China supply issues could cause empty shelves across Australia by Christmas
Huge problems in China could lead to a miserable festive season for many Aussies, who are being urged to “get in early” if they want to save Christmas.
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In the classic Christmas song ‘Rudolph The Red Nosed Reindeer’, Santa Claus can’t fly his sleigh to deliver toys because of poor visibility due to bad weather, specifically, fog. Only with the help of the bright red nose of Rudolph, one of his reindeer, can Santa overcome his logistic issue and deliver toys to the good boys and girls of the world.
With Christmas now less than four months away, Australia is facing its own logistic issues. Indeed, there is a very real chance this festive season will look less like a happy Yuletide tale and more like The Grinch.
When the pandemic first forced shut the doors of China’s factories in January last year, the world began to feel the impact practically immediately. All of a sudden the stream of various products, parts and materials from the Asian country in some cases simply evaporated, as arguably the world’s most draconian lockdown choked off tightly wound supply chains.
Here in Australia this was best illustrated by the sizeable quantity of empty shelves of some large retailers such as Kmart, as supply issues began to significantly impact the availability of goods to consumers.
Across practically every industry from construction to automotive, hairdressers to furniture retailers, supply chain issues have begun to impact businesses and the flow of goods to households.
For example, where once you could order a new couch from one of the nation’s large furniture retailers and have it in under a month, customers are now often facing extremely long waits that at times stretch into the territory of: “You’ll get it eventually.”
A 12-MONTH WAIT FOR STOCK
Now, as a result of multiple outbreaks of the Delta Covid-19 strain in China and elsewhere throughout the manufacturing hubs of the world, these issues have actually significantly worsened since the initial supply chain shocks of March and April last year.
When combined with the enormous level of Western government stimulus driving the highest level of demand for manufactured goods in history, there is little hope that the current supply chain issues can be resolved by the start of the 2022 Lunar New Year (February).
As lead in times for products continues to grow, Aussie retailers are increasingly being forced to order stock eight to 12 months in advance.
CHRISTMAS SHOP NOW
In a recent interview, Super Retail Group chief executive Anthony Heraghty said: “But even if you are buying it eight to 12 months out, the chances of it arriving on time is zero,” he told Fairfax. “If it’s not in the shed or on the shelf today, for Christmas this year I think the chances of it being (in stock) come that peak time is incredibly remote.”
Mr Heraghty went on to say that consumers should certainly consider “getting in early” and doing their Christmas shopping now, with delays expected to stretch well into next year and potentially even into 2023.
BACKLOG AT PORTS
Aussie retailers aren’t the only ones concerned that supply chain issues could prove to be a Grinch this Christmas.
As the backlog of shipping at some of the world’s busiest ports continues to set new record highs, Port of Los Angeles executive director Gene Seroka has shared his concerns about the impact on households.
Mr Seroka said the challenge facing the global supply chain amounts to “squeezing 10 lanes of freeway traffic into five lanes.”
The port boss cautioned Americans to get their Christmas shopping plans in place far earlier this year or risk having some very disappointed loved ones come the big day.
This already challenging situation has been further complicated by an outbreak of the Delta strain at the Chinese port of Ningbo, which is one of the busiest in the world. Ningbo is located just south of Shanghai and serves as the export gateway for much of the industrial heartland of northeast China.
With a number ports and manufacturers throughout Asia also impacted by Covid outbreaks, the effect on global supply chains is cumulative and effectively butterflies out to ports and retailers across the world.
CHICKEN SHORTAGE
It’s not just consumer goods suffering as a result of supply chain issues.
In the UK, popular fast food chain Nando’s was recently forced to temporarily close 50 restaurants, due to an ongoing shortage of chicken across Britain.
In the US, there is a shortage of McDonald’s branded paper bags, as a result of consumers choosing takeaway over dining in.
In Japan, global automotive giant Toyota has been forced to cut already curtailed car production by another 40 per cent due to a dire shortage of computer chips, essential for the manufacturing of their vehicles.
Closer to home, shipping companies are increasingly charging a premium to maintain routes to Australia, with shipping costs rising by as much as 400 per cent when compared with this time last year.
As the trans-Pacific China to United States routes becomes more lucrative by the day due to rising shipping costs, it’s likely that freight costs to Australia will also continue to rise as various routes compete for a limited number of container ships.
If the logistics issues are as serious as feared, for Australians heading into the holiday season, there is no reindeer with a glowing red nose that can rescue our Christmas.
If the tides of global supply chains have decreed it, our Christmas Day may have more in common with the Grinch.
Tarric Brooker is a freelance journalist and social commentator | @AvidCommentator
Originally published as China supply issues could cause empty shelves across Australia by Christmas
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