Why is Britain facing a supply chain crisis?

Irn-Bru and overcrowded petrol stations are latest victims of HGV driver shortage being blamed on Brexit and pandemic, joining long list of companies battling stock issues this summer

What is happening?

Scottish soft drink company AG Barr, maker of the celebrated sugary soda Irn-Bru, is the latest company to be hit by the supply chain snarl-up currently dogging British retail.

Chief executive Roger White said of delays to the shipping of his company’s signature product: “There is a tightness with drivers and we have had particular disruption too with materials, particularly aluminium cans. Inflation is all around us at the moment - materials, wages and supply among other things - so we have to be careful how we manage this.”

Mr White was speaking with the UK mired in a flash fuel crisis, with drivers queueing at service stations to panic buy petrol as rumours spread that pumps would soon runout due to the shortage of HGV drivers that has resulted in barren shelves and consumer discontent across Britain throughout summer 2021.

AG Barr joins the long list of high street businesses that have reported worrying stock shortages in recent months, with restaurant chains Nandos and KFC running out of chicken, McDonald’s struggling to make milkshakes and Iceland trying and failing to keep everyday items like bread and soft drinks on the shelves.

Tesco, dairy giant Arla and confectioner Haribo have all likewise reported supply chain issues of late.

The problems have been developing throughout the summer but first really became apparent during the July heatwave when social media was flooded with photographs of empty shelves in shops across the country.

The disruption was then largely blamed on the “pingdemic”, staff absences caused by the overzealous NHS Test and Trace app ordering people to self-isolate after coming into contact with someone who had subsequently tested positive for Covid-19, prompting shifts to be rescheduled and services to run late or be cancelled across many industries.

But the app was tweaked on 2 August to make it less sensitive, searching for contacts encountered in only the previous two days, not five, which appears to have made it less trigger-happy in issuing quarantine orders.

So if fewer manufacturing, retail and service sector employees were being forced to stay at home, the problem of replenishing supplies in-store should have been greatly reduced.

The fact that it has not pointed to dysfunction elsewhere in the supply chain: namely, delivery.

Many businesses have long warned of a chronic shortage of lorry drivers arising from Britain’s decision to leave the European Union in such an acrimonious fashion and their fears appear now to be becoming a reality.

So is Brexit to blame?

Well, at least partly.

The UK haulage industry estimates that Britain lost 25,000 European lorry drivers in the wake of Brexit as they were forced to return to their countries of origin by tighter visa rules and the loss of free movement of labour principles as part of the EU.

That exodus has contributed significantly to the 100,000 driver shortfall we are now thought to be bogged down in, with the coronavirus pandemic and an ageing workforce also conspiring, the latter by preventing 40,000 new applicants from being able to take their tests and win their haulier licences.

Even embattled transport secretary Grant Shapps has had to agree with his political enemies in Europe and across the aisle that Brexit has been “a factor” in the chaos.

Speaking to BBC Radio 4’s Today programme in late August, Iceland managing director Richard Walker said the lack of HGV drivers “is impacting the food supply chain on a daily basis”.

“We’ve had deliveries cancelled for the first time since the pandemic began, about 30-40 deliveries a day,” he said.

“Things like bread, fast-moving lines, are being cancelled in about 100 stores a day.”

Asked if he believed Brexit was the root cause, Mr Walker answered: “Yes I think so. But it is a self-inflicted wound. I wouldn’t say it’s 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.”

Co-Op boss Steve Murrells agreed when he told The Times that his company was having to reduce some food ranges because of “Brexit and issues caused by Covid”.

British Poultry Council chief executive Richard Griffiths in turn said last week that he had written to home secretary Priti Patel about the shortage being caused by EU drivers returning home and the difficulties now involved in getting more to come to the UK thanks to “the limiting of immigration policies” but had yet to receive a response.

Empty shelves at Morrisons in BelleVale, Liverpool, in July (PA)

“When you don’t have people, you have a problem - and this is something we are seeing across the whole supply chain. The labour crisis is a Brexit issue,” he said.

Also weighing in over the Nandos chicken shortfall was poultry giant Avaro Foods, whose spokesman said: “Our concern is recruitment and filling vacancies when the UK workforce has been severely depleted as a result of Brexit. This is causing stress on UK supply chains.”

Boris Johnson has so far sought to downplay concerns but the Department of Transport is currently trialling extra-long “eco-friendly” lorries on British roads in the hope of allowing hauliers to carry more freight without needing additional staff.

Why are we asking this now?

With the petrol crisis providing an unwelcome reminder of the unseemly toilet roll stockpiling we saw at the start of the first lockdown last March, the situation is showing no sign of improvement without intervention.

This is doubly concerning with Christmas just three months away.

“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,” warned Mr Walker on Today.

“We start to stock build really from September onwards for what is a hugely important time of year,” he explained.

“We’ve got a lot of goods to transport between now and Christmas and a strong supply chain is vital for everyone.”

Also worried about the festive season was Tom Southall, policy officer at the Cold Chain Federation, who told The Independent: “Larger food chains are having to prioritise some products over others. They prioritise possibly what makes the most money or perhaps what’s been popular.

“I think we are going to see that for some time to come - certainly through the Christmas period. There’s a lot of planning that goes into Christmas and that’s happening now. We’ve heard that there are difficulties in processing turkeys for example.”

His warnings about the possibly reduced availability of fresh produce like Brussels sprouts were echoed by Nick Allen of the British Meat Processors Association who suggested pigs-in-blankets could be in jeopardy when he warned: “We are cutting back and prioritising lines and cutting out on things, so there just won’t be the totals of Christmas favourites like we are used to.”