Britain's Supply-Chain Crisis: A Perfect Storm of Challenges

Strategic Insights -

The UK is facing a growing litany of shortages, with petrol stations and supermarkets struggling to keep up with demand. The crisis has been building for months, with industry chiefs warning government ministers of a supply-chain crisis over three months ago. Despite these warnings, ministers were slow to act, with junior transport minister Lady Charlotte Vere expressing reluctance to address the issue, citing concerns that the industry was "crying wolf". It was only after 73 days of inaction that the government finally agreed to the industry's requests, including issuing 10,500 temporary visas to drivers and poultry workers.

Key Takeaways:

  • The UK's supply-chain crisis is a complex issue, with multiple factors contributing to the problem, including Covid-19, Brexit, and seasonal pressures.
  • Industry experts warn that the government's measures to address the crisis are "too little, too late" to avoid months of further chaos and Christmas disruption.
  • The National Pig Association has warned of mass animal culls if butchers are not added to the visa programme, and retailers Next and Amazon, and the big supermarkets Tesco and Iceland are warning customers of potential delays ahead of Black Friday and Christmas.
  • The government's offer of 10,500 visas for drivers and poultry workers will not bring relief in time for many Christmas supply chains, which begin to ramp up next month.
  • Industry associations are warning that the build-up for Christmas needs to start in early November, and that the current measures are "too little, too late" to avoid disruption.
  • The UK's supply-chain was now "riddled" with holes, according to David Jinks, the head of consumer research at ParcelHero, an express delivery company.
  • The danger for Johnson is that when customers see shortages on the shelves, it will trigger a wave of pre-Christmas panic-buying, overwhelming the agenda.

Statistics:

  • Shipping rates from Asia to the UK are 14 times pre-pandemic levels, at $18,000 per container, according to industry analysts S&P Global Platts.
  • Transit times have doubled from 35 to 70 days, causing companies to ship earlier, creating yet further pressure on the system.
  • The NHS may still come under renewed pressure, with hospital admissions now at 700 a day compared to more than 4,500 at the peak of this January's crisis.
  • The UK is experiencing a severe gas shortage, with gas prices five times the three-year average, and gas imports from Russia and EU gas storage facilities are running 17% below five-year averages.

Sources:

  • The June meeting of industry chiefs and government ministers, where executives presented a list of potential fixes to address the supply-chain crisis.
  • The National Pig Association's warning of mass animal culls if butchers are not added to the visa programme.
  • The Retailers Association's warning of potential delays ahead of Black Friday and Christmas.
  • S&P Global Platts' analysis of shipping rates and transit times.
  • The NHS's hospital admission figures.
  • S&P Global Platts' analysis of gas prices and storage facilities.