Shortages will last another year, warns Ikea

Ikea's logo is seen outside of a store
Ikea's logo is seen outside of a store

Ikea has warned that stock shortages will last another year as turmoil in global supply chains shows no signs of letting up.

Jon Abrahamsson Ring, boss of Ikea owner Inter Ikea, said the company “foresees that the availability and raw materials challenge will continue for the better part, if not the whole, of [the financial year to the end of August]”.

He told the Financial Times: “This is here for a longer period than we thought of at the beginning of the crisis.”

It comes as logistics issues plague companies across the world. Ikea has attempted to get around some of the worst of the shipping issues by using trains to transport items from China to Europe, a move it said would “free up container capacity that we can use to ship more to the US”.

However, this has not made it immune to supply chain turmoil. In Los Angeles, for example, record numbers of container ships have been stuck waiting to unload cargo.

Earlier this week, Maersk revealed it had diverted cargo away from the UK, amid growing congestion at the Felixstowe Port in Suffolk as driver shortages left containers piling up.

Estimates suggest there is a backlog of around 7,500 full containers and 50,000 empty ones waiting at the Felixstowe terminal to be taken away, with collections down 20pc on 2020 levels.

The owner of Poundland said yesterday that the discount retailer has seen shipping costs rise tenfold owing to global supply chain issues.

Furthermore, fears mounted over a fresh disruption yesterday, after a second freight operator pulled electric trains from its fleets, because of spiralling energy costs.

Direct Rail Services said it would change to diesel locomotives “in response to temporary fluctuations in energy prices”.

The move followed GB Railfreight, which on Wednesday said it had taken the “difficult decision” to replace their electric services “in order to maintain a cost-effective solution for transporting essential … supplies around the UK”.

Maggie Simpson, director general of Rail Freight Group, admitted that replacing electric locomotives with diesel-powered alternatives was embarrassing for the UK as it prepared for the Cop26 summit in Glasgow.

She told The Telegraph: “From a railway perspective, we need to push forward on decarbonisation and RIA [Railway Industry Association] is right to keep pushing that message.

“If we don’t start soon, we won’t hit 2050 – so it’s as simple as that.”

Supply chain struggles are rippling across the world, weighing not just on retailers but also industry.

UK defence contractor QinetiQ said yesterday it was “experiencing technical and supply chain issues on a large complex programme”, sparking fears that the ongoing turmoil could present a potential risk to security.

QinetiQ is a major partner of the Ministry of Defence. It did not go into what the supply issues were, although said it was expecting to limit the problems to the current financial year.

The problem could force it to write down its short-term guidance. Technology groups, meanwhile, are also struggling with supply chain woes.

In Taiwan, TSMC, the world’s largest semiconductor manufacturer, told investors capacity for chip production would be “tight” throughout 2022, raising the prospect that a draught of silicon supplies will drag on.

The chip “foundry” company, which builds parts for companies including Apple, has promised to invest $100bn (£73bn) over the next three years expanding its capacity to meet demand.