Wednesday, October 27, 2021

Critical shortage of storage space threatens Christmas supplies

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A critical shortage of warehouse space could lead to further delays in Christmas stocks, which are already threatened by growing backlogs in UK container ports and a shortage of truck drivers, companies have warned.

Warehouse operators reported the industry “is creaking at the seams” saying that companies were “dangerously” running out of time to get ready for the busiest time of the year.

The lack of space is exacerbated by a drastic shortage of warehouse workers, with companies competing for thousands of jobs.

Employees are offered salary increases of up to 30 percent, which should be passed on to customers due to the tight margins in the logistics industry. The wage increases come on top of a more than five-fold increase in the cost of shipping a container of goods from China.

Buyers are advised to expect longer delivery times, higher prices and, as a result, less choice.

Thanks to a boom in online shopping during the pandemic, warehouses filled quickly, while companies responded to the chaos in global supply chains by building up inventories, putting further pressure on limited space.

Industry leaders say having a cumbersome planning system means they can’t build new storage space fast enough to keep up with demand.

It comes as shipping lines suffered a traffic collapse at the UK’s largest container port, Felixstowe in Suffolk this week, where a shortage of truck drivers caused goods to pile up in warehouses.

“Ports can move boxes and load and unload ships; the problem is getting goods in and out of the port, ”said Tim Morris, CEO of Major Ports Group. “We have to manage the storage space very carefully. Problems start when it fills up. “

Companies have to wait a long time to move their goods out of ports and are forced to divert goods to Rotterdam and other European logistics centers. Smaller ships are then chartered to bring goods to the UK.

“We have weeks of inventory,” said Phil Chesworth, general manager of Midland Pallet Trucks, a supplier of industrial equipment. “Containers that arrived this week will not be delivered until November. It’s horrific. ”

Containers that cost £ 3,000 to ship before the pandemic are now £ 20,000. “To us, the goods in a container could only be worth £ 36,000,” said Chesworth.

Some of Midland’s goods are stuck in China because shipping companies are prioritizing light cargo that is more profitable to ship, Chesworth said. “We’re at the very back of the queue.” Storage problems have contributed to the growing bill.

“We pay well above the minimum wage, but we simply cannot hire staff. When the containers show up, we fight to get the staff to unload the boxes and put the goods on the shelves.

“The situation is not going to improve this side of Christmas, definitely not. Normally, the entry-level warehouse roles would have been filled in September to cover the two-week peak, so the industry is running dangerously short of time. “

The extreme volatility of the flow of goods to the UK is the biggest source of pressure, said Gary Whittle of warehouse operator Meachers Global.

Goods that used to be in Meachers’ warehouses for a day before moving on are now being left standing for a week or more due to staff shortages, which clogs up more space.

Warehousing in the ports “is creaking at the seams,” Whittle said. “We’re just about to deal with it, but it’s really pretty close to breaking down.”

“Lots of people do a lot to help the industry. I just hope it’s enough. It’s as tough as I’ve ever seen it and I’ve been in the industry for 40 years.”

He added, “It will take three to six months for things to calm down. It’s going to be really, really difficult for everyone in our industry. “

Clare Bottle, executive director of the UK Warehousing Association, said the industry has a greater labor shortage than the transportation sector, which is estimated to need an additional 100,000 truck drivers.

More than a third of forklift truck drivers in the UK are EU citizens, compared with 15 percent of truck drivers, according to UKWA figures.

The brain drain after Brexit went hand in hand with an increase in demand for warehouse staff.

“Activities that would have taken place in a shop are now taking place in a warehouse,” Ms. Bottle said.

“A picker who prepares goods for e-commerce has to pick individual goods for each order, print out address labels, pack them and divide them up depending on the deliverer.

“That takes more space and more manpower, which we just don’t have in the UK.”

Large retailers like Amazon have attracted employees from other companies by offering salary increases and bonuses. Ms. Bottle said the situation amounts to “robbing Peter to pay Paul” for not addressing a macroeconomic labor shortage.

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