Asia China Wine

Global wine supply chain buckles under Covid-19, causing severe shipping delays

As holiday season approaches, leading wine merchants and wineries tell Vino Joy News what has transpired the shipping delays this year and the impacts of the delays.

More than 18 months into the pandemic, the vast network of ports, containers and freight companies that move wine around the world is buckling under the ongoing stress of the pandemic, causing severe shipping delays and skyrocketing shipping costs. As holiday season approaches, leading wine merchants and wineries tell Vino Joy News what has transpired and the impacts of the delays. 

Delay, Delay, And Delay

Backlog of shipments, lack of containers, rising costs, port disruptions due to Covid-19 outbreaks means that normal shipping time from Europe and Oceania to Asia has been prolonged from mere weeks to more than three months, at a time when merchants and wineries are looking to replenish inventories for holiday season. 

The disruptions have caused what Bojan Radulovic, Deputy General Manager at Links Concept, described as “a domino effect” since early 2020 when Covid-19 spread out globally.

“When staff from ports are infected, port closes and cargo ships were rejected embarking,” he says.

China’s early economic recovery and export boom also means that container shipping from China to the US and Europe increased during the pandemic, causing a severe shortage of available containers heading to China and rest of Asia from wine producing countries in Europe, USA and New Zealand. “Shipping demand from China to elsewhere surpassed the reverse,” he says. 

Where did my wine go? (pic: Vino Joy News)
Where did my wine go? (pic: Vino Joy News)

In anticipation of the delay, the wine merchant has planned shipment at least three months in advance in preparation for the upcoming high holiday season including October’s Golden week, Christmas and Chinese New Year. 

James Rowell, Private Client Manager at Altaya Wines, agrees that lack of containers from wine producing countries to China and Hong Kong contributed to the delays. What has compounded the problem, according to him, is re-routing and lack of berth availability. 

Wines that were destined to Hong Kong in some cases were rerouted to Shanghai, Singapore or other destinations. “One reason I have heard is lack of available berths in Hong Kong so shipping companies are reluctant to schedule routes here,” he speculated. 

USA Hit the Hardest

According to merchants, the hardest hit place is the US, the world’s biggest wine consumer and also a leading wine producer. 

Ben Cheung, Senior Trading and Brand Manager of the largest wine retailer in Hong Kong Watson’s Wine, told Vino Joy News the wine supplies from the US saw the longest delays among other countries of origin in their wine portfolio.

“Since last December, we have managed to only ship out 1 reefer container,” he revealed, referring to refrigerated containers, which the merchant uses for all its wines. 

Similarly, Links Concept, which distributes a range of premium American wines including Antica, Mayacamas, Continuum and Sine Qua Non, and Altaya Wines whose portfolio includes cult brands like Harlan, Bond, Colgin complained logjams from the US are the worst. 

While the imports from the US received the most concerns within the wine industry here in Hong Kong and mainland China, some other regions in Asia and Europe are no exceptions either. 

“Categories taking the biggest hit are volume movers from all countries like France, Spain, Italy and South America. Champagne seems to be badly affected.” Rowell of Altaya added, noting that the company’s premium US brands still have reasonable stocks in Hong Kong. 

Global wine supply chain is heavily congested, and merchants complain shortage of containers heading to China and Hong Kong. (pic: iStock)

Olivier Hui-Bon-Hoa, the Asia regional director of Badet Clément, saw a significant hit on Hong Kong, Mainland China, Taiwan, Korea and the South East regions. “What used to take 4 to 5 weeks may require 8 to 9 weeks on average between France and Hong Kong or China,” he revealed. 

“With the South East Asia region currently being seriously hit by Covid,  import has significantly slowed down so far,” he added. 

Last year, one of the worst cases he encountered involved a Taiwan customer. The client waited more than 13 weeks for the wine to reach Taiwan. Some of the most serious cases waited 4 weeks just for the freight forwarder to secure a container.

Aside from delay, the congestion caused spiraling costs for ocean freight, which is at least four times more expensive than last year, according to a Wall Street Journal report. It also created a knock-on effect on merchant’s cash flow and liquidity. 

“Consequently our importers are financially  impacted:  cash flow pressure is greater because of longer shipping time, cost of containers and longer customs clearance. Consequently we  are indirectly impacted because of potential payment delay or credit terms extension,” says Hui-Bon-Hoa.

In addition to impacts on downstream importers and distributors, he said the congestion also strained upstream supplies for winery’s production. “We are more directly financially impacted by the upstream side of the supply chain ( rising cost of dry goods because of delay and shortages). Ultimately the impact will be  seen on the wine shop’s shelves or restaurant tables at one point if not already,” he lamented, cautioning that end-consumers will eventually bear the added costs. 

Roberto Cioaca, Managing Director of Hong Kong-based wine company Heritage Wines, told Vino Joy News that the wines from New Zealand, which has imposed strict lockdown measures, experienced delays too.

For his company which leans heavily on Italian wines, he is relieved that shipments from Italy are on time. “If they get delayed a few days, it’s because of the congestion of Hong Kong port,” he said. 

But not all delays are related to logjams. Max de Zarobe, Chairman of the board of Italy’s biodynamic winery Avignonesi, singled out the UK for worst delays. 

“Surprisingly the UK. Delivery that took 5 days can stretch to 2.5 months. But this is attributable to Brexit more than logistics,” he explains. 

However, he cautioned that volume-driven wines will most likely bear the brunt of the skyrocketing logistics costs. “Chilean wines will probably suffer from the soaring freights. Cheap wine needs low freights to be competitive,” he says. 

Scroll to next page to read more.

0 comments on “Global wine supply chain buckles under Covid-19, causing severe shipping delays

Leave a Reply

%d bloggers like this: