The chemical supply chain has faced numerous challenges in recent years, many of which continue to this day. Tim Doggett, CEO of the Chemical Business Association (CBA), looks at the continued impact of these disruptions on the industry and how it affects the sector’s outlook.
The past few years have been particularly challenging for the UK’s chemical supply chain industry. In addition to facing the global pandemic, the sector has had to deal with regulatory changes and increased bureaucracy because of Brexit along with other major supply chain disruptions such as HGV driver shortages, raw materials shortages, and massive energy price increases, all of which have been aggravated by the war in Ukraine.
However, the chemical industry is generally resilient and, as a crucial element of almost all value chains and a vital part of the UK’s economy, it continues to adjust and adapt.
The CBA has been the voice of the UK chemical supply chain industry for a century and currently represents over 160 member companies, including distributors, manufacturers, traders, warehouse operators, logistics and transport companies, many of whom are the main industry interface providing products and services to thousands of downstream chemical users.
It is this diverse membership that gives the Association a distinct advantage and a 360-degree view of the chemical supply chain, along with an extensive and in-depth range of expertise and insight. As part of its ongoing efforts to support members, the CBA conducts quarterly surveys on the state of the industry. The latest survey, conducted in February 2023, revealed valuable insight into various aspects of member companies’ operations. In particular, it highlighted how certain challenges continue to impact the industry.
During the past year, member companies have faced several supply chain constraints and logistics issues with imports and exports. Although matters have generally improved, almost five out of ten respondents (46%) revealed that they continued to experience rapidly escalating shipping costs during the final quarter of 2022. This is a considerable drop from the 85% affected at the start of year. Around one in ten (11%) stated they were experiencing a shortage of shipping containers.
The negative impacts of road haulage capacity in the UK dropped from impacting nearly two thirds (63%) of businesses, to just more than a third (36%) by the end of 2022. Figures for road haulage capacity in the European Union mirrored these statistics, dropping from 61% at the start of 2022 to 30% by December.
The war in Ukraine triggered particularly severe disruptions and nearly a year since it started, the conflict continues to impact the UK chemical supply chain, with almost half (47%) of respondents stating that they are still facing challenges as a result of the war.
A positive trend revealed by the survey is that employment and training across the sector showed a sharp improvement to +47% (+38% in the third quarter), while member companies also indicated a positive investment in training, with current training levels at +28% and future training levels projected to reach +42%.
The chemical supply chain industry has always been resilient and although many of our members, and the sector as a whole, continue to face serious supply chain constraints, the impact of these disruptions appears to have lessened in recent months. Whilst overall the survey indicates a improved outlook for the industry, it is also evident that external factors could easily dampen or halt this sentiment.
The CBA’s Supply Chain Trends Survey represents the independent chemical supply chain. It has been published since 2003 and aims to provide a snapshot of short-term trends in the UK’s chemical supply chain.
For more information, visit chemical.org.uk.