Supply chain perfect storm
McDonald’s, Nandos, many supermarket chains and other retailers have all experience supply problems in the last few weeks. Dr Jonathan Owens, logistics expert from the University of Salford Business School, comments what is going on behind the scenes.
Dr Owens said: “The UK retail industry is going through the perfect storm of supply chain issues caused by two major factors, Brexit and the Covid. Brexit has laid bare the shortage of HGV drivers, since many European drivers have returned home when the UK left the EU. Although, during the various lockdowns early on in the year and at the start of Covid, there were well documented shortages, this was due to spiking and customers panic buying.
“However, predominantly, what is significant now is that the UK has opened up, and we have demands for products coming from two distribution channels. Online, which has developed significantly during the pandemic and increased its customers base, and the traditional footfall shopping. It is with the latter that we can see where demand is outstripping the capacity to supply. This could be associated with the pent up consumer frustration to purchase and start to return to ‘normality’.
“Covid is a big player in our supply chains predominantly because of their global reach. Ningbo, the third largest global container port, will start full operations from the beginning of September, however it will be a while before it is operating at full capacity.
“As evinced from previous lockdowns of this and other Chinese ports, because of the zero tolerance to Covid, there is no guarantees the Delta virus won’t enter one of these ports again and force another shutdown, and further disruption. So, it is like walking on eggshells and planning nightmare for shipping companies, and the realisation that other ports soon choke and cause bottlenecks and delays. This latest lockdown has hit the start of the festive supply chain for many retailers, and will push back the marketing and availability of some products.
“The stretched and volatile shipping supply chain, as well as our internal distribution problems will see reduced product choice and price increases for end consumers.”