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Lockdown delays supply lines and new warehouses

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Loretta O'Sullivan, chief economist at Bank of Ireland

Loretta O'Sullivan, chief economist at Bank of Ireland

Loretta O'Sullivan, chief economist at Bank of Ireland

The coronavirus lockdown is disrupting the supply chains of most Irish firms and putting the essential construction of warehouses many months behind schedule.

An Ipsos MORI survey of 2,000 firms has found that about two-thirds of industrial, retail and construction companies are suffering supply-chain disruption.

Even a third of services firms - best positioned to work and trade online and least dependent on deliveries of physical goods - cite this as a problem.

That finding is within today's monthly Bank of Ireland Economic Pulse.

The report says consumer and business sentiment has plunged to record lows - far worse than levels registered when fears spiked of a 'no deal' Brexit.

"This month's survey findings are grim in the extreme," said Bank of Ireland chief economist Loretta O'Sullivan.

"With the country more or less in full lockdown, job losses soaring and incomes under pressure, consumer and business confidence both tanked in April."

Real estate adviser Savills, meanwhile, warned that supply shortages would worsen as warehouses fail to be constructed on time.

Savills said 44,000 square metres of warehouses originally were planned for completion this year.

But it said current disruption means only 60pc of depots will be ready by the end of 2020, when the Brexit transition period expires with no successor trade deal yet secured.

Hauliers and logistics chiefs say Ireland must boost its warehouse stock ahead of that uncertain transition, given Ireland's dependence on narrowly timed deliveries from UK distribution centres.

Savills forecast that the prevailing disruption will keep slowing construction of warehouse space through 2021, when a third of the 109,000 square metres of post-Brexit storage facilities planned to be built next year won't be ready.

"A number of developers recently secured planning permission and were gearing up to start construction immediately. These projects will now be delayed until 2021," said Peter Levins, director of Savills Ireland's industrial and logistics division.

"Some may slip into 2022 due to the time it takes to fully develop a new warehousing or logistics building."

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He said Ireland lacked sufficient "good quality modern stock" even before the Covid-19 crisis, and logistics firms require 120,000 square metres in extra space right now.

While demand for storage space has fallen for restaurants, bars and hotels - unavoidable, given that virtually all are closed - that demand is being more than offset by the rising requirements of grocers and online retailers.

Amazon, for example, has just leased its first warehouse here, a 6,800 square metre depot in south-west Dublin, and is eyeing others near Dublin Airport.


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