When former Dublin GAA star-turned-entrepreneur Bernard Brogan – host of the 2022 Hardware Show at the Citywest Convention Center – asked supply chain specialist Kevin Brady about the state of the logistics and transportation industry, the boss of the Woodland Group Ireland made a statement to sigh.
How long do we have?” he replied.
Away from the convention center, packed with companies emerging from the pandemic to personally showcase their wares to potential buyers, Brady addressed the fears of many importers and exporters in his breakout presentation.
A grim picture began to emerge during the discussion, which also included Freight Transport Association of Ireland chief Aidan Flynn and Global Trade chief executive Brian Murphy.
“We know that all business people face tremendous challenges at this event,” said Brady. “Pricing, procurement, compliance or customs – everything is there.
“We want to offer support and figure out where we can add value,” he told the roomful of business leaders.
“Do we have a prize wand? Probably not – but there are things we can do together.”
The presentation by freight forwarder Woodland Group Ireland followed the release of its report on the supply chain for the first three months of the year.
It highlighted the problems Irish companies are facing – geopolitical issues, China’s pandemic lockdown policy, rising shipping rates, increasing delays, bottlenecks in European ports…
Domestically, rising fuel costs, changing customs regulations, shortage of truck drivers, lack of storage space…
In short, the Woodland Group report found that many Irish companies are now looking to restructure their supply chains.
As the global economic engine powering Ireland’s economy sputters, Irish importers and exporters are taking action to ensure their global supply chains don’t falter.
Brady recommended sourcing goods closer to home, carefully checking customs regulations, and more efficiently securing shipments of goods.
Global Trade’s Brian Murphy warned that changing customs regulations could become a problem.
“We have a compliance powder keg waiting to explode,” he said. “Already now I see customs and duty problems for customers.”
Some of Murphy’s concerns stem from how companies are reading – or not reading – the EU trade rules post-Brexit with the UK in terms of “rules of origin”.
According to Chartered Accountants Ireland, rules of origin determine the “economic nationality” of products where such products have been manufactured using materials or components in more than one country.
In order to be covered by the rules of origin and to ensure that products fall under the terms of the EU-UK Free Trade Agreement (zero tariffs and zero quotas), goods must either be sourced entirely from, or manufactured in, the EU or the UK, or are processed in the EU or UK have been substantially transformed/processed in accordance with the specific rules of origin applicable to the exported product.
Anecdotally, Murphy said it was likely Irish and EU importers had underpaid “tens of millions of dollars in tariffs” on UK-originated products, believing they were eligible for zero tariffs.
According to Revenue, at this time there is no evidence of widespread underpayment of tariffs due to false preferential tariff claims.
Despite the warnings to customs, Murphy commended Irish companies for forestalling potential customs problems.
In conversation with the Sunday independentRichard Sloan – Managing Director of Sonas Bathrooms – said that many Irish companies are well prepared for the post-Brexit customs regime.
Sloan said he had heard anecdotal comments from some clients that there seemed to be a lack of preparedness from some UK companies compared to Irish companies.
Sloan said Sonas has a diversified global supply chain, importing from the Far East, Middle East and Europe. The biggest problems in the international supply chain were the significantly increased freight costs from Asia and the extent of the disruptions and congestion in the ports.
“The entire finely tuned balance of the global shipping market has been upset over the past two years,” he said. “It seems to have struggled to get back into alignment.”
With the break, Sloan wasn’t sitting on his hands. Instead, he relocated to source some items closer to home.
He said the cost advantages of some ceramic products sourced from the Far East have been eroded. That, along with problems with reliability of delivery times, meant he had purchasing arrangements with more “local suppliers in North Africa and Europe”.
While longer delivery times and rising prices are headwinds for companies, some believe their domestic sales may have benefited from the higher cost of exporting to Ireland.
Bob Coggins, co-founder of Co Sligo craft beer brand The White Hag Brewing Company, said he believes that since Brexit and Covid, fewer international craft beer brands – particularly from the UK – were being imported into Ireland, which would benefit brewers here .
“When we came out of Covid there was a greater appetite for local beer,” he said. “Sometimes it can be difficult to separate the cost economics of bringing international beer to Ireland from more warmth for local brands. There is something of everything.
“Britain would be a leading brand among craft beer brands, so there would be a lot of British craft beer coming to Ireland ahead of Brexit. That has slowed down. It’s harder for them to come here, so we’re just not as attractive as a market as we used to be.”
Aside from the domestic boost brought on by Brexit, White Hag has had problems with importing and exporting.
Coggins said prolonged delays and increased shipping costs were noticeable. He was referring to an order White Hag had placed for a Spanish beer it wanted to include in a monthly subscription box. Last month, the shipment missed the box after arriving three weeks late.
“We’re less confident about delivery times,” he said. “We’re trying to get our international customers to order three to four weeks in advance so we have time to catch up on those orders and give carriers time to get a better rate or plan better.”
According to Coggins, shipping costs have increased for smaller businesses, especially those looking to break into new markets. For example, he pointed out that the shipping costs from Ireland to Paris for a pallet or two had increased significantly compared to larger orders.
“The cost of a little guy who wants to get a pallet in a new market and start and work with a dealer has suddenly become a major barrier to trading,” he said.
Tom Keogh, managing director of Keogh’s Crisps, has also noticed rising shipping costs.
Keogh said rates in the logistics industry have been rising over the past 12 months, particularly on the US West Coast. He said transportation costs there have increased by 300 percent, with delivery times also worsening due to busy ports.
“We stored products on a ship for four weeks before unloading,” he said.
Few Irish companies have been immune to supply chain problems caused by Russia’s war in Ukraine.
Keogh said prices for sunflower oil, sourced mostly in Europe from Ukraine, have risen 250 percent, with supply issues an obvious concern. However, he said Keogh was lucky as his Ukrainian supplier fulfilled his contract, loading containers onto a train there and transporting them to Poland. It is then shipped to Ireland by truck.
Many other chip makers weren’t so lucky, with Keogh saying he’s heard many deals have been made because of the war.
In addition to securing the sunflower oil, the problems and challenges on the logistics side had caused Keogh’s to start looking at some international markets differently. Keogh, for example, said his company pulled out of development on America’s west coast because it was difficult to offer what he saw as a reliable level of service.
Keogh added that it is still tracking the US east coast and has turned attention back to the UK.
“Many of the logistics problems that we experience worldwide, we don’t have in the UK.”
Despite recognizing the growing complexity and cost of logistics, Teeling Whiskey boss Jack Teeling said he was undeterred in pursuing export opportunities.
Space — or more specifically, the lack of it — is something Teeling says his customers are concerned about.
He said he’s heard problems with storage space in Ireland and abroad as more companies try to stock produce.
Aside from warehousing, Teeling said one of the big concerns is the lack of available space on the ships.
Teeling said he had orders to go to the US, but the customer was unable to secure a suitable shipping space in time. The only way the products could get into the US would add an additional four weeks to the delivery time, leading to fears that stocks would run out.
“Everything is delayed, more expensive and it seems more difficult to find space on a ship,” he said. “That seems to be the way of the world. Many things come into play at the same time.”
https://www.independent.ie/business/irish/irish-businesses-take-the-strain-as-supply-woes-shake-importers-and-exporters-41603934.html Irish businesses suffer from the strain as supply shortages rattle importers and exporters