“These delays are outside of our control and we apologise in advance for any disappointment. We are disappointed about the situation too.”
A backlog at key ports has resulted in Aldi products being diverted to other ports around the country, Christie explained. And by the time they are dispatched and packed onto trucks and trains for delivery to the relevant stores, “many unaccounted days” are added to the product’s travel.
“This is an issue we’ve been grappling with for a number of weeks, however, this week’s Christmas Special Buys have been impacted far greater than expected,” she said.
Christie couldn’t offer a date by which the retailer expects the stock to hit stores but said the retailer is “working hard to limit the impact to future Special Buys” in the lead up to Christmas.
Aldi is one of many retailers affected by shipping delays around the country.
Richard Facioni, executive director of Alceon Group and chairman of Mosaic Brands, told Inside Retail that port delays are exacerbating the Covid-related supply chain issues that many brands are still experiencing.
“[Port delays have] caused a real bottleneck with vertical product, but also third-party wholesale product coming in,” he said.
Mosaic Brands includes retailers such as Noni B, Autograph and Crossroads, among others.
If the industrial action isn’t resolved, Facioni thinks it could leave many retailers without sufficient inventory to push through on Black Friday.
“We’re hoping in the next few weeks it gets sorted, but coming into peak trade and you’ve got port delays on top of everything else we’ve had, everyone’s just pulling their hair out,” he said.
What’s the big hold up?
The port delays go back to August when industrial action over pay conditions between the Maritime Union (MUA) and stevedores began. While port operators have since suspended industrial action to allow enterprise bargaining to continue, the impact is still being felt across the supply chain.
Jamie Dixon, director at supply chain consultancy XAct Solutions, told Inside Retail this has resulted in a significant backlog of containers at ports across the country.
“Currently there is a ceasefire between Patricks and MUA on industrial actions until 1st of December and while this has enabled the ports to start moving containers, the backlog is deep,” he said.
The negotiations are still ongoing and the Federal Government recently intervened to push for a resolution.
Added to that, Dixon said shipping companies have also fallen victim to ransomware hackings which has impacted the discharging of empty containers in Australia, “contributing to an unprecedented container imbalance in the supply chain”.
“Some shipping companies are not accepting bookings exporting goods to Australia due to the known delays, which has reduced export capacity and contributed to the pile up of empty containers, particularly in NSW. This is exacerbating the capacity issues at the ports,” he added.
As Australia is largely an import-based economy, Dixon said this will significantly impact the supply chain for the retail and FMCG industries with reduced supply and increased costs for importers.
“This will likely squeeze margins and push prices up for consumers.”
Months of delays ahead
Unfortunately, the delays are expected to last for months, not weeks.
Dixon told Inside Retail that Christmas supply is already impacted and that stevedores will be under intense pressure over the next three weeks to clear the backlog to provide retailers and FMCG companies with their Christmas supply.
“If your cargo hasn’t already left now via ocean freight, there’s a high probability it will be delayed at some point in the supply chain,” Dixon said.
“Retailers and FMCG companies need to act now if they want to ensure they have products available for Christmas or it could result in no stock on the shelves or available online for consumers.”
While inbound shipments are heavily backlogged throughout the country, Dixon said NSW and Victoria are the most heavily impacted states with a 15 to 20 day delay and 11 to 13 day delay respectively.
A costly solution
With the e-commerce boom brought on by Covid-19 prompting Australia Post to bring forward the cut-off date for parcel delivery, retailers will be under even more pressure to meet demands this Christmas.
Many are now seeking to bypass the ports in favour of more reliable forms of transport at this time. But these come at a cost.
“Importers are turning to air freight to ensure cargo arrives before Christmas, however this comes at a higher financial and environmental cost for the importer. Additionally, air freight is already constrained due to the lack of passenger flights which is putting more pressure on the struggling airline industry,” Dixon said.
“To circumvent port delays, importers are also offloading their NSW or Victoria cargo to other states and using transport companies to move cargo interstate, putting pressure on road and rail freight across the country.”
Unfortunately the issues with Australian ports aren’t going to be solved anytime soon.
“The backlog of containers at the ports is too deep and with the industrial action still in contention, we can expect delays and issues running into the first quarter of 2021.”