STOCKHOLM: Ikea warns stock shortages to last into next year

STOCKHOLM: Ikea, the Swedish furniture
giant, says it expects the disruption to global supply chains to continue for
at least another year.

Chief
executive Jesper Brodin said while there had been some improvement, there was
still congestion at ports which has led to supply problems.

“We
need to live with disturbances for the year to come,” he said.

The owner
of Poundland has also predicted that pressure from supply chain problems will
last into 2022.

Andy
Bond, chief executive of PepCo, which owns Poundland, said that its shipping
costs had soared. “There are some times where we have had to pay 10 times
our normal rates,” he said.

“That’s
not to say every day but that has been the impact.”

Mr Bond
said the retailer had good levels of stock for Christmas and did not expect to
increase prices to cope with rising shipping costs. But he said: “I think
that we see the next 12 months remaining challenging.”

‘No easy fix’

Mr
Brodin, chief executive of Ingka, which operates the majority of Ikea’s stores,
told the BBC that the UK and other countries were suffering with
“congestion in ports and disturbances in supply chains”.

“There
is no easy fix to any of this even if people are working hard across not only
Ikea but also across the world,” he said.

Last
month, Ikea said it was struggling to supply 10% of its stock, or around 1,000
product lines including mattresses, to its 22 stores in the UK and Ireland amid
the continuing shortage of HGV drivers.

Meanwhile,
earlier this week, it emerged that the key British commercial port of
Felixstowe was suffering from logjams of shipping containers because of the
busy Christmas period and a deficit of lorry drivers to shift them.

Ikea has
been forced to purchase additional shipping containers and charter vessels to
address product shortages.

A
spokeswoman for Ikea told the BBC last month: “We have also sent goods by
train from China to Europe and we have invested in temporary intermediate
warehouses in China, Vietnam, India, Indonesia, and Thailand to support
production.”

Mr Brodin
said: “One thing we have learned is it is difficult to predict. You need
to be on it every day and find the best solutions.

“At
the same time from a realistic point, we need to live with disturbances for the
year to come but things will gradually get better, I’m sure.”

Port delays

On
Wednesday, shipping giant Maersk told the BBC it was re-routing some of its biggest ships away from the Port of
Felixstowe, due to
a logjam of shipping containers.

Lars
Mikael Jensen, head of global ocean network at Maersk, told BBC Radio 5 Live’s
Drive programme that some of its largest 20,000-container ships were waiting
outside Felixstowe, the UK’s biggest container port, for between four to seven
days.

“We’ve
taken those measures because we saw, because of the big ships, there is a limit
to how many berths they can call in Felixstowe, and because its slower, it took
longer to handle every ship,” he said.

“Instead
of wasting time waiting, we progressed to the next stop, and arranged that the
boxes are relayed from that port rather than wait for a week and then discharge.”

But on
Thursday afternoon, the BBC understands that Maersk apologised to the
government for the comments, which led to widespread concern about Felixstowe’s
capacity to receive and process goods.

The BBC
has seen details of a conversation between the government and the shipping
company.

It’s
understood that Maersk told the government that Lars Mikael Jensen, head of
Maersk’s east-west network, had said in a press briefing that Felixstowe was
experiencing congestion.

Mr Jenson
had mentioned that one ship was diverted to Rotterdam where the cargo was
offloaded to a smaller ship.

Maersk
said that there is not a specific plan to divert ships from Felixstowe now or
in the near future and that traffic is managed dynamically. The company also
said they are making decisions for other European ports.

Maersk is
also understood to have said that they are bringing in 25% more boxes to the UK
between July to September, than the same period last year.

Rising sales

Ikea
revealed that, over the year to 31 August, sales rose by 6.3% to €37.4bn
(£31.6bn).

Mr Brodin
said that when the Covid pandemic first hit last year, the group was forced to
speed up a plan to invest in a strategy to meet customer needs and take on
“the new competition”, in particular ramping up its online operation.

He said
that what the company had planned as a two-year transformation was rolled out
in two months.

Mr Brodin
said dealing with the pandemic “is definitely a challenging time in so
many ways”.

He said
the increase in annual sales was the one he was “most proud of”
during his 25 years with the company.

“We
have experienced the demand on life at home like never before in every market,
since, of course, people have been in the same situation – confined to the four
walls of their home.”