Winemakers Feel the Pinch as Global Supply Chain Issues Continues
Certain elements operating in the wine market have created a huge obstacle for wine enthusiasts.
As the economy recovers and consumers spend again, the increased volume of imported goods is arriving too quickly for the global supply chain to handle. Add our collective love affair with direct shipping and you get the delays you know, plus more to come, and dramatically higher costs at every logistical link.
Global wine supply chain typically looks like this, excluding variations and storage requirements: grape grower > producer > packer > exporter > shipper > importer > trucker > wholesale distributor > retailer/restaurant/bar.
A procedure that used to take 30 days can now take three months, roughly speaking.
Business as a whole is a component of the issue. To keep costs low, many distributors have historically used a just-in-time system, receiving items as close to when they are actually needed as possible. According to Serge Lozach, managing director of Wine in Motion, an importer based in New Jersey, “just in time no longer exists” today.
Prior to the pandemic, ships outside of U.S. ports used to hold goods-laden containers. The Port of Los Angeles announced on October 13 that it would begin operating 24 hours a day, seven days a week, just like the Port of Long Beach did last month.
The majority of wine that arrives in the United States does not originate on the West Coast; however, these two ports are not the only ones that experience significant delays. Sea-Intelligence, a supply chain analyst, claims that global ocean liners’ schedule reliability reached an all-time low in August 2021.
However, the ships are not to blame. And don’t think that because workers unload 3,500 containers in the early hours of every night, every bottle will be delivered right away.
“The market is putting a lot of pressure on us to complete orders in much less time than is normal and necessary.” —Antonio Mendonça, Portugal’s Bacalhôa Vinhos.
The European Portfolio Director of Cutting-Edge Selections, a distributor based in Ohio, Ann Boucher, attributes delay to friction and deficiencies throughout the entire supply chain. She recently had to postpone a large Bordeaux order at the last minute because the producer didn’t have any boxes to put the wine in.
According to Antonio Mendonça, director of exports for Bacalhôa Vinhos de Portugal, which produces wines like Alianca Vinho Verde, problems like rusty containers with holes started the disruptions last year. Everything required for wine production, including glass, label inks, paper, and cardboard, is currently becoming increasingly scarce.
According to Mendonça, “many imported components are in short supply everywhere, and industries are constantly lagging behind as the imbalance of shipments globally is having a knock-on effect on production.” This is because of the imbalance of shipments.
The problems are the same for everyone in the business. It’s a nightmare from production to getting dry goods to fulfill orders, says Lozach.
And Mendonça asserts: We are under tremendous market pressure to fulfill orders much more quickly than is typically required.
According to Boucher’s estimation, shipping costs have gone up by 55%. Additionally, she mentions that “we now regularly pay demurrage charges” in reference to the utilization of a storage container within a terminal. For instance, approximately 80,000 containers are awaiting unloading at the Port of Savannah.
A lack of truck drivers is another aspect of the issue.
The United States had a shortage of approximately 60,000 drivers prior to the pandemic, as stated by the American Trucking Associations. In part due to pandemic-timed early retirements, this number is expected to rise to 100,000 in the coming years.
The government of the United States and the trucking industry started looking at different options this summer. Some of the options include making it easier for the DMV to speed up the processing of licenses and learner’s permits and lowering the minimum age for commercial driver licensing from 21 to 18 for interstate drivers.
There are fuel shortages at filling stations and airports, space shortages at warehouses, and container shortages—including some instances of pre-holiday hoarding of empty containers—while we wait for teenagers to start hauling oversize vehicles across the nation.
According to Julie Peterson, managing partner of the consulting firm Marq Wine Group, based in Washington, D.C., “the biggest challenge right now is the unpredictability of container supply. “The key has been to be agile. She recalls having to fill a container with 1,250 cases from 26 Georgian wineries in the middle of harvest that she hadn’t anticipated having for two months for ten days
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Peterson says, “It’s hardest on the wineries. “They have to deal with a lot of it, especially during their busiest times.
VignoblExport, a France-based freight forwarder that handles transport and logistics, is headed by Erwan Leteurtre.He switched his business from overseas to air shipments at the beginning of 2021 due to a shortage of space on ships and a significant increase in orders. However, according to Leteurtre, there is also a backlog in the sky. While the carriers increase their means, their costs skyrocket, causing tension for the future.
He is referring to the pressure of passing on the costs of gasoline, raw materials, and space to airlines and shipping companies.
Leteurtre states, “It is indeed a complicated situation. “These costs cause an issue with the market price.
Concerns are shared by the entire sector.
According to Boucher, “increases in costs are not trivial” and “will have to be accounted for at some point. “She, like her peers, is annoyed by missed opportunities; money that hasn’t been spent. Due to constraints in the supply chain, the potential for financial gain is eliminated.
There is the possibility of ordering too much wine or reordering wine that has already been shipped to avoid running out.
According to Boucher, “We are optimistic the sluggishness will improve as countries come out of lockdown, increase manufacturing, and hire more truckers. “However, we worry that inflationary pressures will take a long time to return to normal.
Everyone, from producers to importers to distributors to retail and hospitality establishments to customers, seems to be losing out as the holidays approach. Dry January might need to be moved up because products for the end of the year might be in stores by the beginning of 2022.