Will Port of Felixstowe strikes affect Christmas booze stocks?
Sunday saw the start of an eight-day strike by workers at the port of Felixstowe – but what effect will this have on the supply chain as wine stocks start heading to the UK in the build-up for Christmas?
The port of Felixstowe handles more than four million containers and about 2,000 ships each year, and accounts for around 48% of container trade into the UK, according to the Unite union. Currently,1,900 of the Port’s 2,500 dock workers are on day two on the picket line, which is expected to last until Monday, 29 August. It is the first strike at the port in 30 years.
According to the OEC, key import categories include furniture, computers, auto parts as well as clothing, and although it is difficult to get firm figures, industry experts estimate that around 100k Litres of wine are imported through the port on a monthly basis.
As Mark Lansley, owner and CEO at Broadland Drinks points out, “It’s massive, we [ie UK importers] can’t cope without it.”
Currently, around 97% of the 1.2 billion Litres of wine in the UK is imported, of which roughly half comes from the New World, 75% of that comes into the UK via containerised deep sea ports.
What is the immediate impact?
Because the potential for a strike was flagged up around six weeks in advance, importers using the Port of Felixstowe have been able to divert deep sea ships of other ports around the UK.
So Lansley noted that while normally, around 25-30% of its stock would be imported via Felixstowe, the company had moved the majority of this to London Gateway instead, with only around 15% now heading for Felixstowe.
“The trouble is, wine can take six to eight weeks to get here from various countries, so of course once the ship is embarked on its way it’s often hard to change the port [of entry], but we have been moving, spreading [imports] across the ports for quite a while,” he says. “We do have a couple of tanks at Felixstowe that have gone into Belgium, and that’s going to cause us to be short on stock, but we do have safety stocks.”
However, he noted that because global supply chains were so interconnected, one closure would have a large knock-on effect on the others.
“It’s like if the Central line in London is closed, it’s going to affect the traffic levels on the other tube lines,” he explained. “A lot of the ports are working at their capacity anyway. So yes, you will start you’ll see things moving, shunted out to Belgium and Holland to start with. There’ll be a big disruption.”
Furthermore, this latest disruption comes on top of 18 months of well-documented “imbalance” in global supply chains.
Unreliable global shipping
As Richard Lloyd, general manager, European Ops & SC at The Park in Avonmouth explains, “The global shipping reliability has been below 40% for the last 18 months now so we have had to adjust stock holding levels at different points along our supply change so disruption like this latest strike can be absorbed.”
“Unfortunately for the shipping industry disruption like the strike at Felixstowe has become all too common an event over the last year,” he told db.
Impact over Christmas
The timing is particularly notable, as retailers and suppliers start stocking up for Christmas – bulk wine coming in from New World would normally be landing from now through to early October to be bottled in the UK and on shelf in time for Christmas.
As Lansley notes, UK suppliers hold on average one to two months of stock in the supply chain.
“You are going to see stock-outs of certain lines,” he warned.
Fergus Fitzgerald, production director at Adnams, said there had been “small delays” on the small proportion of product coming through Felixstowe, but that it had “sufficient stock” at the moment.
“Supply chains are complex and we have taken steps before this to de-risk our exposure to key products and seasonal demands though with less than 124 days away it will have an impact.”
However, there does not seem to be widespread concern over stock levels yet. The Park’s Richard Lloyd said that stock levels were currently “very healthy” and bottlers were well-prepared.
“We balance our risk to disruption of this kind by using multiple ports of entry so we can flex between them,” he said, noting the main ports The Park currently uses are London Gateway, Southampton and Bristol (and not Felixstowe).
“In addition to holding extra packaged goods stock holding at The Park we have also invested in extra infrastructure that allows us to now hold 250 containers of bulk wine on site which ensures we have a buffer of wine to maintain throughout through our packaging lines.”
Similarly around 85% of wine for both Lanchester Wines and Greencroft Bottling ship via Teesport or the Port of Tyne.