Firms sourcing goods closer to home as Covid spike hits Asian suppliers
Irish businesses are looking into restructuring their supply chains as “global concerns”, including the pandemic and the war in Ukraine, continue to hit.
Changes include potentially reviewing shipping methods, revising markets they buy goods from and exploring storage needs.
The findings come in a new quarterly report by freight forwarder Woodland Group released earlier this month. It found the first quarter of 2022 had been an “extremely mixed period” for firms at all stages of the supply chain, adding that glimmers of hope had been bookended by far-reaching global challenges.
The report highlighted a “mass over-capacity across European hubs”, slowing the speed of shipments to and from Ireland, with bottlenecks at crucial ports. Congestion in the US and Covid in China were also flagged as slowing Ireland’s global supply network.
On the report’s results, Kevin Brady, managing director of Woodland Ireland, said no one could have “predicted how the start of 2022 would play out.”
Woodland said that a “brief respite and return to normal working practices” had helped the sector at the start of the year. However, China’s rise in Covid-19 cases has stalled the global supply chain’s ability to bounce back.
The rise of Covid in China has also led to disruption and congestion at major ports, including Shanghai. As a result, Woodland said many Irish firms were reviewing regional supply chains, hoping to reduce lead times and increase reliability as Asia becomes less predictable and value for money declines.
Woodland found that sourcing goods closer to home had grown in popularity through 2021 as global pressures mounted. Around a fifth of Woodland’s Irish clients sourcing from Asia enquired into alternative markets to ensure supply.
Brady said Eastern Europe, Turkey and Egypt were areas that gained traction.
In Europe, congestion issues were made worse due to Russia’s war in Ukraine. According to the report, many containers destined for Russia were left at north European ports or returned to their origin due to sanctions. In addition, the report said Russia’s invasion of Ukraine had unsettled Irish trade.
In Ireland, the main concerns within the haulage industry included labour shortages and costs.
Woodland cited a Freight Transport Association Ireland survey of hauliers that found the key concern in the industry is that of skills and driver shortages.
In addition, haulage costs had gone up, primarily due to rising fuel prices. Woodland’s report also flagged a shortage of Irish warehousing space. For example, Woodland cited the vacancy rate for industrial property in the Cork region, which was around 20pc in 2012 and had shrunk to just 2.6pc in the first quarter of 2022.
Blaming inflation and supply chain issues, Woodland added that the cost of building new warehouses had risen to a point where construction slowed while rent and demand grew.
Brady said availability issues had emerged as many clients overstocked due to a “just-in-case rather than just-in-time” policy.
The report found that Ireland’s trade growth had shown promise for 2022, despite cut margins. The drive to fill the skills gap in Irish haulage had also gained traction, with increased lobbying from the sector.