Supply chain: Empty container, crisis of lack of capacity, factor of Champagne shortage

In Australia and abroad, empty shipping containers have piled up in ports and ships are scarce – and that now means a Christmas favorite is under threat.

It might be a seaside suburb in the same corner of the Sydney woods as Bondi, but you won’t find a cheerful postcard featuring Port Botany.

This bushy corner of Sydney is full of industry rather than sportswear. Trucks, each loaded with a single container, are rushing incessantly to and from the dozens of ships. But they can’t move fast enough to meet demand.

The huge skyscrapers of shipping containers, stacked in ports around the world, are a sign that all is not well in global supply chains.

Far too many of these steel shells are idle, filled with nothing but air. And there are far too few ships to take them on.

Yet at the same time, retailers are desperately looking for more overseas deliveries to fill the gaps on the shelves as Christmas approaches.

An industry insider told that there are “no easy answers” to supply chain squeeze.

The last product affected by this global wrinkle is alcohol. Retailers are warning customers that supplies of some imported spirits and champagne may be affected, given huge demand during the holiday season.

That’s minor compared to Brits who have been warned to expect gaps on the shelves until potentially 2023.

In a recent report, the Australian Consumer and Competition Commission (ACCC) said a “logistical nightmare” was underway.

“The supply chain has been kept in a state of continued disarray, unable to meet the growing demand for containers,” he said.

Shipping container skyscrapers

Sea containers are the defining characteristic of Port Botany. Behind barbed wire fences, walls of containers – technically known as twenty-foot equivalent units or TEUs – rise skyward.

On one side of the street, a barrier of identical white TEUs from the massive Danish transporter Maersk is easily higher than any local apartment building.

Nearby, a collection of over 200 rust-colored TEUs are neatly piled up, reminiscent of a boat stranded on the brooder. Some towers go up to seven containers.

Australian Peak Shippers Association (APSA) Secretary Paul Zalai told that the large amount of spare containers in Australian ports “caught everyone off guard” in the height of the crisis. pandemic, but the problem had diminished.

But not so elsewhere. In the UK, spare containers were recently stored at disused airfields east of London. In Los Angeles, local residents complained when trucks carrying the huge steel boxes started popping up on local streets as they searched for temporary places to store them.

“The bottom line is an efficient supply of containers and ships to meet a growing need,” Zalai said.

“Logistics nightmare”

Ideally, full containers would enter Australia, be emptied and then filled with Australian goods for shipment overseas.

“In a perfect world, you would have 50% imports and 50% exports,” Peter Van Duyn, maritime logistics expert at the Center for Supply Chains and Logistics, told ‘Deakin University.

” But it is not the case here. Australia has phased out much of its manufacturing, so already a quarter of TEUs are returned empty. “

Transporting empty containers increases costs for shipping lines at the best of times. But Covid-19 made everything worse.

In October, ACCC summed up the problem: “There is an abundance of empty containers, but they are stuck in the wrong places.

“Shipping lines find it easier to build new containers rather than evacuate existing containers,” the government agency said in its container stevedore surveillance report.

Closures and closures of borders had led to an increase in demand for household items which were usually transported in containers. Things like TVs, sneakers, and game consoles.

“At the same time, the pandemic has triggered a cascading effect, with intermittent and continuous shocks throughout the supply chain, depleting shipments and unused port capacity. The supply chain has been kept in a state of continuous disarray, unable to meet the growing demand for containers.

“This represents a logistical nightmare for the industry. “

Schedules of shipping lines that once “ran like clockwork” were stuck, ACCC said.

Bottleneck in the United States combined with closures in China

One of the biggest lingering issues is with the ports of Los Angeles and Long Beach in California, which handle 40% of container traffic in the United States.

Despite the enormous size of the ports, longshoremen cannot cope with the enormous demand for unloading and loading ships.

“About 70 or 80 ships are currently waiting to enter California… and that is reflected in the entire supply chain.” said Mr. van Duyn de Deakin.

In many cases, shipping lines were in such a rush to unload their cargo at ports and return for more that they left without loading any containers – leaving TEUs stranded on the wrong side of the ocean.

Another issue has been China’s stance on Covid-zero. This has seen it shut down entire ports due to a case of Covid, which has further impacted the container supply.

And it’s not just Covid-19 that’s causing problems. The Ever Given vessel blocking the Suez Canal, one of the busiest shipping lanes in the world, did not help. The industrial action of longshoremen in Sydney has also had an impact.

At some point earlier in the year, it was estimated that 30,000 more containers had arrived in Sydney than was left. These thousands of containers were simply piling up in container yards and transport depots waiting to be returned.

Gaps on the shelves

The lack of containers has led to an “astronomical” rise in shipping costs which in turn is fueling prices for consumers and hence inflation.

For retailers, this has resulted in product shipping delays and shelf gaps.

Associated British Ports CEO Henrik Pedersen told a UK industry newspaper Retail Gazette that he would be “positively surprised” if the issue were resolved next year, meaning the chaos could last until 2023.

“When you have congested container ports around the world, it takes a long time to turn things around,” he said, also highlighting a shortage of truck drivers after Brexit in the UK.

Retailers, including Marks & Spencer, have seen empty shelves for some items.

In Australia, imported alcohol is now in the logistical sights.

Endeavor Group, which owns retailers Dan Murphy’s and BWS, blamed “supply chain constraints” for a limit of 12 bottles per person for French champagne brands including Mumm, Pol Roger and Moet.

Coles, owner of Liquorland and First Choice, also confirmed some buying limits, but insisted this was standard practice during peak periods.

How long will the tightening of the supply chain last

APSA’s Mr Zalai told that lack of vessel capacity is now a bigger problem than containers with not enough ships, for example, using key routes from Australia to the Middle East and Southeast Asia, which is crucial for agricultural exports.

“We are delighted that the government has heard our cries and that there is a Productivity Commission review on this matter as there are no easy answers and there must be thorough and independent research,” did he declare.

If national restrictions come back, it could make the problem worse, he said, as Australians spend more money on products for home entertainment.

If that doesn’t happen, there is a way to fix the supply chain issues, van Duyn said.

“Once the holidays are over and people buying less products, the pressure on supply chains will not be so great.

“It is therefore reasonable to hope that things will return to normal and that the astronomical prices currently charged for containers will drop.”

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