a 40ft container has increased by 600%, with some reports citing between 500 and 800%. Small Irish importers have spoken of 20-foot container prices ranging from $ 1,740 to over $ 15,000. One wonders if the oil crisis of the 1970s is about to become the maritime crisis of the 2020s.
Where have all the containers gone, you ask? Asia recovered from the pandemic and resumed its exports before the rest of the world. The containers left China, but did not return quickly due to the lockdowns.
Out of 100 containers arriving in North America, only 40 were re-exported. There have been significant backlogs with containers in the wrong places. Labor shortages have caused delays in unloading containers inland and some shipping companies no longer allow this. The route from Beijing to Chicago now takes 70 days compared to 30 days.
Consumer demand is the other important factor. During lockdown and beyond, consumers around the world have shifted from purchasing services (travel and events) to real goods.
It’s Sunday afternoon I’m writing this and the Amazon courier just passed. The demand for stay-at-home has filled more and more containers around the world. Then we had the Suez Canal traffic jam which added to the woes. Meanwhile, the world relies quite heavily on China for the production of new containers, and prices have increased along with rental prices.
The gas crisis comes on top of the maritime transport crisis
Gas is the next product to add to the Perfect Storm in the UK. The Russians are playing political games with gas supplies across Europe and are accused by 40 MEPs of trying to hamper post-pandemic economic growth.
Gas has become so expensive (wholesale prices up 70% in one month) that a US company with fertilizer factories in the UK has just closed.
Carbon dioxide is a by-product of the fertilizer industry and this company controls 60 percent of UK supplies.
Everything from carbonated drinks to meat products is affected, as CO2 is used in stunning animals before slaughter and in refrigeration with dry ice. It is also a preservative to keep food fresh and is needed in critical industries, from hospital surgery to the nuclear industry.
Two lessons emerge from this. As a small country in the Pacific, we need to pay close attention to our supply chains and identify how we can cover our risks in the freight industry.
Trade agreements, international relations and how we align ourselves politically will be crucial in helping both importers and exporters become freight efficient.
– Janine Starks is the author of www.moneytips.nz and can be contacted at [email protected] She is a financial commentator with expertise in banking, personal finance and fund management. Opinions are a personal point of view and general in nature. They do not constitute a recommendation for an individual to buy or sell a financial product. Readers should always seek specific independent financial advice tailored to their own circumstances.