The UK is the top destination for containerized exports of U.S. wine, which primarily enters through the Port of Southampton, with smaller numbers of TEU (twenty-foot equivalent units) entering via Liverpool, Felixstowe and London.
Last year, the Port of Southampton handled 4,382 TEU of U.S. wine, more than double the volume of containerized wine exports shipped to second-ranked Germany and third-place Belgium.
Yet, the combined impact of the pandemic and Brexit are weighing heavily on UK ports and their ability to expedite cargo.
Similar to most countries, the UK’s trade in goods fell sharply for much of 2020 before rebounding in the fourth quarter of 2020. However, the disruption caused by Brexit was equally significant.
Congestion at UK ports has been an issue for months, but since the UK’s formal withdrawal from the European Union on January 1, it’s gotten worse.
The Container Availability Index (CAx) produced by Container xChange, a leading platform for buying, selling and leasing containers, uses an index reading of 0.5 to describe a balanced market, or one where the same amount of containers enter and leave a specific port. A figure below 0.5 means more containers leave the port compared to the number that enter, while a figure above 0.5 means the opposite.
At the Port of Southampton, the CAx for a twenty-foot container averaged 0.72 last year, but stands at 0.85 currently. The UK ports of Felixstowe and Liverpool have also seen their CAx rise this year compared to 2020.
“The UK’s leading gateway terminals for container traffic suffered congestion for much of 2020, prompting carriers to cut some calls and ship cargo in from European hubs via the Channel Tunnel, ferry services and feeder services instead,” noted Dr. Johannes Schlingmeier, CEO of Container xChange, this past week.
“Based on the build-up of containers at ports in 2021, it seems the situation has further deteriorated. We are now seeing critical levels of boxes building up at Southampton and Felixstowe. Post-Brexit cross-Channel shipments are more complicated under dual-Customs regimes and this could be a factor in logistics bottlenecks.”
In the meantime, changing consumption patterns in the UK are also challenging exports of U.S. wine.
For instance, the London-based research firm International Wine and Spirit Record (IWSR), states that consumption of still wine has gradually declined over the past five years.
In part, UK adults are drinking less still wine because of the “cumulative duty increases and widespread price inflation that has made wine a more expensive drink.”
Younger consumers are also moving away from wine—or not entering the segment at all, while “moderation and premiumisation” are also contributing to less wine consumption, according to IWSR.
On a positive note, many consumers are more concerned about sustainability as a result of the pandemic, stated IWSR.
“In tandem with increasing the focus on environmental concerns, the pandemic has amplified the trend towards health and wellness. Together, these issues have acted as major drivers of the organic, biodynamic, and low-intervention wine movement.”
Specifically, “With the pandemic highlighting the fragility and vulnerability of our place within the natural world, the focus on ingredients, authenticity, proximity, wellness, and taking care of yourself, society and the planet, are all climbing fast,” explained Daniel Mettyear, research director for wine at IWSR.