Supply chain’s perfect storm
By Richard Gyde, managing director of Mila.
Even without the coronavirus pandemic, this is peak season when it comes to importing freight from Asia.
Black Friday, Thanksgiving and Christmas combine to drive huge spikes in demand, and logistics businesses across the west also ramp up their orders to cover Chinese new year shutdowns.
However, this year there’s something of a perfect storm brewing. I’ve started to see some coverage of this in the national press, but it hasn’t been covered in the trade yet, despite the fact that it has the potential to impact on every single business which relies on goods coming into the country, and not just fenestration hardware.
Essentially, we are now seeing massive cuts in air, rail and sea freight capacity with resulting delays and a surge in prices, just at the point when worldwide demand for many goods has reached record levels.
Our logistics partners and our sourcing office in China both tell us that market rates for sea freight have shot up in recent weeks as competition has increased for space on containers. At the same time, many carriers are avoiding the UK altogether or have introduced a UK Port Congestion Surcharge because of the operational difficulties and slow turn around at UK ports. And this is before we even start to factor in any impact that a no-deal Brexit might have.
At Mila we are obviously doing all we can to secure sufficient space for the huge orders we have on the way from our Chinese suppliers. But, along with every other major UK hardware supplier, we face having to pay double, treble or even quadruple the cost for that space if we want to bring those orders in on time.
One logistics company has described the situation in Asia as ‘total meltdown’ and it seems likely that we will see prices in the UK have to rise if we are to have any chance of restoring product availability to normal levels early in 2021.
I am not scaremongering, and I can assure Mila customers that we are very much ahead of the game when it comes to securing the freight capacity we need from what is available. However, I do think the hardware industry has a duty to warn fabricators and installers of what might lie ahead and sound a responsible note of caution so that they can start to factor in yet another consequence of the pandemic.