Industry Update: Tsunami of knock-on effects
The impacts of Covid continue to ripple throughout the globe in many more ways than expected. This has caused undulated effects across all industries, especially manufacturing, as supply chains have been affected.
Covid combined with the repercussions of Brexit are two of the main culprits in causing supply chain delays across multiple industries. As a result of this, we're now experiencing; UK commercial driver shortages, logistics staff shortages, global raw material price increases and pro-longed lead times across many manufacturing sectors.
UK HGV Driver Shortages: Action required yesterday.
Lorry drivers have been allowed to increase their driving hours in order to try and minimise the impact of the driver shortage in the UK. In addition, plans have been announced to allow European lorry drivers back into the UK on temporary visas. Whilst this shows that some action has been taken, this is a minuscule contribution to an ever-increasing tsunami of knock-on effects on UK logistics. Not to mention the safety and welfare implications that this may have. This is one of the reasons why at Invopak, we will be doing our utmost to be more efficient and ensure that we don't need to increase drivers' hours.
The government has announced some long-term plans to attract new drivers, simplify training and encourage people to stay in the sector; however, the RHA has stated that "the crisis is so great it needs immediate short-term measures allowing the industry to work towards the longer-term fixes."
The Week quotes, "The primary reason for all this is an estimated 100,000 shortfall in the number of UK lorry drivers needed to get goods and materials moving. That’s partly because 14,000 EU drivers have left the country since Brexit, and only 600 have returned."
It's clear that the shortage can be largely attributed to Brexit, combined with the knock-on effects of Covid has only magnified the issue. The current outlook is bleak; it seems like proactive action to reduce this crisis was required many yesterdays ago. For now, we remain hopeful that the current short-term measures will be enough to keep our supermarkets stocked and the UK industry ticking over until some longer-term action is taken.
The worst labour shortage since 1997?
We've explored the headline topic of HGV driver shortages. However, labour shortages are being experienced throughout the UK; this is something we've personally felt as we try to recruit more staff, especially in warehouse roles.
This combined with the HGV driver shortage, is causing huge headaches for millions of companies across the logistics sector.
It has been described as the worst labour shortage since 1997. There are rising fears that sustained labour shortages could lead employers to push up wages, which could feed through to rising inflation as companies raise prices to accommodate higher wages. The 1997 labour shortage encouraged millions of people to switch to jobs such as builders or warehouse staff as they chased the higher paycheque that these roles began to offer. As you can imagine, this trend caused the age-old supply and demand principle to kick in, and we soon saw this bubble burst. This leaves a lot of us asking the question, will the UK labour shortage follow this same pattern? But what damaging effects will it have on the economy whilst it rides its course.
Global Raw Material Price Increases: the never-ending rollercoaster.
I'm sure this is something that we're all tired of hearing. We've had to review our prices as relentless metal continually, and polymer increases continue to hit manufacturers.
Whilst we've experienced increases in both plastic and tinplate products, we've had the largest impact on our tinplate products. So instead of wading through the mass of articles reporting on this subject, we've summarised a few of the key points as to what has triggered steel increases, why they continue to occur and what our forecast for the future is:
- China, one of the main manufacturing countries, is imposing tariffs on the export of anywhere between 10-25% to keep domestic supply regulated (starving our market).
- The need to rebuild post-pandemic and the desire for ‘green’ products is creating a steel boom.
- However, Europe and North America are seeing the greatest rally in steel, with prices toppling records as governments focus on infrastructure spending.
- Manufacturing plants are straining to bridge the gap in demand after lying dormant throughout the pandemic. However, Western manufacturers aren’t keen on expanding capacity after weathering years of painful shutdowns and low prices.
Overall, pricing will remain high for the remainder of the year, potentially higher, and shortages will continue as supply is tight and demand is ever-growing.
The inevitable result, prolonged lead times.
An inevitable result of labour and raw material shortages is delays. As we explored earlier, this bottleneck is likely to continue for some time. We have to learn to live with it, and we are trying to protect our customers as much as possible by:
- Increasing our stock holding.
- Continually reviewing our Stock Guarantee lines.
- Proactively reminding customers to order ahead.
- Sourcing additional manufacturers.
- Offering pallet storage to customers who wish to bulk buy and store their products or packaging through our sister company: Invo fulfilment.
What can you do to help protect yourself?
- Order online and check our live stock levels. Check out our how-to order online video to get started.
- Place forward orders well in advance.
- Consider taking alternative products that we have available.
- Consider additional storage via Invo Fulfilment.
By working together, we can safeguard your supply.