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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.

Solutions

China wine imports
Facing wine delays, merchants are stockpiling to buffer blows (pic: stock image)

To cope with the delay, Bojan Radulovic of  Links Concept, planned an extra 3 months of stock ahead. “Despite doing so, I’m still not confident shipment for the festive seasons could arrive on time.”

Roberto Cioaca of Heritage Wines says advance ordering would buffer the blow but it also adds on storage costs especially for a city like Hong Kong where space is limited and expensive. “The only thing we can do is to order more wines than we need, trying to create a buffer stock but it increases our storage costs, which are huge,” he says. 

For James Rowell of Altaya Wines and Olivier Hui-Bon-Hoa, they admitted there are still a lot of uncertainties and it’s challenging to predict how long the congestion is going to continue.

“As the situation is so unpredictable it’s very hard to anticipate. I do expect there to be stock shortages on certain lines from now through to Chinese New Year and beyond,” says Rowell. 

“Ultimately, It is the very fluid situation of the whole shipping and logistic system that makes our activity more complicated and challenging together with not knowing what could happen next with regard to Covid outbreak or worsening of sanitary situation in a given market,” says Hui-Bon-Hoa.   

Highlights of quotes (pic: Vino Joy News)
Highlights of quotes (pic: Vino Joy News)

In retrospect, the congestion is a wake-up call for global wine supply chain, says de Zarobe, who was in the shipping industry before Avignonesi. “The Container lines were running like Swiss clocks on an extremely tight schedule. No one realised how lucky they were to order online a product on the other side of the planet and have it delivered to their doorstep in no time,” de Zarobe commented.

“Covid has disrupted this well-oiled clock and caused congestion at ports. Tonnage at anchor waiting to berth is not sailing around the world, suddenly the supply tonnage shrank and the all logistic chain ran amok.”

Air Freight Can Help, But Costly

When maritime transport is facing difficulties, air freight can be an alternative but most merchants and wineries ruled out the option as it can cost up to 10 times of ocean shipping.

“If I have a choice, I won’t send by air freight…The air freight cost is 10 times more than ocean freight cost,” Cheung of Watson’s Wine said.

Moreover, even when merchants are willing to splurge on hiked airfreight costs, availability is still very much up in the air.  Cheung’s team at last decided to use air freight only on the US wine as they are running out of stock for 8 weeks. 

Air freight in covid era costs 10 times more expensive than ocean freight (pic: Vino Joy News)
Air freight in covid era costs 10 times more expensive than ocean freight (pic: Vino Joy News)

Radulovic of Links Concept rejected air freight outright. According to him the shortage of shipping has driven up demand for air freight. As a result, civil aircrafts are heavily stretched, which means cargo prices went up even further. 

Asked if he considers air freight, he replied resolutely, “Never – in fact the increase in air freight fee is more severe than that for shipment. In normal days, many of the stocks are delivered by civil aircraft due to the fact that the capacity of civil aircraft carriage outweighs the cargo planes. In COVID era when there’s miniscule civil plane, the price of cargo plane increased a lot,” he says. 

Cioaca of Heritage Wines agrees that air freight is not a feasible option. “First, because there is not much space available in the commercial planes. Second, because the costs are prohibitive,” he explains. 

In rare cases, Rowell adopted air freight only for the expensive and premium wine.

“Air freight is more expensive than before and it’s hard to book a slot. Some companies specialising in high end wines have regular slots booked on a long term basis with costs locked in. They are obviously in a better place to cope with this situation,” Rowell said. 

The shipping delays and high costs for air freight has driven wineries to explore other more traditional options such as train freight. Hui-Bon-Hoa of Badet Clement is in talks with importers who are considering train freight for the China market. He is actively asking experts in order to ensure his company has reliable stock supply, while he’s cautious to add that price hikes are evident in all modes of transportation in Covid era.

“I feel that  anticipating and planning your order and needs is the solution for our client to optimize order consolidation,  anticipate shipping out of containers to get the goods on time in their own market,” he says.   

Facing the unprecedented global pandemic, winemakers and merchants strived to come up with strategies to deliver their products, with no clear end to pandemic in sight.

Amid the uncertainties, one thing guaranteed is their dedication in providing the best they can. “What we can do is just prepare for the worst… We need to provide some positive things for the customers here in Hong Kong. That is at least what we can do.,” Cheung said. 

Additional reporting by Ning Sang Lawati

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