Australians trying to order goods could face a nightmare before Christmas, as shortages caused by blockages in global supply chains continue to bite.
The pandemic has stretched supply chains to breaking point, which may make some goods scarce until 2023.
Shoppers are still complaining of empty shelves, long after the toilet paper buying frenzies and personal protective equipment shortages of 2020. There are shortfalls of goods from medicines to coffee, to electronics and bicycles and clothes. Dan Murphy’s has said some alcohol products will be hard to source, and Australia Post has warned presents may not make it in time to go under the Christmas tree.
There is no single reason for the shortages, but rather a combination of factors arising from the global disruption caused by the pandemic and local obstacles such as state border closures and industrial disputes on the wharves.
The chief economist at the Committee for Economic Development of Australia, Jarrod Ball, says there was a “massive shift of consumption” into goods over services during Australia’s lockdowns, as governments pumped out wage and benefit subsidies and restrictions prevented spending on travel and hospitality.
But as demand for goods grew, the problems with supply got steadily worse.
The chief executive of the Australian Retailers Association, Paul Zahra, says that has caused a nightmare for his members.
“Our supply chains are under incredible pressure at the moment and there’s a myriad of issues at play here that are creating the perfect storm for retailers and consumers.”
Where are the bottlenecks?
Most of Australia’s imports come from China, followed by the US.
As an island, Australia is particularly vulnerable to shipping delays, all the more so when the number of flights arriving in the country has been drastically curtailed.
“At a global level, retailers are reporting that the capping of incoming flights has put significant pressure on shipping, and we are seeing container costs escalating up to four times their usual rate,” Zahra says.
The price of shipping containers has exploded, as has the cost of chartering a ship to move things around the world, as the domestic spending boom on consumer goods in the US and the general disruption to pre-pandemic flows of containers has caused logjams of container ships in US ports, and shortages elsewhere.
When containers do arrive, they face more delays at Australia’s ports. The Maritime Union of Australia is locked in a battle over pay and conditions, with rolling strikes set to continue this month.
Pallets, the wooden containers used to transport many items, are also suddenly undergoing a mismatch of supply and demand.
“The pallets are a really good example of all these factors coming together in a way people might not have foreseen,” Ball says.
“You’ve got a massive spike for consumer goods but at the same time a big lift in demand for timber due to lots of building and the renovations that are going on.
“Add to that disruption to the factories that make the pallets, and that all adds up to a pallet shortage.”
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Covid itself continues to have a direct effect on crucial links in the chain. Distribution centres have been shut down, or staff forced to isolate, slowing the flow of goods. Australia Post has been overwhelmed at times during lockdown restrictions, and courier companies are also feeling the strain.
“Some distribution centres and warehouses have been impacted by reduced staffing levels due to Covid cases, we’ve had industrial disputes from delivery drivers and port workers, while state border controls and limited domestic flights are also impacting the movement of goods,” Zahra says.
Finally, there is a shortage of the right people for the right jobs. Infrastructure Australia warned in October that two in three key occupations necessary for construction were “likely or potentially in shortage”. There are nationwide shortages of engineers and architects, and potential shortages of bricklayers, concreters, carpenters, electricians and other tradies.
Which products are worst affected?
Cars and electronics
The pandemic has increased demand as people buy more computer products to work from home or entertain themselves in lockdowns.
But the global dearth of semiconductors used in electronics such as whitegoods, phones and cars means even Apple has struggled to get chips for iPhones, Macs and iPads. All computer manufacturers are facing similar difficulties.
Toyota Australia says current demand exceeds supply, with long delays for parts. People are waiting months for some of its most popular models. Nissan, General Motors and Volkswagen are all facing delays.
Food and groceries
The Australian Food and Grocery Council has pulled together a taskforce to deal with supply problems, including the pallet crisis, which is hampering supermarkets shifting goods around the country. The council’s chief executive, Tanya Barden, says Covid staff shortages and shutdowns mean products have been kept in storage on pallets for longer.
“The issues include impacts on global shipping and sector shutdowns based on health authority orders,” she says. She hopes that as states open up, pallets will be emptied and put back into distribution.
“New measures for management of Covid close contacts in the workplace should also have beneficial flow-on effects to address pressures on labour capacity issues in supply chains.”
Specific issues have further complicated the picture for other products, including coffee and some alcohol brands.
Building materials
Even before Covid, Australia was facing timber shortages because of the 2019-20 bushfires, which burned commercial plantations as well as native forests.
Demand for construction materials skyrocketed during the pandemic as the federal government poured stimulus money into construction. That happened globally, too, so imports couldn’t make up the shortfall.
Steel and other construction supplies are also in short supply. Steel mills around the world wound back production when Covid hit, expecting things would slow down, the Australian Steel Association chief, David Buchanan, has said. But then the stimulus money did what it was intended to do, and demand soared.
The Australian Institute of Architects has warned that insulation, bricks and plaster board could also face shortages.
When will it end?
In July, the Productivity Commission warned that increasingly complex global supply chains meant they were more at risk from trade wars, natural disasters, financial crises, pandemics and infrastructure-related failures such as cyberattacks.
Ball says the consensus is the shortages will not end anytime soon.
“It won’t really be until 2023 that we start to see some moderation in this,” he says, warning that even then there is a risk of worker shortages in service industries.
Zahra says the only thing consumers can do is try to plan ahead wherever possible.
“It’s the season to shop early,” he says.