Irish companies are scrambling to restructure unpredictable supply chains around the world

Irish companies are looking at restructuring their supply chains as ‘global concerns’ including the pandemic and war in Ukraine continue to strike.

Hangs might include reviewing shipping methods, reviewing markets they buy goods from, and exploring storage requirements.

The findings come in a new quarterly report from freight forwarder Woodland Group released earlier this month. It noted that the first quarter of 2022 had been an “extremely mixed time” for companies at all stages of the supply chain, adding that glimmers of hope had been accompanied by far-reaching global challenges.

The report highlighted a “mass overcapacity at European hubs” slowing the speed of shipments to and from Ireland, with bottlenecks at key ports. Congestion in the US and Covid in China have also been cited as slowing down Ireland’s global supply network.

Commenting on the report’s findings, Kevin Brady, chief executive of Woodland Ireland, said no one “could have predicted how the start of 2022 would play out”.

Woodland said a “brief hiatus and return to normal working practices” helped the sector earlier in the year. However, China’s rise in Covid-19 cases has stalled the global supply chain’s ability to recover.

The rise of Covid in China has also caused disruptions and congestion in major ports including Shanghai. As a result, Woodland says, many Irish firms are looking at regional supply chains in hopes of reducing lead times and increasing reliability as Asia becomes less predictable and value for money falls.

Woodland noted that sourcing goods locally became more popular through 2021 as global pressures increased. Around a fifth of Woodland’s Irish customers sourcing from Asia inquired about alternative markets to ensure supplies.

Brady said Eastern Europe, Turkey and Egypt are areas that have gained traction.

In Europe, congestion problems were exacerbated by Russia’s war in Ukraine. According to the report, many containers destined for Russia were abandoned in northern European ports or returned to their point of origin due to sanctions. In addition, the report says Russia’s invasion of Ukraine has shaken Irish trade.

In Ireland, labor shortages and costs were among the top concerns in the transport industry.

Woodland cited a survey of hauliers by the Freight Transport Association Ireland, which found that the key concern in the industry is skills and driver shortages.

In addition, transport costs have increased, mainly due to rising fuel prices. Woodland’s report also pointed to a shortage of Irish storage space. Woodland cited the commercial vacancy rate in the Cork region, for example, which was around 20 percent in 2012 and had shrunk to just 2.6 percent in the first quarter of 2022.

Woodland blamed inflation and supply chain problems, adding that the cost of building new warehouses had risen to the point where construction was slowing while rents and demand rose.

Brady said availability issues have arisen as many customers have overstocked due to a “just-in-case, rather than just-in-time” policy.

The report found Ireland’s trade growth showed promise for 2022 despite tightened margins. The drive to close the skills gap in Irish transport had also gained traction, with increasing lobbying from the sector.