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Supply Chain – The Shipping Forecast
d=”standfirst”>The more accurately you can predict levels of demand, the less likely you are to experience hitches and glitches in the supply chain, says Patrick Schmitt
If you thought getting the grapes from the vineyard to the winery is tricky, try transporting the bottle from the cellar to its final point of sale – which might be a retailer some 2,000 miles away located in a medieval city centre, with a one-way system, no parking and an army of traffic wardens big enough to overthrow an African dictatorship. The process is far from easy and can involve several forms of transport, all of them subject to delays. However, there are measures to reduce the expense and improve the reliability of wine transportation, and plenty of software to help trace that held-up case, meaning the amount of unsold, warehoused stock can be minimised. Anyway, let’s follow the bottle.
The sea side
Firstly, imagine it’s a New World brand heading for Britain and we’re beginning the initial major leg of its journey – its time at sea. This usually proves the longest and most costly part of any product’s passage, and for this reason the shipper and supplier ideally want full and large loads to justify the expense. The distributor and/or retailer, on the other hand, will want regular and small deliveries, because excess stock means unsold capital, while they will also want consistent time periods between placing an order and arrival of the goods. A solution? One could be JF Hillebrand’s Deep Sea Groupage. This is because it involves importers sharing loads to reduce costs individually, while creating a full container for the shipper.
In return, Hillebrand guarantees a fortnightly departure from deep sea areas direct to the UK, which includes the main New World wine trade lanes – Australia, Chile, Argentina and California. In effect, Hillebrand carries the risk of part-filled loads while giving importers known and fixed arrival times for the future. And such predictability, can be used by importers “to maintain better levels of stock availability with more manageable levels of stock” according to David Mawer, commercial director at Hillebrand. “In simple terms there’s a balance for the customer in terms of maintaining high levels of stock availability on the shelf without maintaining huge levels of stock in the UK,” he adds. “With traditional groupage methods, full loads may have forced importers to hold six to 12 months of stock – a situation with both financial implications and ones concerning freshness of stock,” he notes.
A question of capacity
However, despite Hillebrand’s initiative to ensure regular and predictable wine supplies from deep sea areas, whatever the size of the load, there are other issues when it comes to wine transportation that are not solved by simply instigating clockwork-like container shipping schedules. So, if we are to continue to follow the bottle, the next leg is dependent partly on better forecasting prior to shipping in the first place, and partly on a more strategic approach to the last leg of the wine’s time at sea. This is because there is a global shortage of shipping services relative to volumes being transported, resulting in a shortage of vessel space. Furthermore, major ports around the world are overcrowded. “Global volumes of business are increasing ahead of expectations,” says Mawer, “leading to a lag in shipping services. Carriers are facing overbooking,” he continues, “and are having to turn cargo away.
“We have a commitment with shippers that they have to take our cargo, the challenge has been managing urgent short notice requirements; before, there was space for these.”
Mawer urges importers to “think about this issue in their pre-Christmas planning” because if they all order and plan to ship stock at the same time “it leads to a huge peak when space is already at capacity”. Instead, he suggests perhaps bringing in stock a “little earlier so there are no nasty surprises”. And, interestingly, Eric Wright, wine and spirits operations director for Kuehne & Nagel, believes this shortage of shipping from deep sea areas is actually encouraging customers to focus more strongly on European wines, “so you are starting to see an increase in European movements again,” he says.
When it comes to that final part of the waterborne journey, unloading at the last port of call, it seems it is no longer feasible for a shipper to rely on just one port per country. In Britain in particular, the southeast ports are not only crowded, but so are the roads in and around the area, while the region is also suffering a shortage of drivers. “We have a tremendous problem in this country with UK haulage. Apart from the fact there are traffic jams and accidents there’s a distinct lack of drivers – particularly professional drivers – and with volumes still increasing how do you cope with that?” asks Wright, before adding, “We’ve been in negotiations for many months and have started to put stock on feeder vessels. So the mother vessel, instead of calling at Felixstowe, calls at, say, Antwerp and then we get the containers put onto feeder vessels and fed into three or four different ports in the country. That then lifts the load away from the main ports. It also gives our customers the potential to look at moving a distribution centre and there is the potential for the customer to make savings.”
The long and winding …
Which leads us to the final stage in the transportation of wine – its land-based journey. “This is one area which is becoming very difficult to control,” comments Wright. “I can’t remember the exact figures but the FTA [Freight Transport Association] identified along with the RHA [Road Haulage Association] the fact that this country is probably short of 20,000 to 30,000 professional drivers.” Certainly the problems caused by this issue are to some extent avoided by shipping to ports near to the final destination for the products, but it can also be alleviated by using trains where possible. “Road congestion around the southeast and driver and hauler shortage means the operators and ourselves are looking to develop new rail services to get the cargo out and up country to the Midlands and further north by rail, and then use shorter runs by road,” says Mawer. Similarly, Simon Williams, ADUK supply chain director, gets round the problem partly by ensuring most containers “go into Rotterdam and then onto feeder vessels to places in the north of England like Grangemouth, but also we are using rail, and there are a number of rail movements from Scotland into Europe”.
But this still leaves those final few yards, a stage when the bottle must experience this country’s compact city centres with strict parking restrictions. The horeca trade is particularly headache-inducing when it comes to wine supplying, according to Jeremy Pearson from London City Bond, a company with 80 vans on the road every day servicing this sector. “The amounts are small, bottle picking is intense and the delivery windows are difficult – often there is a late-morning opening and the wine must be delivered before service starts. It can be a double man operation because you are in a red line area and often you can’t take a seven and a half tonner [truck] to where the restaurant is.” Of course, with such demanding deliveries it’s best to minimise the number of visits; something Cert has attempted with its transport management system, which, linked to its bonded warehouse management system, means orders can be tracked and later – hopefully – consolidated. “So a wine bar receives one delivery rather than three,” says Jeff Stanton, chief executive of the Cert Group. “It is a tool to enable you to see all orders going through and to manage them in the most effective way,” he adds.
But, ignoring unexpected traffic and unforgiving meter maids, modern day transportation is more reliable, and thus predictable. Furthermore, a highly visible supply chain means even delayed stock can be planned for. But, with such advancements, surely the need for a warehouse – a store for unsold stock – will soon become redundant? “In a perfect supply chain you wouldn’t have stock,” comments Stanton (that is ignoring wine put into bond as an investment). However, the issue of unsold stock still arises due to inaccurate human judgement of future demand. “The most unreliable element is the ability of the customer to forecast,” continues Stanton. “We’ve already planned for Christmas, based on what customers have told us, but I know we will be wrong because forecasting is difficult; things don’t always go to plan.
“The warehouse is the cover for an inefficient supply chain and most customers would take the view that it is better to pay the cost of financing stock than not having it and lose out on a sale if the demand suddenly appears.” Finally, he adds, “Things have become more efficient, but I can’t believe I’ll see a supply chain with hardly any stock in my lifetime.”