Labour and driver shortages are cutting across every part of the supply chain in sectors from hospitality to construction.
A shortage of workers in key industries such as food production and transport has been compounded by the post-pandemic reopening of the hospitality sector which has created more openings.
The ONS reported that job vacancies hit a record high of 953,000 in the three months to July. The record jobs available comes at a time when there are 100,000 fewer EU workers and one million people are still on furlough.
Tom Bradshaw, vice president of the National Farmers Union told the Times that butcher shortages at abattoirs meant pigs were “backing up” on farms as they couldn’t be slaughtered quickly enough.
The poultry industry is hatching 10% fewer chicks because producers can’t process the grown birds. Beef slaughterhouses “can’t extract all the value from the carcass because there aren’t enough butchers to process the offal”, said Bradshaw.
Supermarkets are cutting their ranges as “shortages are at a worse level than at any time I have seen”, Coop chief executive Steve Murrells said in an interview with the Times.
Murrells said the crisis was the result of “Brexit and issues caused by Covid”.
The Co-op has taken the step of retraining staff as lorry drivers because of an estimated 100,000 shortfall. Of the 14,000 European lorry drivers who left the UK last year, only about 600 have returned.
According to the FT, supermarkets are delivering to stores less frequently and prioritising the most profitable and easily transportable items.
Fast food giants
Supply constraints are being felt across a range of sectors including hospitality, wholesale, construction and healthcare.
- McDonald’s cut milkshakes and bottled drinks from its 1,250 restaurants on Tuesday due to supply chain problems
- A chicken shortage forced Nando’s to close 45 stores last week, and upmarket restaurant Novikov is struggling to find Wagyu beef
- Pub chain Greene King has reported drinks shortages in Scotland and City Pub Group has run out of Prosecco
Retail executives told the FT that “consumer unfriendly” measures could be brought in, such as stopping slow selling lines or bulky, low margin items like bottled water, as well as halting promotions that encourage demand spikes.
One said that the lack of drivers means the “wrong things get the supply”, pointing to agency drivers being diverted to supplying Amazon for Black Friday, before moving on to Christmas work for supermarkets.
Construction and packaging
Shortages of construction materials have seen lead times increase from days to three months for some items. Prices have also soared, with a knock-on effect of preventing new premises opening and holding up refurbishments.
Packaging is also becoming more expensive as cardboard prices have gone up due to the home delivery boom.
With the Christmas ‘golden quarter’ looming, the problems could worsen.
Neil Carberry, chief executive of the Recruitment and Employment Confederation (REC), told the Telegraph that labour shortages may cause delays to online orders and force retailers to increase delivery costs.
The REC warned that a lack of workers could spill into next year, with available workers in the wrong locations or having the wrong skills.
Carberry added that the labour market could face pressures for the next decade as baby boomers retire and Brexit limits the chance of migrant workers filling vacancies.
Pigs in blankets
Christmas favourites, such as pigs in blankets and gammon, could be in short supply reports the Evening Standard.
British Meat Processors Association (BMPA) chief executive Nick Allen said members are 12-13% short on staff, with one company missing about a fifth of its workforce.
“Some of the pig processors are having to cut down on how many pigs they are processing a week so that’s starting to have an impact back on the farm,” he said.
Demand for pigs in blankets reaches about 40 million packets at Christmas, but a shortage of labour could cut production by a third.
Richard Walker, managing director of Iceland, has predicted significant problems for Christmas this year if a solution isn’t found to the labour shortage.
“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,” he told the Guardian.
With problems widespread, HSBC has cut its UK GDP growth forecast for this year to 6.7%, down from 7.1%.