Supply chain turbulence
It is now almost a year on from Brexit and almost two since the first reported case of COVID-19. Both events rocked the global supply chain. Though the chaos which coloured the first quarter of the year has settled somewhat, the global freight market is still extremely volatile.
The issues facing global freight are not unique to the wine industry. Supply chains are under enormous pressure as consumers who are spending more time at home are demanding goods in higher volume. Price rises and empty shelves are becoming more common.
The price of logistics and supply chain services are reaching record levels as demand out-paces capacity in global freight. When combined with the additional admin burden being experienced post-Brexit, the wine industry is facing a difficult set of challenges.
For UK wine businesses the announcement of the removal of VI-1 requirements from January 2022 was a positive event. However, 2022 promises further Brexit-related challenges. Up until now, many outside of the wine industry have been able to delay customs declarations, but from January 1st, when this relief is removed, customs declarations will be required at the time of shipment. Longer wait-times at ports are expected due to massive increases in real time customs processing which will create a much larger administrative burden. Additionally, an air of uncertainty exists because of changes to UK labelling regulations, EU law changes that affect drivers, and the requirement for safety and security declarations in the UK. This unpredictability is leading many in the industry to adopt a cautious approach which is directly affecting sales.
How Liv-ex can help
Despite the challenges facing the global supply chain, Liv-ex has managed to maintain and even improve the performance of our logistics network.
At the start of 2021, Liv-ex paid sellers on average 15.2 days after receiving or collecting SIB trades. By the end of Q2 we had reduced this to 13.5 days by understanding, and successfully navigating the challenges posed to create a stable post-Brexit logistics network. By continuing to push forward, we’ve reduced this further to 13.3 days, meaning our sellers are now being paid on average 1.9 days quicker than at the start of the year. In addition to this our buyers are receiving their stock quicker and since the start of the year the average days to have purchases available has reduced from 23.1 days to 20.5 days, a reduction of 2.7 days.
Liv-ex’s expansive network allows seamless and efficient trade globally as we cover all logistics options in these areas. Members only need to organise a collection or deliver locally, and Liv-ex will handle the rest.
As of 2020, Liv-ex began combing alcohol by volume (ABV) values of wine with the LWIN database, which stores details such as origin and designation to automatically generate commodity codes (sometimes called HS codes), making it easier and quicker for members to ship internationally. Liv-ex can generate a commercial invoice in seconds rather than the prolonged manual process. This has further increased efficiency behind the scenes for many members.
Liv-ex have expanded our range of services over the last year. We currently collect from 11 different countries which means we handle logistics from start to finish. Deliveries out of Belgium have commenced which gives buyers access to their wine sooner. Furthermore, the addition of the US collection service has opened up a new Californian market for buyers internationally.
Global supply chain issues look set to continue into 2022 presenting frustrations for members of the international wine trade shipping stock themselves. Liv-ex is able to simplify the logistics of buying and selling wine. We handle the paperwork, are introducing greater flexibility and frequency of our collection service and have a digital-first approach that is letting us continually shorten both payment and receipt time and remove much of the pain the industry is currently encountering.
For more information about our logistics services please click here.
For information about Liv-ex membership, click here.
To learn more about the issues facing the global chain supply post Brexit, click here.
To learn more about Liv-ex’s award-winning supply chain initiative, click here.