“All the challenges thrown at our trade have made life tough and forced unwanted decision-making. Like it or not, this is now the new normal, and we need to get used to it,” writes Beresford-Jones.
Time to jump ship?: Edward Beresford-Jones
Logistics in the wine trade have been challenging for the past three years: Brexit, Covid 19, oil and gas prices, port strikes, and the current situation in Ukraine have all thrown issues that have tested importers, suppliers and freight forwards alike. In some ways, the variety of problems has made working in logistics quite enjoyable, for problem solvers that is. Delays, less services, and rising costs forced importers to think about how margins are affected. The temptation has been to shop around and find someone who can provide a better, cheaper service, but is now the time to jump ship?
When Brexit hit, we all called on our freight forwarders to help us through the paperwork and what needed doing to ensure shipments made it through customs and cleared in the UK without delay. Despite years of notice, the information received was so vast and time-consuming that having a trusted someone who could stay on top of things was vital. Freight-forwarders needed to recruit in order to cope with the mountains of additional paperwork, inevitably leading to surcharges and extra costs passed on to the end users.
Lead times increased due to build-up of lorries at ports, meaning managing expectations became crucial to keep both sales people and customers informed and happy. What used to be an easy two-week turnaround from western Europe to the UK doubled in most cases. This was then compounded by staffing issues at warehouses, another result of the UK leaving the union, meaning further delays to the availability of wines.
All of this ensued after a global pandemic of a magnitude which had not been seen for multiple generations. Demand for containers went through the roof, meaning shipping costs inevitably increased. A quick solution would be to increase margins, but with such an uncertain future and rise of cost of living, this would threaten customers’ satisfaction. Speaking to those in the shipping industry, we all agreed that it was going to take time to get back to normal, and with the pandemic still in full force globally, it was not easy to estimate when that would happen. To top it all, a blockage of one of the world’s busiest shipping canals a year later made it look as though the universe was conspiring against any kind of recovery.
Port strikes in the US and in the UK added further delays, the war in Ukraine increased costs of oil and gas which had already been rising, leading to yet more emergency surcharges on shipments. The pressure to increase prices grew with every new problem.
So, where does this leave us now?
Costs will stabilise, but won’t come down to anything near what we were used to. The situation in the UK currently makes it harder to see a light at the end of the tunnel, and as the governments are keen to point out that this is still a global problem, it will likely go on even if one or more countries come out of the other side.
Some importers can look into alternative shipping methods: the UK is home to some of the Europe’s largest bottling plants, so perhaps shipping in bulk and bottling at destination is an attractive route. However, this would need a radical wholesale change in the wine industry to become an option for everyone.
Consolidation, the grouping of orders together to fill dedicated containers, is a good option especially when shipping from in-demand suppliers who offer small allocations. This can further delay availability, leading back to managing expectations. Smaller importers could group together and share the costs, but trying to be aligned with each other’s needs and expectations can be tricky.
In terms of jumping ship, there are plenty of options when looking for a preferred freight forwarder. Many specialise in certain parts of the world, so could there be a case to have multiple partners? Probably, but this would mean additional management and a risk of upsetting current partners. Wholesale change, or finding a new partner, brings its own risks; but if you are struggling to see any improvement in your current service, it may be wise to see what else is on offer.
All the challenges thrown at our trade have made life tough and forced unwanted decision-making. Like it or not, this is now the new normal, and we need to get used to it. Communication must be crucial throughout by keeping sales teams informed about problems and what the company is doing to mitigate this as much as possible. Client relationship managers can then use their skills to appease customers and inform them about what is happening and what solutions can be provided.
Communicating with suppliers to make them aware of the challenges you are facing and how these might affect them is also critical but, most importantly, is the ability to communicate with freight forwarders. Most have long-standing, happy relationships with their partners, so talking through issues with them and working together can help them to provide the service one would expect. Good communication from freight forwarders to the company is also necessary to keep the importer in the loop, whether it is good or bad news.
So, is it time to jump ship?
This could further complicate what is already an extremely difficult time; my suggestion is to demand better communication, plan to minimise increasing costs as much as possible, and develop and strengthen relationships with existing freight forwarders to help weather the storm. There is no harm in seeing what else is available in case the situation becomes unworkable, but it should be more beneficial to improve what one already has rather than going through further turmoil.
