More than 18 months after the start of the pandemic, the huge network of ports, containers and freight companies that transport wine around the world is crumbling under the continuing pressure of the pandemic, resulting in significant delivery delays and exploding costs.
Port closes in China
Delays in deliveries, lack of containers, rising costs and disruptions in the ports due to epidemic outbreaks are all aspects of a crisis that has increased shipping times from a few weeks to more than three months. Just when traders and producers are looking to replenish stocks in anticipation of the end-of-year holidays. The disruptions have created what Bojan Radulovic, deputy director of Hong Kong wine merchant Link Concepts, calls a “domino effect” since early 2020, when the pandemic went global. “When port personnel are affected, the port closes and ships are denied permission to dock.
China’s rapid economic recovery and export boom also caused an increase in container flows from China to the US and Europe during the pandemic, resulting in a severe shortage of containers headed to China and the rest of Asia from producing countries in Europe, the US and New Zealand. To anticipate delivery delays, wine merchant Link Concepts Bojan Radulovic planned his shipments at least three months in advance, in anticipation of the “Golden Week” holidays in October, Christmas and Chinese New Year. For James Rowell, head of private clients at Altaya Wines, the problem is exacerbated by changing shipping routes and a lack of berths. “Wines destined for Hong Kong have sometimes been redirected to Shanghai, Singapore or other destinations.”
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The United States most impacted
According to wine merchants, the U.S. has been the most affected by this phenomenon. Ben Cheung, brand and operations manager at Hong Kong’s largest wine merchant, Watson’s Wine, confirmed that wine supplies from the U.S. have suffered the longest delivery delays of any supplier country in his portfolio. “Since last December, we have only managed to get one reefer container shipped,” he said. Still, other regions of the world are not left out of the phenomenon.
The most penalized categories concern high-volume countries such as France, Spain, Italy and South America. Champagne seems to be particularly affected.James Rowell, Head of private clients at Altaya Wines
For Olivier Hui-Bon-Hoa, Regional Director for Asia at Badet Clément, Hong Kong, mainland China, Taiwan, Korea and Southeast Asia are suffering. “Where it used to take 4 to 5 weeks between France and Hong Kong or China, we now have to plan on average 8 or 9 weeks”. Brexit obliges, the United Kingdom is also experiencing major difficulties: “Deliveries that used to take 5 days can now reach two and a half months,” laments Max de Zarobe of the Italian winery Avignonesi.
Other options being considered
The impact on costs is also felt: “Our importers are affected financially,” confirms Olivier Hui-Bon-Hoa. “Longer delivery times, the cost of containers and longer customs clearance times are putting more pressure on cash flow. As a result, we are indirectly affected by possible delays in payment or longer credit periods. To anticipate longer delivery times, some operators are increasing their inventories. Bojan Radulovic has planned for three months of additional inventory, “but I’m still not sure that shipments for the holiday season will arrive on time.
Finally, if air freight is considered prohibitively expensive – “up to ten times that of sea freight” – not to mention the lack of availability there too, other solutions are being studied. For example, Olivier Hui-Bon-Hoa of Badet Clément is in talks with importers who are studying the use of rail freight to the Chinese market.