Stock Shortages Could Last Well Into Next Year, Warns Ikea

The current disruption to the global supply chains is expected to last for at least another year, warned Ikea, the Swedish furniture behemoth.

While there has been some improvement, according to CEO Jesper Brodin, there is still congestion at ports, which has resulted in supply issues.

“We need to live with disturbances for the year to come,” he said.

Predictions for continuation of supply chain problems until 2022 were also expressed by Poundland’s owner. Shipping costs had risen dramatically, said Andy Bond, the CEO of PepCo, which owns Poundland. “There have been times when we had to pay ten times our normal rates,” he explained.

“There are some times where we have had to pay 10 times our normal rates,” he said.

“That’s not to say every day but that has been the impact.”

Poundland did not expect to raise prices to compensate for rising shipping costs as the retailer had adequate stock for the Christmas holiday season, said Bond.

But he said: “I think that we see the next 12 months remaining challenging.”

The United Kingdom and other countries are experiencing “congestion in ports and disruptions in supply chains,” according to Brodin, CEO of Ingka, which is the operator olf the majority of Ikea stores.

“There is no easy fix to any of this even if people are working hard across not only Ikea but also across the world,” he said.

Ikea said last month that it was having trouble supplying 10 per cent of its stock, or which was about 1,000 product lines, to its 22 stores in the UK and Ireland due to a continuing shortage of HGV drivers.

The critical British commercial port of Felixstowe was experiencing a backlog of shipping containers due to the busy Christmas season and a shortage of lorry drivers to move them, it was revealed earlier this week.

To address product shortages, Ikea has been forced to purchase additional shipping containers and charter vessels.

“We have also sent goods by train from China to Europe and we have invested in temporary intermediate warehouses in China, Vietnam, India, Indonesia, and Thailand to support production,” a spokeswoman for Ikea told the media last month.

“One thing we have learned is it is difficult to predict. You need to be on it every day and find the best solutions. At the same time from a realistic point, we need to live with disturbances for the year to come but things will gradually get better, I’m sure,” Brodin said.

Due to a backlog of shipping containers, shipping giant Maersk said earlier in the week that it had started to re-route some of its largest ships away from the Port of Felixstowe.

Some of the company’s largest 20,000-container ships were waiting for four to seven days outside Felixstowe, the UK’s busiest container port, Lars Mikael Jensen, Maersk’s head of global ocean network, said.

“We’ve taken those measures because we saw, because of the big ships, there is a limit to how many berths they can call in Felixstowe, and because its slower, it took longer to handle every ship,” he said.

“Instead of wasting time waiting, we progressed to the next stop, and arranged that the boxes are relayed from that port rather than wait for a week and then discharge.”

(Adapted from Telegraph.co.uk)



Categories: Economy & Finance, Regulations & Legal, Strategy, Sustainability, Uncategorized

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