Just after weathering the trade tariffs storm, the international wine industry has been swept up in global logistic problems that has impacted suppliers, importers, exporters, distributors, and customers. This has placed pressure on the supply chain to share costs and increase patience, evidenced by many companies big and small.
During an August earnings call, Dollar Tree detailed their experiences of increased costs and delays. Factors included a lack of capacity, high demand, port delays, labor shortages, and more. America’s fifth largest importer in retail, which imports 90,000 containers a year, experienced a 20% increase in the spot market for freight since May 27th. The same report from Business Insider cited a webinar that showed shipping times between Shanghai and Chicago have doubled “to 73 days to 35 days”.
Costco Chief Financial Officer Richard Galanti echoed the pressures of increasing freight in their May earnings call. Inflation and logistics have impacted suppliers, who have been “paying up to double for containers and shipping.” Their products across the board have succumbed to inflationary pressure, notably due to similar factors Dollar Tree cited: a lack of containers, higher freight costs, and port delays.
Wine Searcher sought to shine another light on the challenge to contain costs, warning customers to “prepare for the possibility that your favorite wines may not make it to your local store.” It cited MHW Chief Revenue Officer MaryAnn Pisani, who said, “There are things I’ve never seen in 25 years.” The issues extend even once the container reaches port, where labor shortages and Covid exposures have dramatically slowed movement of goods. This has spiraled into warehouses slowing staging orders, which has also been impacted by a shortage in truckers.
The ripple effect from supplier to shelf has consumed ports and trucking companies. Container ships have been sitting in southern California ports multiple times this year. Truck drivers entering retirement with not as many drivers to replace them has become another layer to the pallet of problems.
Will this resolve itself this year? Analysts and experts are already saying no, predicting potential normalization for 2023. Yet for the trucking crisis? Perhaps we’ll have to wait for autonomous trucks to arrive. Regardless, we all have to be patient and understanding, something that a glass of wine will surely help with.