14 July 2022

Supply Chain Disruptions: They Disrupt

We are in the middle of a surge in the arrival of new stock. We are also in the middle of a second Covid wave. Not every container can be unpacked immediately on arrival. That is annoying but maybe not quite as bad as being held in a leaking tent, awaiting a turn to enter the emergency department of a hospital in our largest city.

Our staff do their best to give priority to genuine urgencies. When everything is urgent, nothing is. Containers that unload from ships in Tauranga take about three weeks to reach Auckland, a three-hour drive away.

We continue to be subject to Covid-related absenteeism and have difficulty finding new staff. There is a waiting list of several months for us to get delivery of goods-handling equipment. Most warehouses, ours included, are full to the rafters and few are being built. Yet, this too will pass. The large inventories accumulated by some importers will have to move out, sooner or later.

We have adopted several measures to mitigate the current difficulties. We leased a fourth warehouse that acts as a processing centre for the other three. That will enable us to convert the processing areas in those warehouses to high racking, substantially increasing our storage capacity. We bought two additional trucks to cover the movements to the processing centre. Our immediate expenditure on those measures was about $900k, including an additional recurring annual rent of $300k.

We will continue to provide updates on local conditions, so that they are visible to you. We ask you to work cooperatively with our warehouse managers to increase communication for both parties, so we can do the best we can during this period of disruption.

Daniel Silva

25 June 2022

Travel Notes

Last week, three of us went to Melbourne to catch up with our clients there, for the first time in over two years. Covid fashions happen there one or two months before they land here, so it was good to see their airports and airlines discarding the mandates for performative mask rituals. 

On our return, we had to mask up in flight, except for the time spent slowly sipping from a small glass of water. We also had to spend quite a bit of time filling forms online for no discernible effective purpose. This nonsense, like pre-departure testing last week, will soon be dropped here too – much to the dismay of some of our public health activist experts.

Melbourne looks like a well-kept city, compared to Auckland. Their restaurants are as good as ever, perhaps even better, but we noticed a strange reluctance on the part of chefs to comply with our requests for two fried eggs on the steak. Weird.

Our clients are having the same issues that we have here with labour availability, supply chain disruptions in China and large increases in freight costs. They are also overstocked, having increased their inventories. They were pleased to hear of our large investments in additional capacity and equipment, to enable us to cope with stock-on-hand levels about 30% higher than the same time last year. John Widdows will explain those changes soon in a forthcoming post in this blog.

Daniel Silva

15 May 2022

Friendshoring

The past two years have presented importers with large increases in freight costs and the loss of reliability of freight schedules.

The freight costs will eventually come back to pre-pandemic levels. That is because the extraordinary profits of the major shipping lines have attracted new players keen to get a share of that bonanza. Capacity will increase and so will competition.

Likewise, freight schedules will return to some level of predictability, as supply chains gradually adapt to the new conditions. The capacity to spontaneously adapt is what makes supply chains so resilient. They are a product of millions of decisions made independently by millions of individuals, every day.

So, Covid-related disruptions will come to an end but there are two other factors at play which are of present concern to importers. The first is the need for democratic nations to realign their trade to other democracies. The second is the looming inflation and the resulting corrective recessions, which could adversely affect economies for years to come.

Two examples of the perils of trading with dictatorships: (1) Germany becoming dependent on Russian gas while dismantling its nuclear energy sector; and (2) many other countries’ decisions to subcontract manufacturing to China.

China’s zero-Covid folly is one that we are familiar with, having tried it here. Our attempt to eliminate Omicron was only abandoned when people decided that it was futile and stopped complying with the increasingly absurd isolation mandates. In China, however, the option to change course when mugged by reality is not in play, as rulers there appear to believe themselves to be infallible.

Importers in the rest of the world will be affected by the resulting disruptions. As they realise that the lure of cheaper labour is not sufficient to outweigh the uncertainties inherent in dictatorships, like a brutal lockdown here or a small neighbourly invasion there, they may start to trade more with other democracies. This tendency even has its own buzzword: “friendshoring”.

The other cloud on the horizon is the looming inflation and the inevitable corrective recessions. This is the result of some believing that “this time it’s different”. It wasn’t. This too will pass, but it may take a decade or two.

In May of 2021 we were storing 3.1 million units of stock. Today, we are storing just over 4 million, an increase of 29%. This is an illustration of how supply chains are fast to adjust to changing conditions. Most of our clients decided (wisely in our view) to increase their inventories. We are responding by increasing our storage capacity.

On 1 June, we will take possession of a fourth warehouse in Mangere.

This warehouse, unlike the others, will not be used for a specific set of clients. Instead, it will become a fulfilment centre for the other three warehouses. That will enable us to centrally deploy our automation investments and increase the storage space available in the main warehouses. 

Daniel Silva

23 February 2022

Labour Capacity Reduced, Targets Increased

We have started to experience labour shortages caused by isolation mandates. We expect these shortages to increase and to continue until the attempt to resist the spread of Omicron is abandoned.

The result will be an increasing difficulty in us meeting processing targets. We are currently running about one day behind. We will keep you informed on how we are tracking and will review the job completion targets weekly. This notice will appear in our Portal page:









The target date extension applies only to new jobs. These notices will be updated every Wednesday afternoon (pay day) with data from the previous week.


Aaron Hobbs

20 January 2022

We Are Running Short of Cartons

The supply chain challenges continue to grow. Now, we are facing a shortage of cardboard cartons.

I have just received notice from our main supplier that we are nearly out of our custom-specified cartons. Our supply agreement with them includes a commitment for 3 months’ supply at any given point. However, the cardboard manufacturer is so far behind that there are no reserves.

It seems that all alternative manufacturing avenues are in a similar situation. At this stage, we will not get any new stock until around February 8.

The reason we specify custom carton sizes is that they fit your order profiles and courier breakpoints. That ensures that you get the best value in carton utilisation and freight cost.

I have instructed all our teams to immediately re-use, re-use, re-use the cartons the goods arrive in. We have also secured a supply of some generic sizes, to keep disruption to a minimum.

The downside of this is that there may be instances where our packaging choices will not be the best for you. Please bear with us on this; we hope it is only temporary. Our teams will continue to try to pack your orders in the most efficient manner possible.

Please contact your warehouse manager or me at any time to discuss this issue.

Aaron Hobbs

Preparing for Omicron

When Omicron enters the community, we may see large numbers of people labelled as close contacts being forced to stay home and isolate. This means we could see big workloads while being short-staffed and unable to work at full capacity.

We are hoping we don’t end up in this situation but, in case we do, we are setting up our customer service teams now with the training and equipment for remote work.

Our warehouse managers will be in touch with you, if and when the need arises, to discuss a plan to achieve the least possible disruption to your business and customers. This would be a big-picture plan rather than selecting specific orders for priority, as that could have the potential to further slow processing.

We suggest that you too start to prepare in case this situation arises and discuss with your customers the impact of possible future warehousing and courier delays.


Tegan Smith




20 December 2021

Groundhog Year?

About this time last year, we looked back on 2020 and said, As we come to the end of 2020, we are still to find out if our attempt to isolate ourselves in a bubble, separate and distant from the rest of the world, can work. With the help of real science (vaccines) we may yet get away with it and make 2021 a year to remember. Let's hope so.”

So much for those hopes. Politicians and bureaucrats do not seem to have prepared that well for future waves. Maybe they reckoned there was no need, given the apparent success of their ‘world-leading’ elimination strategy. Last year, we also said, “It is easy to criticise the Government for […] missteps, but we must forgive them, for they knew not what they were doing.” This year, we are not quite so forgiving.

On a positive note, our colleagues at DSL were amazing. They coped with wild fluctuations in volumes of work and managed to complete jobs no more than one or two days from the KPI targets. By contrast, at least one of our major competitors is running three and a half weeks behind. Couriers are having trouble scaling up to meet demand and their delays in delivery appear to be increasing.

Another positive note is that our clients were also amazing, both in their resilience and forbearance. By that we mean that none have gone out of business, and we have not received complaints about the small delays in meeting targets. Thank you. We decided to remove the “KPIs Suspended, Best Endeavours” Covid disclaimer from our portal by the end of this month and will return to aim for the usual KPI of at least 98% on-target.

We too have learned something, so we refrain from making hopeful predictions for 2022. We do, however, note that even the worst plagues in history came to an end, usually within two years of the outbreak. What we can assure you is that we will continue to aim to keep business – yours and ours – running as best we can. We thank you for your continued support and wish you a great Christmas and a better New Year.

Daniel Silva

08 December 2021

Our Heads Are Up In The Clouds

We have just finished migrating our main servers to the cloud, hosted by Microsoft on their Azure platform. This means that our file, email, data, web, and other servers no longer live in the airconditioned storeroom opposite the office kitchen.  

This also means that we can sleep better, in the knowledge that a hoodie-wearing lowlife from Minsk or Pyongyang can’t blackmail us for some bitcoin in exchange for your data. It also means that we have a much better chance of continuing to serve your orders without interruption, and are able to easily scale up our IT systems as demand increases. 

In other IT news, we welcomed Christian Whyte to our in-house fulltime developers’ team last week. Christian will be focusing on migrating our client portal to the new .Net 6 Blazor framework. When that project is completed, you may not notice much of a change on how the site looks or works, except that it will be faster and more secure. 

Phillip Rashleigh
phillip@dsl.co.nz

01 November 2021

Rationing by Courier Post

Courier Post told us that we must not send more than 84 parcels per day from our warehouses. One day last week one of their drivers, unaware of our limit, collected 109 parcels from us. When their central command found out, they immediately slapped us with a one-day penalty. Our clients were punished by Courier Post refusing to collect their parcels from us the following day.

The 84-parcel limit was calculated as being 80% of the average daily collections from us during a two-week period in October. We know that no such limits apply to their own warehousing subsidiaries.

Of course, we understand that Courier Post, like us and every other logistics service provider, is having to contend with large volumes of web sales. We have told our clients that the usual 98% KPI is suspended, and it may take us a day or two longer to fulfil their orders. They understand  and not even one has complained.

It never occurred to us to simply tell our clients to stop sending us orders. We obviously lack the command-and-control instincts of the state-owned postal service. Still, we have been trying to help them by giving as much of their business as we can to their competitors. If you have specified Courier Post, you can help us to help them even more, by allowing us to shift your business away from them.

John Widdows

06 October 2021

Outlook For Retailers

In Auckland, we are in a lockdown variant. From a retailer's perspective, you could call it "lockdown with KFC". This week, it evolved to "lockdown with KFC in the park". At some stage, retailers may have to cope with regulations like "one person per x m2 in the store", enforced by a security guard at the door (at their cost).

Then, lockdowns will end – as they have in most of the world. Retailers shouldn't count on a strong recovery based on web sales, like the one we experienced last year. That is because we no longer have large volumes of new entrants to on-line commerce, and many people appear keen to spend their money on overseas travel, the moment border restrictions ease.

Web sales will continue to be an important and growing part of retailing. Some retailers are doing it very well. Software designed years ago to manage store operations using cash-register-based control systems may not be best suited for a web channel. Retailers should consider upgrading to one of several modern platforms designed for that purpose.

Here at DSL, we have continued to cope with large inbound volumes, which are a mixture of catching-up from shipping disruptions and the usual seasonal Christmas rush. Orders have been packed ready for dispatch as soon as the lockdown lifts. Warehouse space is tight but manageable, at this stage. We have suspended the usual strict 98% KPI but are running no more than a day or two behind. We will keep you informed.

Daniel Silva

23 August 2021

Back In Lockdown

New Zealand was suddenly placed in lockdown last week. This one is different from that imposed in March of last year. We are no longer required to lock up our distribution centres and can accept incoming shipments. We can ship direct-to-consumer orders of products that our clients consider to be essential. Retail stores are to remain closed, but we can ship orders to other distribution centres or to retail stores that want to receive them in preparation for reopening.

We are focusing on unpacking containers and counting and putting the contents away. Our dedicated staff are available to perform the work, until they find themselves in the company of more than 10,000 “close contacts” or visit a place in the ever-growing list of “locations of interest”. Then, they will have no option but to self-isolate.


Our contractual KPIs are suspended for obvious reasons of force majeure. It takes longer to unpack a container under strict social distancing rules and not all pallets can be immediately placed in pickable locations. We will be working on a best-endeavours basis during this period and for some time after it ends. We will keep you informed.

Daniel Silva

16 March 2021

Stock Management

Our Stock Management page now includes more information to help you manage your stock. Please let us know if there are any other useful metrics that we can include for you.


Phillip Rashleigh