It’s about to get weird Another new normal for the supply chain

IT’S ABOUT TO GET WEIRD

Another new normal for the supply chain

Manufacturing stoppages, shipping shortages, and supply chain disruptions are already causing bottlenecks and backlogs in ports around the world resulting in massive delays in all sectors of the economy.

The global pandemic was the first big kink in the supply chain, with the temporary closures of many manufacturing facilities overseas. Major weather events paralyzed transport routes, and a big ol’ ship – one of the largest container ships ever built - famously wedged itself in the Suez Canal plugging up worldwide shipping for six days and freezing nearly $10 billion in trade per day. All this showed the fragility of our supply chain and the power of the ripple effect.

Those in the winery industry are definitely feeling the squeeze. With harvest season approaching, the pressure in on to ensure wineries have packaging and material to produce and get their products to market.

“It’s a huge challenge and so many businesses are affected by the current condition of the supply chain,” says Christa-Lee McWatters, TIME Family of Wines in Penticton, B.C. “We placed our order for glass in August and we’re hoping to get it in time for bottling in July,” she says. “We’ll need to put our order in now for next year at a time when we don’t even know what grapes we’ll have.”

With factories oversees still not back to full operating capacity since before the pandemic, production remains significantly low and producers are faced with major delays, increased freight charges, and higher costs to produce.

“In our industry, we are seeing cost increases on almost all materials, including glass, bottles, labels, and glue, on top of freight increases and additional surcharges,” says McWatters, adding that freight surcharges have increased drastically. For example, glass shipments arriving from China will see a 30-40 per cent surcharge for fuel, and shipping containers are now three times the cost of what they were before the pandemic. She also says finished goods being shipped to customers domestically are getting a 55 per cent fuel surcharge on top of freight charges.

“Every supplier is dealing with the same issue because a lot of the materials are not domestically produced,” she says.

Bailey Williamson, Blue Grouse Estate Winery.

Christine Coletta, Okanagan Crush Pad Winery. Credit: Jon Adrian.

“You order so well in advance, and then some product arrives immediately, and some pieces of the equation don’t come at all.”

As an alternative, some producers have turned to airfreight for certain products but that too is taking longer and costing more than pre-pandemic days. Another solution is to order sooner and order more. While ordering double and stockpiling as future insurance is an option, many small wineries do not have the space to warehouse items at their facilities and leasing expensive warehouse space adds to carrying costs.

“We’ve experienced what a lot of our fellow wineries and producers have experienced, says Christine Coletta, Okanagan Crush Pad in Summerland, B.C. Coletta says that the organic winery ordered their glass last year and have already received their supply. However, while they are prepared for bottling, other projects are on hold. “I ordered metal posts from Italy one year in advance and I thought I was on top of it,” she says. “But there’s no container. While the product is available and ready, the manufacturers are unable to find a container to ship it to us.”

The shortage of containers has further been impacted by domestic transportation of goods with a shortage of truck drivers, crucial in getting product to the public. So, when product does arrive into port, it sits until trucks are available and is then subject to storage fees until delivered.

“You begin to second guess all your decisions,” says Coletta. “You order so well in advance, and then some

Christa-Lee McWatters, TIME Family of Wines, Photo: Chris Stenberg.

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product arrives immediately, and some pieces of the equation don’t come at all. So, it’s very inconsistent and there’s no rhyme or reason across the spectrum of supplies that you can rely on.”

With empty shelves in grocery stores and long delays for consumer goods such as cars, large appliances, and any part necessary to repair pretty much anything; consumers have experienced this directly.

“I do believe that for the next year and half this is going to continue,” says Coletta. “The global marketplace is fine and dandy, but I think we need to be a little bit more self-reliant. Perhaps Canada needs to become more of a manufacturing hub and not leave that piece to other countries.”

Bailey Williamson of Blue Grouse Estate Winery and Vineyard in Duncan, B.C. sources his glass from North America. As part of its environmental strategies, the Vancouver Island winery uses an eco-friendly glass, which is lighter to ship and the shorter distance of travel helps lessen their carbon footprint. And while their strategy meant they didn’t have to deal with container shipment delays from overseas, Williamson said he knew something was afoot.

“During the pandemic when many overseas glass manufacturers shut down, that put more pressure on the North American producers because people were looking for an alternate supply,” says Williamson. “I think everyone has to start thinking farther our than they have in the past. The situation is only going to get more stressed and more competitive, and as a small purchaser, things could get a bit weird.” Surcharges have been the biggest shocker as some are justifiable and some are questionable, adding as much as 50 per cent to the cost of the product and sometimes more.

“It’s going to be a very interesting time,” says Coletta. “I think in general producers will have to increase their prices because every piece along the supply chain has gotten more expensive for us.”

Williamson echoes this statement, saying increases are inevitable and it is cause for concern. “I don’t see any other way around it,” he says. “And there could be a breaking point where people who want to support local just can’t afford to.” o

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