Source: The Lloyd’s Loading List; BIFA
Date: 18th October 2021
Reports about potential widespread empty shelves this winter due to logistics issues have been exaggerated, with plenty of volumes moving to ensure a broadly adequate supply – as long as consumers don’t engage in widespread panic buying.
The British International Freight Association (BIFA) stressed that freight forwarding companies “remain committed to delivering a suitably festive Yuletide, as we witness a seasonal whirlwind of worry and rumour that this year’s Christmas festivities in around ten weeks may just not happen as a result of the current supply chain challenges”.
BIFA said it “is time to maintain a sense of perspective, or the headlines may become a self-fulfilling prophecy”.
Director General of BIFA, commented: “Many products that consumers are beginning to fear will be absent from shop shelves could well have been shipped and received by retailers already. If we see normal purchasing patterns, we should also see that most of what consumers are seeking will be available to purchase.
“After all, we need to remember that more teu were shipped successfully in August 2021 than in August 2019 before the pandemic. There is plenty of cargo being moved around.”
He continued: “Are there major operational challenges, currently? Yes, of course; but our members and freight forwarders across the world that are responsible for managing the supply chains that underpin global trade are moving ‘hell and high water’ to address them and doing their part to ensure that the forthcoming holiday season will go ahead as well as possible.”
Importance of supply chains highlighted
BIFA believes the latest crunch in global supply chains will act as an opportunity for the industry to demonstrate to the general public both the significance and magnitude of modern supply chains, as well as how vulnerable they can be.
“The wider public may now appreciate why it is known as a supply chain,” BIFA noted. “If one link breaks, such as when in March this year the Suez Canal was blocked for six days by the grounding of a container ship, the chain breaks for everyone.
“The current publicised issues raise further awareness about the importance of the growing and exciting supply chain management and logistics sector. It should also put the precarious balancing act of supply chain management into perspective and hopefully lead to a deeper appreciation from the consumer for end products, and the essential role of the freight industry in delivering them.”
While BIFA “accepts that moving boxes from the ports to destinations inland is one of the biggest issues facing retailers and the freight forwarders that serve them in the run-up to Christmas”, BIFA said they “hope that as port congestion reduces, as it inevitably will, the headline writers will be equally vocal as backlogs are eased and containers are delivered”.
Some of BIFA’s sentiments are shared by a container shipping analyst, who observed that “Christmas is not cancelled” and said that “the current supply chain challenges appear to give rise to ever more overblown press headlines raising fears of a disastrous upcoming holiday season plagued by empty shelves.
“We almost appear to be heading into a state similar to Eastern Europe during the cold war with massive lines outside stores to get the bare essentials if we are to believe the headlines.”
“It might be worthwhile to maintain a sense of perspective”, highlighting that 15.2 million TEU were shipped in August, globally, and noting “this is 620,000 TEU more than August 2019 before the pandemic.”
“In North America, 2.9 million TEU were imported in August, up 340,000 compared to 2019. In Europe, imports were also 2.9 million TEU, up 50,000 compared to 2019.
“There is, thus, no shortage of cargo being moved around.”
“Would importers like to have moved more cargo than this? Yes. And keep in mind that the product may well have been shipped, but is right now stuck in the supply chain related to the inland movement from terminal to the warehouse then to the store.”
Sense of perspective
Will we have empty shelves? That depends a bit on perspective.
“Imagine you want to buy shoes as a Christmas present,” Jensen noted. “You go to the store and suddenly 10% of the shelves are empty. This sounds like confirmation of the headline-grabbing story of widespread shortages.
“However, the reality is that under normal circumstances you might be able to choose between 1000 different types of shoes (to pick a random number). Due to the supply chain crunch, there might now ‘only’ be 900 different types of shoes available. Hence 10% of the shelves are empty.”
But does this mean there is a shortage of shoes? “If that one specific type you absolutely wanted is out of stock, then to you it appears as a catastrophic shortage. But if you just want a functioning pair of shoes, there is still plenty to choose from.”
In conclusion: “In other words, if you are very particular in the type of product you absolutely want to buy, you might be out of luck and have to wait a little longer for your product. But if you are less particular, there will be plenty of products available to buy for Christmas.”
One supply chain stakeholder observed that they had gone to a Toyota dealership last week “and the place was empty. They had one car in stock. I think the automobile vertical is one so dependent on a certain issue (chips) that it’s much worse shape.”
“If you need a car, surely you can then find a different brand. Secondly, the issue with, for example, cars is related to the manufacturing of computer chips and not the container shipping challenges.”
“What I am objecting to is what I see as an increasingly irrational clamour that the container shipping supply chain problems are causing mass shortages of goods which is simply not correct.”
Challenges for importers
Another commentator agreed with the container shipping analyst’s “perspective”, but added that there was “still the challenge for supply chain parties or entrepreneurs to manage the congestion short-term, mid-term and long-term”.
The container shipping analyst responded: “Of course, it is a challenge for the importers and exporters. But the bottom line is that we are still seeing more cargo moved globally than before the pandemic. That means for every importer who is seeing massive supply chain problems there are also importers who are more successful in managing these challenges.”
The container shipping analyst concluded “The consequence is that supply chain management has been catapulted to be a much more important competitive parameter than it used to be; and this means some companies are now more competitive – relative to their peers – and some are less competitive. And – unsurprisingly – the most noise being heard are obviously from the ones who have lost out in this competitive environment, not from the ones who are benefitting from it.”