International supply chains are currently under considerable strain as global economies emerge from Covid. Ireland’s international supply chains are similarly challenged.
In relation to shipping, shipping costs across the globe have risen considerably. This is largely attributed to the disruption caused to the global supply chains by the COVID-19 pandemic. On a more local level, the end of the Brexit transition also represented an inevitable disruption to normal trade flows as businesses adjust to the effect of the UK becoming a third country.
In the first half of 2021, the volume of goods traded globally increased significantly as economies reopened. Surging demand coupled with moderate supply growth caused upward pressure on shipping charter rates. The surging demand was evident on all major containership routes. Disruption to supply lines during initial waves of the pandemic has meant that capacity in the containership industry has not kept pace with demand, driving shipping charter rates upward.
Within the aviation sector, cargo-only flights continued to operate during COVID but the grounding of the majority of scheduled passenger services, with the consequential loss of bellyhold capacity, had a significant impact on the price of air cargo. I expect to see a phased reintroduction of a number of European routes from Dublin towards year-end. Together with the impending relaxation of US travel restrictions, we should see an increase in capacity for belly hold air cargo over the coming months.
In the road haulage sector, the demand for use of the UK landbridge for accessing EU markets has fallen considerably as a result of Brexit. This has driven the simultaneous decline in Ireland-GB traffic and an increase in direct Ireland-EU traffic. However, land borders across the EU remain fully open and no delays, outside of the norm, are being seen.
There is however a shortage of HGV drivers. This is not an issue confined to Ireland, but has been a growing issue across Europe and globally for number of years. It has been exacerbated in an Irish context by COVID and Brexit. Both the Irish Road Haulage Association and Freight Transport Association of Ireland have informed my Department that Irish road transport operators are finding it increasingly difficult to recruit and retain qualified HGV drivers from Irish labour supply and from abroad.
Overall, like many countries across the EU and globally, Ireland’s supply chain remains under considerable strain. In terms of mitigating actions, my Department has and continues to meet with stakeholders from the shipping, aviation, haulage and exporter associations in relation to the range of issues they are experiencing, and rapidly responding to, due to Covid and Brexit. In relation to shipping supply lines, the Irish Maritime Development Office continues to monitor maritime traffic, trade and the global shipping market data.
In aviation, as part of Budget 2022, the Government announced a substantial aviation package of €90m to be used by state airports to further incentivise the restoration of connectivity and associated bellyhold capacity.
In response to HGV driver shortages, a National Logistics and Supply Chain Skills Group is in place since 2019 and various actions have already been taken by the Group in collaboration with the industry to promote the training opportunities available. In addition, Minister of State Hildegarde Naughton has asked the Group to examine the driver shortage problem and to make recommendations for mitigation. A number of interim actions are already being progressed including the acceleration of HGV driver licence exchange agreements with additional non-EEA countries.
