Petrol panic and empty shelves: the UK suffers supply chain shortages as Christmas nears

In the last month, various high street businesses across the country have reported worrying stock shortages. More than half of British shoppers, surveyed by YouGov, have experienced noticeable food shortages in their local supermarkets and shops in recent weeks – a trend that is predicted to only worsen in the coming months during the build-up to Christmas. 

The issue has largely been associated with the hospitality sector, as big restaurant chains have been among the worst hit with Nando’s and KFC running out of chicken. Tesco and Iceland have failed to keep everyday items on the shelves, while McDonald’s and Wetherspoons struggle to offer popular beverages. However, the issue extends to businesses all across the economy, most recently hitting petrol stations and causing people to ‘panic-buy’ due to the rationing of fuel deliveries.

This ongoing crisis has been blamed on a number of factors, all ultimately stemming from Brexit and the pandemic. While severe disruption to global trade was, arguably, an inevitable long-term consequence of Brexit, Covid-19 has seriously exacerbated these pre-existing issues. This is most obvious in the case of the UK’s chronic shortage of lorry drivers. 

The shipping process has been seriously slowed down, leading to inevitable widespread stock shortages

Long before Covid-19, many businesses had warned of a potential lack of heavy goods vehicle (HGV) drivers due to the dramatic fashion in which Britain left the European Union. As predicted, thousands of European drivers promptly left the UK following the decision, leaving us with a 60,000 driver shortfall which, thanks to Covid-19, is now estimated to be at 100,000. 

The arrival of the pandemic then brought with it countless unforeseen obstacles. For instance, an abnormally slow turnover of candidates waiting to qualify as HGV drivers. Although it is not news that there is a huge backlog of individuals waiting to take driving tests, this has proved particularly detrimental to the transportation sector as many are still waiting to be cleared by the Driver and Vehicle Standards Agency (DVSA) and likely won’t be until 2022. With around 30,000 HGV driving tests not taking place last year because of the pandemic, the shipping process has been seriously slowed down, leading to inevitable widespread stock shortages.

To make matters worse, all sorts of businesses across the country have experienced unprecedented labour shortages due to the so-called ‘pingdemic’ (the sensitivity of the NHS Test and Trace app resulting in thousands of people being ordered to self-isolate after coming in contact with someone who had recently tested positive for Covid-19). This had an enormous impact on the UK’s economic recovery, with July seeing a massive drop in retail sales resulting in a mere 0.1% GDP growth from the month before. 

Businesses had to reschedule shifts last minute, services ran late and some services were cancelled altogether due to lack of staff available. “Trying to staff whilst people are having to isolate has been tough on the team,” explained Charlie Wells, director of The Farm in Stratford. “There isn’t a day where we’re not short-staffed.” Many retailers reported being unable to operate at ‘full steam’ and subsequently had to close early, or altogether, with those staff who were available being forced to work overtime to make up for absences.

I have never seen the sort of pressures that our members are under. It’s not just about driver shortages, we are seeing skill shortages across the entire supply chain

– Richard Harrow, CEO of The British Frozen Food Federation

Although the NHS app was adjusted on 2 August to make it less sensitive, Covid-19 is still fanning the fire – as it were – of the pre-existing pressures put on businesses due to Brexit. Sectors such as the shipping industry have been among the worst hit, due to the lack of applicants going for roles. Typically, a high percentage of their workforce is made up of individuals from countries outside of the UK – but with Brexit-linked rule changes making it arduous for them to work here, many businesses have been failing to get orders to arrive on time, if at all.

With companies having to deal with increased delivery service charges, as well as record-breaking volumes of customers, it is unsurprising that they are struggling to absorb everything. “We are actually facing what I can only describe as a perfect storm,” said Richard Harrow, CEO of The British Frozen Food Federation. “I have never seen the sort of pressures that our members are under. It’s not just about driver shortages, we are seeing skill shortages across the entire supply chain. There will inevitably be some price inflation around food…members who would normally be laying stock down now for Christmas say they don’t have the resources to do it.”

With the countdown for Christmas – a key trading period – already on for businesses, many now fear that a lot of their supplies won’t come in time. Toy shop owner Donald Nairn, who runs Toys Galore in Edinburgh, is concerned that he will miss out on having numerous popular toys on sale this Christmas. “Certain things I anticipate will be in incredibly short supply, like Barbies for example. We are basically ordering as much stock as we possibly can right now so we have stuff to sell at Christmas time,” said Nairn.

It is predicted that the UK could face shortages of various festive products – notably, pigs in blankets – and Iceland’s managing director, Richard Walker, has reiterated just how critical this time of year is for businesses to stock up. “The reason for sounding the alarm now is that we’ve already had one Christmas cancelled at the last minute and I’d hate this one to be problematic as well. We start to stock build really from September onwards for what is a hugely important time of year…we’ve got a lot of goods to transport between now and Christmas and a strong supply chain is vital for everyone.”

Many criticise [the government’s] dismissive approach to post-Brexit trade deals and developing workforce difficulties

Unfortunately, many retail representatives think that these stock shortages could exist for the foreseeable future. The Confederation of British Industry (CBI) warns that supply chain issues could last for up to two years, whilst The Food and Drink Federation (FDF) says the challenges could be indefinite. “I think we will see we are now in for permanent shortages”, explains Ian Wright, chief executive of The Food and Drink Federation. “These shortages don’t mean that you’re going to run out of food… but what is changing now is that the UK shopper and consumer could have previously expected just about every product they want to be on a shelf or in the restaurant all the time. That’s over, and I don’t think it’s coming back.” 

In response to these predictions, many business executives have been vocal about how they are going to cope with the changes to their stock. For instance, Steve Murrells, CEO of the Co-Operative, has explained that while there will never be bare shelves, many supermarkets are adapting by streamlining their selection range in order to prioritise and process more, “rather than three different qualities of strawberry, there is just one grade.” Some also think that the answer lies in opening smaller and more localised food systems, as independents provide, which would be immune to many of these issues associated with international trade.

Increasing pressure is mounting on the government to ‘get a handle’ on this supply chain crisis. Many think that the situation shows no sign of improvement without intervention. Although common problems, like staffing teams testing positive and having to self-isolate, are out of their control, many criticise their dismissive approach to post-Brexit trade deals and developing workforce difficulties. 

Iceland’s Richard Walker, has publicly criticised the government’s management of the transportation sector. Walker labels Brexit as the root cause of the supply chain shortages, but says “it is a self-inflicted wound. I wouldn’t say [the supply chain shortages are] an inevitable consequence of Brexit… This is caused by the government’s failure to appreciate the importance of HGV drivers and the work they do for us. 

“These HGV drivers have kept the show on the road for 18 months during the pandemic and it is criminal that we are not viewing them as skilled workers…This is not a new issue, we and everyone else in the retail, manufacturing and transport industries have been calling on the government to step in and find a solution to the problem for many weeks, such as including lorry drivers in the essential and skilled workers list.”

At the moment we’re running very hard just to keep on top of the existing demand

– John Allan CBE, Tesco’s Chairman

Many echo Walker’s sentiments regarding the government’s refusal to recognise how much businesses – particularly ones which sell fresh, perishable supplies – wholly rely on HGV drivers. Many are pushing for a more flexible immigration policy that recognises skilled professions and the logistics sector has asked the government to introduce a short-term visa scheme for HGV drivers, to help alleviate the shortage. 

John Allan CBE, chairman of Tesco, has also called on the government to change the rules to allow for more workers from overseas to help solve the problem. Anticipating shortages at Christmas, he said: “at the moment we’re running very hard just to keep on top of the existing demand and there isn’t the capacity to build stocks that we’d like to see.”

PM Boris Johnson has so far repeatedly downplayed concerns raised by the Department of Transport, however, the government has shown that they are aware of the crisis and wants to ‘shake’ things up. Many business executives are now looking ahead to October when all supply chain difficulties are expected to get worse, due to the introduction of post-Brexit checks on goods coming from the EU. What is certain though, is that we are witnessing the beginning of a new era of trading in the post-Brexit, post-pandemic world.