Australia’s supply chain issues likely to continue despite drop in Covid cases

Shoes, women's fashion and stationery are just some of the goods Australian shoppers face difficulty finding on shelves as an international shipping crisis sparked by the Covid-19 pandemic shows little sign of abating.

While Covid cases are dropping, Australian retailers have warned supply chain issues are expected to continue for up to 18 months.

"This is due to the sheer volume of products and supplies within the global supply chain and the profound shortage of freight space on ships, shipping containers and pallets exacerbated by the limited flights into the country," the chief executive of the Australian Retail Association, Paul Zahra, said.

The continued high price of shipping, together with ongoing uncertainty about when goods ordered from overseas will arrive, has forced Australian importers to order further ahead. That is putting pressure on their businesses at a time when many are already reeling from the direct impact of lockdowns over the past year as well as January's "shadow lockdown", caused by people staying home in a bid to avoid the highly contagious Omicron strain.

Zahra said retailers were reporting a sevenfold increase in supply chain costs and ordering times from overseas that have doubled or tripled.

"The other cash flow impact is retailers having to order and pay much earlier for stock - often as a leap of faith, given the uncertainty in the current market when it comes to customer sentiment and expectations," he said.

ARA members report that they are ending up with either not enough stock or stock arriving at the wrong time - a particular problem in highly seasonal sectors like footwear and frocks, which depend on the weather, and stationery, where sales are given a large bump by the back-to-school rush at the beginning of the year.