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Soapbox: Richard Lloyd at The Park makes the case for agile supply chains

Published:  22 November, 2021

We hear from Richard Lloyd, general manager for European operations and supply chain at The Park, the hub of Accolade Wines’ European operations and an independent business in its own right, on how the industry can work together to overcome its supply chain difficulties

As an industry, we are currently facing more challenges than ever before. The perfect storm of shipping reroutes, HGV driver and fuel shortages has caused havoc across the globe and has made the need for collaboration greater than ever before.

So what exactly has formed this crisis and how can we collaborate to improve the situation? For one, the behaviour of the shipping lines has been particularly detrimental. Shippers have used the challenges of the past 12 months to generate extra profit by inflating shipping prices by up to 700% for some routes.

In times of adversity, the power of the supply chain is to unite and find solutions to obstacles. Passing on actual incremental costs due to inefficiency is accepted by most, but what has happened in global shipping far exceeds this. For example, Maersk is now forecasting full-year EBITDA for 2021 at $22-23bn, compared with $18-19.5bn previously.

Then, there is the issue of flexibility. The extended supply chain has been restricted through shipping volatility and HGV driver shortages. To keep the country moving, distributors must try to operate HGVs with full loads.

This is where consolidation centres like The Park are critical for effective distribution. As Europe’s largest wine packaging company, The Park offers producers a range of multi-format packaging, distribution and storage, and our capabilities have expanded to ensure drivers do not waste time queuing to have their truck emptied.

A solution for this is a move to ‘drop trailer’ loading – an innovative solution with proven results. Trailers are loaded hours in advance, so when a truck arrives at the site, there is no waiting time.

Currently, 900 million litres of wine are drunk annually in the UK, with the largest proportion of that coming from New World countries. Within this, we’ve seen a gradual move to more wine coming to the UK in bulk.

The ability to have stock at different points in the supply chain is critical to ‘buffer in’ the volatility and variability of shipping. Having the right mix of wine in bulk is the optimum way to attempt to mitigate the impact of the shipping crisis. Even if this doesn’t seem like the most efficient use of cash flow for a business, it will ultimately protect profitability through sales.

Bulk wine enables more than double the volume of wine to be shipped per container versus finished product, which means businesses can transport two and a half times more wine at reduced transportation costs. With the need to optimise distribution and lessen the impact on the planet, being able to consolidate brands and own-label products on to one truck is critical.

When compared with transporting traditional bottled-at-source wine, shipping in bulk actually emits 40% less CO₂, and considering the effects of climate change on vineyards around the world – Italy’s drought and wildfires, and France’s frosts causing production to be down 9% and 29% respectively – reducing the carbon footprint of the wine industry must be a priority.

According to the International Wine Challenge, in 2019 wine was estimated to have a carbon footprint of 1.6 million tonnes of CO₂, with glass production and transport making up the majority of that output. As an industry, we have a responsibility to tread more lightly on the planet and to encourage others to follow.

Crisis management

Though it’s possible to isolate friction points, it’s difficult to pinpoint exactly what is driving these crises. Covid-19 had a significant impact on the wine market due to labour shortages reducing production and distribution across the supply chain and the ‘Pingdemic’ was particularly frustrating.

However, while many of the crunch points – labour shortages, for example – feel like a self-inflicted injury the country did to itself, the pandemic has not been all doom and gloom for the wine and spirits sector.

Covid-19 has forced producers to explore new avenues and there are some signs of a resurgence, fuelled in particular by off-trade growth alongside an a growing adventurous thirst for more convenient formats.

The industry has been working tirelessly over the past year and a half and continues to do so as we approach the sector’s busiest season; and while costs and disruptions are at all-time highs, I believe there is very much a solution to every challenge we are currently facing. It’s vital these issues are addressed. Otherwise, we’ll all be facing frustration, wasted effort and costs.