Is it curtains for Christmas? How supply-chain crisis spread across Britain

Supermarkets, restaurants and factories are struggling with shortages of stock and staff

A sign requesting shoppers' patience about out-of-stock products on empty shelves in a supermarket at Nine Elms, south London. AFP

Britain's factories, supermarkets and restaurants are grappling with supply chain problems as the fallout from the Covid-19 pandemic and Brexit leaves shop shelves empty, production lines on the go-slow and even puts Christmas under threat.

High street businesses across the UK have reported worrying stock shortages over the past week, with US burger chain McDonald's running out of milkshakes and bottled drinks – a shortage of lorry drivers is being blamed for causing the problem.

Meanwhile, fast-food chains Nando’s and KFC complained of running out of chicken, with Nando’s forced to temporarily shut 50 of its outlets, while supermarket chain Iceland said it was struggling to keep everyday items, such as bread and soft drinks, on the shelves.

The food retailer, along with market leader Tesco, said that the supply chain chaos was worsening and that impending product shortages were not likely to ease in time for Christmas.

"The reason for sounding the alarm now is that we've already had one Christmas cancelled at the last minute," Iceland boss Richard Walker said.

"I'd hate this one to be problematic as well. We start to stock build from September onwards for what is a hugely important time of year.”

The crisis has even caused the National Health Service to temporarily stop blood testing for certain conditions because of a shortage of collection tubes, while popular UK bakery chain Greggs said it had also fallen victim to the supply interruptions.

"Unfortunately, like others, we're seeing temporary interruptions in supply for some ingredients, which occasionally results in shops not being able to maintain full availability on all lines," Greggs said.

The problem has been growing over the summer months, with the disruption blamed on a combination of Covid and Brexit causing thousands of EU workers to leave the country.

At the start of the year, Britain faced major border delays after the country’s exit from the EU on January 1, while new immigration rules disrupted recruitment.

That led to fewer EU citizens working in the logistics sector, sometimes shunned by Britons because of the low pay and long hours, while the pandemic then persuaded even more foreign workers to leave, causing a shortage of lorry drivers.

The Road Haulage Association estimates there is now a shortage of more than 100,000 drivers from a pre-pandemic total of 600,000.

The shortage is at a critical stage, said Rod McKenzie, director of policy at the RHA, with not enough time to address the recruitment crisis ahead of Christmas “because of the length of time it takes to train lorry drivers”.

"We need some help to make sure the wheels don't fall off, almost literally, in the Christmas season," Mr McKenzie said, calling for short-term visas for overseas lorry drivers.

Companies are being forced to come up with new ideas, with one company, which supplies food to care homes and restaurants, buying smaller vans because of the lack of qualified lorry drivers.

Coral Rose, managing director of Country Range, a group of 12 wholesalers supplying food and other non-food items, said the shortage of drivers has affected the supply of products from manufacturers to its warehouse as well as its deliveries to customers.

Ms Rose said “we’re taking drastic action, such as buying smaller delivery vehicles", to make sure that the company is not affected by the shortage of people with specific HGV licences.

The British Retail Consortium said the situation will worsen in October, when imported EU animal products require new border checks.

Jonathan Owens, a supply-chain expert at the University of Salford, said empty shelves and delayed or cancelled deliveries "have become a familiar sight for many, as companies struggle to meet demands ... with decreased capacity".

The Confederation of British Industry said that retail and distribution stocks are at a record low with some sectors warning that the issues are going to worsen as schools and offices return to normal.

Tony Danker, the CBI head, said deep structural challenges existed in Britain and the prompt use of more government money to help retrain staff could ease the crisis.

"The government needs to take a sector view of the challenges and identify solutions that can have an impact quickly," he said. "That could mean being agile in the way we use our immigration system to bring in fixed-term visas for shortage occupations."

However, the problems are also being caused by global challenges, with a worldwide shortage of semi-conductors badly hitting sectors such as manufacturing.

UK car production plunged to its lowest July level since 1956 as the global microchip shortage hit the industry.

Only 53,438 cars were built during the month, a drop of 37.6 per cent on July last year, the Society of Motor Manufacturers and Traders said. Supply chain challenges hampered production and carmakers are struggling with a wave of workers being “pinged” by the National Health Service Covid-19 tracing app.

The chip shortage has slowed car assembly lines around the globe because new vehicles often include dozens of microchips, also known as semiconductors.

The dearth is not only putting pressure on carmakers, but also on tech companies and the consumer electronics sector, which are also competing for supply.

A quarterly survey published by the CBI on Thursday said reports showed that labour shortages in the services sector were now at their highest level on record.

The staff shortages and supply chain challenges are already having a knock-on effect on the wider economy.

A flash reading of the IHS Markit/CIPS composite Purchasing Managers’ Index for August showed a drop for the third month in a row.

PMI fell to 55.3 from 59.2 in July, its lowest level since February; although a reading above 50 still signals growth over contraction.