Just as retailers can open again, the knock-on effects of the Suez Canal blockage on an already stretched supply chain could worsen product shortages, say some experts.
The Construction Leadership Council (CLC) flagged up the Suez Canal blockage as a further blow to the supply chain as demand in many sectors is already outstripping availability.
The vital shipping link was taken out of action on March 23 by the Ever Given container ship and did not reopen until March 29. It is estimated that 10-12% of global trade passes through the canal and the stranded ship held up around $9.6 billion (£7bn) of trade goods each day.
The CLC said: “Unfortunately, this means the availability issues we are currently experiencing are likely to worsen before they improve on imported products such as screws, fixing, plumbing items, sanitaryware, shower enclosures, electrical products and appliances.”
Experts warn that the effects of the blockage could last for months. A spokesman for researcher IHS Markit said: “However long it takes, the damage has been done, with carriers warning to expect months of supply chain disruption and even tighter capacity as Asia imports surge to Europe and North America.”
The International Federation of Freight Forwarders Association (FIATA) said that freight terminals will suffer high levels of congestion and a severe drop in vessel arrivals and container discharge, which will “aggravate the already ongoing shortages of empty containers available at ports”.
This latest development is a double-whammy for a supply chain already severely impacted by the restrictions imposed on manufacturing capacity by the coronavirus pandemic. Manufacturers were already struggling to meet their production targets and feed the surging demand for home and home-improvement products fuelled by people trapped at home under lockdown and with money to spend that would otherwise have been spent on holidays and eating out.
The CLC warned: “All users should plan for increased demand and longer delays, keep open lines of communication with their suppliers and order early for future projects.”
Commenting on the current situation, Bill Miller, managing director of the Kitchen Bathroom Buying Group (KBBG), said: “With independent showrooms in England opening on April 12 and in Scotland later in the month, anything that could lead to delays in supply is very unwelcome. The industry is gearing itself up for what is expected to be a very busy spring and summer trading period due to pent-up demand and the desire of consumers to invest in their home, with a new kitchen or bathroom high on their wish list.”
On a positive note, he added: “I am confident that the kitchen and bathroom suppliers we work with have already built-up their stock levels to meet this anticipated high demand and so this will mitigate any delays caused by the Suez Canal issue.
“However I am concerned that although many of the appliance manufacturers have been able to rebuild some of their stock levels over the past three months, it is still a fragile situation and a large spike in demand could unfortunately lead to a repeat of some of the supply delays seen last year.”
But, he concluded, “independent retailers have always proved themselves to be resilient, so despite whatever issues there may be in the future, I am confident that the independent KBB sector will more than meet these challenges”.
Speaking on behalf of white-good manufacturers association Amdea, chief executive Paul Hide said: “A lot of shipping was diverted south, so that wouldn’t necessarily delay arrival by more than seven to 10 days. Now that freight is flowing again, we believe that any supply constraints as a direct result of this issue will be short-lived. Small appliances from Asia are likely to travel that route, but very few major domestic appliances come from Asia, so we don’t believe supplies of these goods will be affected. However, it is expected that the main impact will be to keep the cost of shipping high.”
In terms of retailers reopening after lockdown, Hide added: “Overall, there is enough stock to go around. Our experience is that all channels have managed to maintain strong sales via click-and-collect and direct-to-home delivery, so we don’t believe that the reopening of retailers, welcome as it is, will result in significant product shortages.”
Appliance shortages have caused some frustrated KBB retailers to buy appliances online. In a recent survey of our kbbreview100 retailer think tank, 97% said they were worried about appliance shortages and 79% of kitchen retailers said they had bought products online to complete orders. Eighty-five per cent of bathroom retailers had concerns about supplies of sanitaryware, sinks and taps.
Commenting on the shortages, Shehryar Khan, a director of Sheraton Interiors in London, said: “The supply issue has certainly been a challenge since the pandemic hit. We saw huge delays mainly from the larger appliance manufacturers, which in some cases have not improved. We have certainly suffered in terms of our bottom line, trying to manage installations with items being delivered after the initial delivery of the kitchen.”
At its recent virtual press conference, BHS spoke of the problems it has had keeping up with demand for appliances. Dr Silke Maurer, chief operating officer at BSH, said: “The pandemic and reduced transport capacities have had an impact on our business. We had delays in deliveries. It led to a situation where we had a certain backlog, depending on the category, and we’re working at high pressure to catch up. For refrigerators and washing machines, for instance, we’ll be able to manage the backlog before the end this year. For other units, we are struggling, but it depends a lot on transport capacity and the availability of components.
“That’s a very unsatisfactory situation for our consumers and us. In an effort to find the best possible solutions together with our suppliers, BSH teams in production, procurement and logistics are pushing the limits of their performance and, thanks to their unflagging dedication, we’re able to deliver a large part of our orders as usual.”
Picture of Ever Given by Kees Torn