Despite growing optimism among some, the chemical supply chain faces a slew of challenges. And with so many industries reliant on the sector, addressing these is not just a priority for the industry, but for British business in general. Tim Doggett, Chief Executive Officer (CEO) of the Chemical Business Association (CBA), answers questions on the current state of the chemical supply chain also, the priorities for the sector and the new Government.
The chemical supply chain is enormously important and is not only essential to our economy, but society, as it directly and indirectly impacts the entire population of the UK.
It is truly global, and it includes not just distributors and manufacturers, but also logistics, transport and warehousing companies as well as many other support and service providers. Without the chemical supply chain, countless products that people rely on every day would become unavailable, including food and medicines, ultimately effecting the public’s health and access to essential goods and services.
What have been the major setbacks, disruptions and challenges the chemical supply chain has faced in recent years?
It was well publicised that the pandemic was a major cause of disruption, and its effects are still felt even today. Another event in recent years was when the Evergiven ran aground in the Suez Canal, further highlighting our dependence and reliance on global supply chains. Alongside this, the Russia-Ukraine war has exacerbated the disruption and instability within supply chains and continues to cause significant challenges.
The recent attacks on ships in the Red Sea have had a major impact, delaying deliveries, dramatically increasing shipping costs and reducing the optimisation of vessels resulting in reduced capacity.
Another major disruptor was Brexit, which has had many long-term negative impacts on the chemical supply chain.
The introduction of bureaucratic and customs procedures increased the complexity, workload and import/export costs for businesses, with the formalities frequently causing complications and significant delays at ports. For many businesses it meant switching from a ‘just in time’ model, to ‘just in case’, which in turn led to stockpiling and overstocking, causing not just storage capacity issues, but also negatively affecting cashflow.
Perhaps the single biggest impact to the chemical supply chain in recent years is UK REACH, which is a result and casualty of Brexit, and it was fundamentally flawed from the outset in access – or rather, lack of access – to data.
UK REACH not only affects the chemical supply chain and the wider chemical sector, but downstream users, who were previously not within the scope of the regulation. From the outset, the CBA has worked tirelessly to highlight the issues and to offer solutions.
Having made the first major breakthrough back in 2021, progress has been frustrating and painfully slow. It must become a top priority for Government, as the uncertainty around UK REACH continues to stifle investment, resulting in it having a negative impact not only on the chemical industry, but industry as a whole and its ability to trade, innovate and grow.
Our ambition remains the same, to make UK REACH proportionate, effective and efficient, for industry and regulators alike, with no reduction in standards.
Brexit has also impacted the labour market. It is well documented that fewer EU nationals now work in the UK, and this has inevitably impacted the chemical supply chain, while a shortage of HGV drivers continues to be a problem, albeit this is a global and chronic problem.
On the domestic front, a principal issue for the chemical supply chain is ensuring the long-term sustainability of a skilled workforce.
While recruitment may not currently be an urgent issue generally for the chemical supply chain, there is an increasing ‘war on talent’, as well as several factors that are likely to have an impact, such as many experienced members of the workforce approaching retirement and skills shortage in the cohort that will step into their roles. There is also a lack of awareness of the career opportunities that exist which along with negative perceptions of the chemical supply chain.
How is the industry responding?
To ensure there is a current and future sustainable pipeline of skilled employees, the CBA has made it one of its missions to establish the chemical supply chain as an employer of choice. It is leading and involved in a variety of initiatives such as Generation Logistics and Generation STEAM that seek to improve skills, recruitment and retainment. A key objective is to attract new and future talent into the chemical supply chain, while at the same time, supporting those already working within it.
We are not only focusing on future generations. We fully recognise the merits in embracing seasoned professionals, over the age of 50 and that employers must create a workplace that values and utilises the talents of all employees, regardless of age. Our 5050Vision highlights the value of this segment of our workforce.
What can the new Government do to support a healthy, sustainable and reliable supply chain?
For many years we have worked closely and extensively with Government, both in the UK and overseas, and we look forward to this continuing.
The new Government must work in partnership with the industry to establish a dedicated chemical strategy. Covering everything from import/export logistics and manufacturing to regulation, this must seek to improve and support all aspects.
Furthermore, the Government must listen to the views of business on UK REACH whilst endorsing and supporting ongoing initiatives, like Responsible Care, which aims to improve sustainability, and our People and Skills Hub.
Finally, to encourage economic growth within the logistics industry, the Government needs to ensure that the industry is represented on the new Industrial Strategy Council, and by supporting and working in partnership with associations like the CBA to address issues, break down barriers to opportunity and kick-start economic growth in the chemical sector.
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