'Concertina effect': Supply chain and shipping disruption could last 'the entirety of 2022'

Once goods arrive in Ireland, a shortage of truck drivers is causing delays to final deliveries.

IRISH CONSUMERS AND BUSINESSES can expect little relief in the short term from the supply bottlenecks and disruption that have heaped transport costs on importers this year, supply chain experts have warned.

Major congestion at the main European feeder ports serving Ireland  — Antwerp and Rotterdam — continues to delay the flow of goods from Asia to Irish ports. 

Once the goods have arrived in Ireland, a long-flagged shortage of truck drivers — exacerbated by Brexit and the pandemic — is causing further delays.

In the run-up to Christmas, Irish haulage infrastructure is only getting “tighter” with delays of up to a week for deliveries, according to a report by Woodland Group, a UK supply chain management and consulting company with a presence in Ireland.

“Whereas we used to be able to ring one of our [trucking companies] and get a delivery, even within the next 48 hours without problems. You’re talking now potentially a week to get something delivered,” Kevin Brady, managing director at Woodland Group’s Irish arm, told The Journal.

In its ‘Asia-Ireland Supply Chain Impact Report’, published last month, Woodland cautioned importers and exporters that there is “is no quick fix” to the global disruption. Businesses and consumers can expect delays and shipping rates to remain elevated until at least Chinese New Year in February 2022, the report warned.

But in an updated version, seen by The Journal, Woodland is telling its customers that “these problems could last the entirety of 2022”.

‘Key factors’

Trade links with Asia — particularly China, sometimes referred to as the ‘factory of the world’ — are crucial for Ireland, the report highlights.

According to Woodland’s analysis, goods from Asian countries represented 15% of Ireland’s total imports in 2020, worth €10 billion, €6 billion of which came from China alone — up from €5.1 billion in 2019.

But the “growth rate of imports” from China has slowed in the second half of 2021. Delayed shipping timeframes and increased costs — due to skyrocketing freight prices — are the “key factors” in this decline, according to the report.

Covid outbreaks in China — which have resulted in the temporary closures of Ningbo, Shanghai and other ports — coupled with pandemic-related labour shortages have resulted in “mass congestion” in some cases.

Typhoon In-Fa, which struck China in July, also caused delays, Woodland said.

The cost of shipping goods from Asia to Ireland, meanwhile, has ballooned to a “record high level” over the past year or so. This is down to a number of factors including booming post-lockdown consumer demand in many European countries, a shortage of freight containers and backlogs of ships queuing to enter ports.

Symptoms of this global malaise have been generating headlines across the world.

Just this week, there were a record 77 ships sitting off the twin ports of Los Angeles and Long Beach in California.

container-ships-wait-off-the-coast-of-the-congested-ports-of-los-angeles-and-long-beach-in-long-beach-california-u-s-october-1-2021-reuters-alan-devall Container shps queing off the congested ports of Long Beach and Los Angeles in the US earlier this month. Alamy Stock Photo Alamy Stock Photo

“It’s a case of elevated demand,” Kevin Brady told The Journal. “We saw this last year in the run-up to Thanksgiving in the US. But it’s definitely a worsening situation from last year.”

Longer waits for berths mean disrupted shipping schedules, disrupting the rhythm of global trade flows and causing a ripple effect of delays across the globe. 

And European ports haven’t escaped the chaos, Brady said.

For getting containers off mother vessels [from Asia] in those base ports like Antwerp, Rotterdam and Zebrugge and getting them shipped off [to Ireland] on smaller feeder vessels, we’re talking about delays of anything between one and two weeks.

This process of loading goods from one ship to another to be brought to their final destination is called ‘transhipment’.  

Delays at major transhipment ports, both in Europe and Asia, are now beginning to impact Irish exporters, the Woodland report highlights.

They are seeing a “25-30% increase in pricing to their goods” although Irish exports, in general, have performed very well this year, led by the booming pharmaceutical industry.

‘Pinch points’

Happily, however, Irish ports like Dublin, Cork and Rosslare have coped “very well” with the disruption, Brady said.  

“There are always specific times for pinch points,” he explained. “But I think the big problems have been at origin in Asia or the transhipment ports in Europe. In fairness to Irish ports, we haven’t had a huge amount of problems. 

Where issues are cropping up in Ireland, however, are once the goods have arrived here and need to be delivered to their final destination, he said.

Although not nearly as acute as the situation in the UK, Brady said there are definitely “pressure points” emerging, which are having an impact on “final deliveries”.

Haulage companies have sounded the alarm in recent weeks about a long-standing shortage of drivers, a structural issue within the sector that has been made worse by Brexit and the pandemic. 

Earlier this month, hauliers told The Journal that many Eastern European drivers used to drive UK landbridge routes from Ireland to mainland Europe. But since Brexit, those routes have become more difficult, the result of extra regulatory and customs checks, resulting in long delays. 

So many drivers have gone back to Poland, and to the [former] Eastern bloc countries, and they avoided the hassle that way,” Wexford TD Verona Murphy — a former president of the IRHA — said in early October.

Speaking to The Journal this week, Aidan Flynn, chief executive of the Freight Transport Association of Ireland said the industry has been highlighting this issue for years.

‘Concertina effect’ 

“Our reference point for this is the Forfás report from 2015,” Flynn said.

It estimated that there “would be 33,000 job openings in the freight distribution sector up to 2025,” he explained. “About 7,500 of those would be for drivers because of an ageing workforce. So it’s not a new phenomenon.”

But the shortage has definitely been “exacerbated” by the Covid-19 pandemic, not just in Ireland but across Europe, Flynn added.

“The likes of Germany have a shortage of about 80,000 drivers. Britain has obviously highlighted the fact that they have a shortage in excess of 100,000. France has shortages and so on,” Flynn said.

The situation has been made worse in the last six months due to the “uncertainty within the industry”, he explained, with many businesses “closing and then starting up again and then closing” due to public health restrictions. 

However, Flynn said he believes the actual shortage peaked in about September. 

“Yes, there’s gonna be challenges within the supply chain for Christmas,” he said. 

But they’re more linked to global supply disruption. It’s this kind of concertina thing where you have delays and then all of a sudden you’ve got lots of products being delivered at the same time… I suppose there is a little bit of chaos built into the supply chain now because of the uncertainty.

This week, Minister of State for Business, Employment and Retail Damien English announced that the Government will scrap the quota on the number of non-EU drivers allowed to work in Ireland.

In a statement, he said removing the cap “will support the work of those businesses responsible for importing and exporting consumer goods and products to and from Ireland”.

Flynn said the move is welcome but it’s unlikely to have much of an impact in the short term.

“The demand for the permits in the last six or seven months has increased significantly and I think removing the cap definitely helps out,” he said.

But he said that competition for drivers is a “pan-European and a global issue” and FTA Ireland is focused on raising “awareness of the industry” domestically and trying to attract drivers on a local basis. 

Earlier this week, Eugene Drennan, President of the Irish Road Haulage Association told The Journal that many businesses using trucking companies have “steadfastly refused” to accept any increase to transport rates, despite the cost increases that trucking companies have incurred this year.

In the lead-in to what could be a very challenging Christmas, Flynn said the haulage sector and “drivers in particular need to be afforded respect” by businesses and consumers.

“They need to understand the actual value of the haulage sector in terms of their associations and arrangements with them,” he said. “These guys are also faced with massive increases in operational expenses due to the carbon tax increases the cost of fuel.” 

As for shipping prices and transport costs, the next few weeks will be telling, said Kevin Brady, with many major companies due to lock in their rate agreements with shipping companies for the coming year.

Those deals will “basically set the precedent for the rates for 2022″, he said.

“So, really, we’re just waiting on those big-ticket items to be concluded — and then that sets the tone, really, for everybody else.” 

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