Tackling Supply Chain Disruptions: A Solution to Warehouse Space Shortage?
21 June 2024

Tackling Supply Chain Disruptions: A Solution to Warehouse Space Shortage?

European retailers are facing significant challenges as they rush to secure their Christmas orders early, driven by soaring shipping costs and disruptions in trade routes. The ongoing conflict in the Red Sea has severely impacted shipping prices and created substantial uncertainty in the supply chain.

Current Supply Chain Disruptions

The recent surge in container prices, which had initially peaked in January, has surged again. For businesses reliant on timely shipments, these disruptions necessitate meticulous advance planning to ensure timely deliveries for Black Friday and the Christmas season. Early planning, while effective in mitigating stock shortages, puts a strain on cash flow and requires additional warehouse space to store goods for longer periods. The spot rate for immediate delivery of goods has escalated from $4,500 to $7,500, significantly impacting bulky, low-margin items such as furniture and kitchen appliances.

Impact on Retail Prices

The substantial increase in shipping costs leaves retailers with limited options to absorb these expenses, inevitably leading to higher prices for consumers on big-ticket items in the coming months. This surge in costs is a direct result of attacks in the Red Sea and Gulf of Aden, which have caused the average cost of shipping a 40ft container to rise to over $4,000, a 140% increase from 2023 levels.

Strategic Shipping Adjustments

Importers are adapting by shipping goods as early as possible, a lesson reinforced by past disruptions. Retailers typically begin importing goods for the holiday season between late summer and autumn, but many are now advancing their schedules to avoid potential shortages.

The strategic rerouting of vessels around Africa to avoid the Red Sea has extended shipping times, with journeys between Asia and Europe now requiring over 100 days. This adjustment not only affects the rotation of container equipment but also results in only 50% of global container shipping being completed on time.

Ziegler’s Solution: London Gateway Warehouse

In the midst of these challenges, businesses face a critical need for reliable and ample warehouse space to accommodate early shipments and buffer against supply chain disruptions. Ziegler’s new 365,000 square foot warehouse facility at London Gateway presents an optimal solution. This state-of-the-art facility offers abundant storage space, ensuring that businesses can store their goods securely and efficiently as they navigate the complexities of current shipping dynamics.

By leveraging Ziegler’s extensive warehouse capabilities at London Gateway, businesses can better manage their inventory, reduce the impact of shipping delays, and maintain a steady supply of products for their customers. This strategic move not only addresses immediate storage needs but also positions businesses to handle future uncertainties with greater resilience and confidence.

For businesses actively engaged in shipping, Ziegler’s London Gateway facility stands out as a crucial asset in overcoming the ongoing warehouse space shortage and ensuring smooth operations during peak seasons.