Analysis: you can blame Covid, Brexit and the Suez Canal hold-up for current supply chain problems

For many of us, the phrase "currently out of stock" is all too familiar. We may have experienced a difficulty in purchasing a particular product or favourite brand online or from the more traditional brick and mortar high street shop or local corner shop,

There are many different reasons which can cause stockouts. One of the most common causes is a disparity between the inventory numbers retailers have on paper (or on screen) and what they actually have on their shelves. These discrepancies are caused by human error, technical issues, shrinkage (the loss of goods due to damage or theft) or a combination of the above. While some retailers may take a reactive approach to stockouts, rather than taking proactive steps to prevent them, retailers can generally proactively avoid out-of-stocks with a little planning and the right approach.

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From RTÉ One News, warning of severe disruption to Irish supply chains after Britain leaves the EU

But the recent phenomena of out of stock cannot be blamed just on poor planning by retailers and requires a more in-depth investigation. In recent decades, the world has become a very small place due to globalisation and advances in logistics and supply chain management. Globalisation refers to the free movement of goods, services, and people across the world and, in supply chain management, it refers to the process in which a business operates on an international scale.

Ireland certainly punches above its weight in industries such as pharmaceuticals, software development and agri-food products due to globalisation and advances in logistics and supply chain management. However, when it comes to globalisation, the big winner is China. According to data from the United Nations Statistics Division, China accounted for 28.7% of global manufacturing output in 2019.

The more globalised the world becomes, the greater the risk of disruption is to supply chains. Five possible sources of disruption to global supply chains are natural disasters, transportation failure, geopolitical instability, price hikes and cyber attacks.

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From RTÉ Radio 1's Morning Ireland, Glyn Roberts from Retail NI on how Northern Ireland shoppers face empty shelves because of issues around new post-Brexit trading arrangements.

The small matter of a global pandemic

It has been over a hundred years since the world last experienced a global pandemic and our supply chains were a little slower and less complicated back in 1918. On January 23rd last year, the Chinese authorities placed the city of Wuhan under quarantine and the rest of the Hubei province a few days later. In the following days and weeks, China made more extreme decisions for lockdowns and factory shutdowns which meant numerous supply chains and factories came to a halt.

Since China is responsible for almost 30% of global manufacturing output, these closures led to significant production delays and product shortages across the globe. In February and March 2020, more mandatory lockdowns and stay-at-home orders followed across most of the developed world, especially Europe. With closures in China and Europe, manufacturing delays and supply disruptions were inevitable.

Travel bans brought passenger air travel to a virtual standstill. As around?40% of annual global air cargo?is typically transported in the belly of passenger aircrafts, this caused further distribution to already struggling supply chains.

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From RTÉ Radio 1's Morning Ireland in March 2020, David Fitzsimons from Retail Excellence on the effects bulk buying on the supply chain

Of course, a natural human response to potential empty shelves is to panic buy essentials. Unfortunately, this behaviour only leads to more empty shelves. Due to the nature of the supply chain disruption, healthcare was overwhelmed with demand for PPE, ventilators and general medical supplies.

Changes in work-practices and a shift to working from home also affected the demand items. As the vaccine rollout continues, we are collectively learning to live with Covid-19. Our supply chains are also adapting and becoming more resilient to the impacts of the pandemic.

The ship that got stuck in the Suez Canal

From March 23rd to 29th, the large container ship Ever Given became horizontally wedged in Egypt’s Suez Canal. The canal’s temporary blockage had a domino effect on global supply chain disruptions as the majority of trade between Asia and Europe relies on the Suez Canal.

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From RTÉ Radio 1's The Business, Graham Parker from Kontainer.com on the problems caused by the Ever Given getting stuck in the Suez Canal in March

The blockage exacerbated problems at already congested ports, railyards, and distribution centres. The Ever Gven problem put a further strain on containership shortages. Most of all, it delayed shipments, including the delivery of raw materials that affected downstream production and the manufacturing of all kinds of consumer goods.

Speaking of geopolitical instability...what about Brexit?

It is over five years since the UK voted to leave the EU and I am fearful that we have yet to experience the full political and economic impact of Brexit. Larger retailers such as Tesco, Marks & Spencer and over 50 other British retailers currently operating in Ireland will eventually face tariffs for re-exporting goods to the EU. To a large extent, Ireland’s existing retail supply chains are still very reliant on distribution hubs that are in located in Britain, though we may see more distribution centres such as Amazon open in Ireland.

In recent months, we have seen a 50% reduction in the use of the Dublin/Holyhead ferry and the UK landbridge. Meanwhile, traffic flow through Rosslare Port increased by 45%, as 12 sailings a week from all Irish ports to the continent increased to six a day. However, these direct routes that circumvent the UK landbridge to the continent take longer, cost more and are more susceptible to adverse weather conditions.

There is no bright side when looking at the impact of Brexit. While there are many reasons for the current out of stock phenomena, Brexit will no doubt have an impact on our shelves in the future.


The views expressed here are those of the author and do not represent or reflect the views of RTÉ