Much like the start to each of the last few years – thanks to the COVID-19 pandemic and its impact on global trade – shipping has opened 2024 with more uncertainty due to further unprecedented events.

What is certain though is that the traditional patterns of trade are changing, as well as consumer habits both in a general sense and more specifically within the wines and spirits trades. Weakened economic conditions globally are contributing to lower demand in traditional markets, as well as resulting in lower consumption and changing consumer habits.

Whilst certain consequences of the COVID-19 pandemic continue to be felt and the economic outlook globally has generally been pessimistic, there are positives on the horizon.  Capacity and equipment imbalances, as well as service reliability have continued to improve, while freight rates normalise.  In certain industries the pandemic has led to a conscious restructuring of supply chains, though the wines and spirits trades have clear limitations in this regard.

Some of the anticipated and felt improvements of having the brunt of the COVID-19 pandemic ease, have been offset by the unprecedented situation in the Red Sea and the lack of access to the Suez Canal.  Increased freight costs and longer transit times are the main shipping related consequences of this, as 25% of global containerised trade traditionally transits this route, though current carrier vessel and equipment oversupply on the back of the COVID-19 pandemic has helped to minimise impact on affected trades.

Also, in South America, Panama Canal water levels are an ongoing long-term concern despite anticipated improvement in the short-term with the rainy season approaching.  This ties into the impact of climate change on the shipping industry, not to mention the regional challenges in the production of wines and spirits themselves.

The goal of lowering carbon emissions across both industries adds to challenges and costs, though many innovations that are the result of adapting to sustainability are a welcomed consequence – necessity being the mother of invention holds true.

Digitalisation continues to be an ever-increasing imperative in both shipping, logistics and the bulk wines and spirits trades.  Digitalisation benefits all levels of the supply chain, from crop management and remote harvest monitoring to real time access to shipment data and multi-level system integration, not to mention the reduction on physical documentation and ease of conducting transactions (all of which are welcomed).

New models of Direct To Consumer sales along with AI integration aid both consumers and retailers though adapting to this, or digitalisation in general, is not without its challenges and consequences, especially for smaller businesses or developing markets.

The commonly predicted outlook for the remainder of 2024 for each independently – bulk wines, spirits and global trade – is an expected improvement in the second half of the year.  However, this is based on no further unprecedented events along with improvements and/or stability alleviating the issues – economic and geopolitical – that are currently being contended with.

Even without the current and recent issues, the bulk wines and spirits industries, along with the shipping industry at large, are experiencing a period of rapid transformation.  Changing consumer habits, changing traditional markets, and a focus on digitalisation, lowering carbon emissions (as well as the impact of climate change on the actual production of wines and spirits) are what everyone in these industries are having to adapt to and navigate.

However, despite the many unknowns and unpredictability of the factors that now influence the wines and spirits trades, we must remember that these remain a significant and exciting part of the merchant shipping and global economy that we are all a part of.

Disruption to traditional supply chain models, trade patterns, consumer habits, as well as new technologies being adopted are not without their difficulties, though more importantly this also presents many new opportunities.  We can all drink to that 🥂