Import-export businesses turn to storage facilities as an alternative to just-in-time shipping.
Kennards self storage operations manager Andrew Kirkham says the past year has been "unprecedented" in the company's 50 year history.
"When Covid came I didn't know what would happen. If someone said we'd have significant demand in 2021 I'd have been surprised."
Before Covid storage facilities were at 80 percent occupancy, but now well over 90 percent of its storage spaces are occupied.
"We've had unprecedented growth across the board. We've been blessed with strong demand across the country," Kirkham says. "People are willing to pay monthly for large spaces because they just don't know when they'll have shipments coming through next."
Everyone from retailers to tradies are hiring large storage facilities to stock pile goods in shortage, he says.
Kennards recently opened a new six-level, 7000 square metre storage building in Auckland's North Shore, and it had the best occupancy in its first month than any of its other stores ever had.
Auckland online business owner Sarah Bola says shipping delays have pushed out arrival times for her made-to-order shoes by two weeks.
Bola started Sandy Days three years ago, after the birth of her son, as a side hustle. Since then, it's become a full time business.
She says before Covid, customers could expect to receive their customised shoes in two weeks, now it takes about three to four weeks.
Bola, who also sells clothes, has been storing items at her house to avoid shipping delays. But the shoes, which are custom-made, make it harder to bulk order and store.
She says if things continue as they are she might have to look into renting out a storage facility too.
International shipping costs have increased “exponentially” since Covid, she says.
While there have been several pain points, Bola says it's not all bad news. Pent up consumer demand means her revenue has increased by about 300 percent since the pandemic.
"We're just rolling with the punches," she says.
Export NZ executive director Catherine Beard says businesses are holding more inventory because no one can rely on the "just-in-time" movement of goods any more.
"In some ways it's worsened the supply chain constraints," Beard says. "It's also more expensive because businesses have a lot of money tied up in stock and are having to hire places to store that stock."
The just-in-time movement started in the Japanese car industry in the 1960s, as a simple supply-chain management reform to cut overheads by doing away with in-house storage.
Instead, they sourced parts as they needed them. For this to work, supply chains had to be reliable.
"Just about everyone in the world is affected by this, so inevitably price increases will flow on to the customer until the problem sorts itself out." – Catherine Beard, Export NZ
But Covid has put a spanner in the works, and a number of issues, including increased customer demand and outbreaks shutting down factories, have caused significant delays in shipping internationally.
Shipping companies have also been making huge profits because of the Covid-related supply chain delays.
Industry analysts Sea Intelligence reported the 11 top shipping companies in the world reported combined profits of US$16.2 billion in just the first quarter of this year. That's higher than the US$13.3b combined profit they posted in the entire second half of last year.
To put it into perspective, Sea Intelligence says in the decade to last year, only twice had a carrier posted an operating profit of more than US$500 million.
Beard says for quite a number of years shipping lines were hardly making any margins because there was an oversupply, and the shipping industry says, this is a correction.
These transport issues are likely to last at least another two years, she says.
Beard says because shipping woes are being felt internationally, customers are eventually going to pay the costs businesses are putting up with.
"Just about everyone in the world is affected by this, so inevitably price increases will flow on to the customer until the problem sorts itself out."
Meanwhile, Kennards' boss Kirkham says the company's looking to expand its footprint with more stores planned to be built in the regions.
"We've just got expansion of our Hawkes Bay store going through consent now and we're hoping to confirm some acquisitions in the next quarter."
