Sat, 16 Oct 2021

Three things that could help save Christmas 2021 from shortages

The Conversation
15 Sep 2021, 22:41 GMT+10

When problems with food shortages in the UK first started making headlines over the summer, the government played down the seriousness of the situation. It said that the UK had a "robust and resilient food supply chain", referring to "isolated incidences" of problems within the system.

Several months later, it looks anything but. The chairman of Tesco, John Allan, recently warned that supermarket shelves could be empty at Christmas, while some senior figures are openly wondering if the shortages in supermarkets could even be permanent.

There are reports that toy shops and other non-food retailers are struggling to get enough stock into their warehouses to prepare for the Christmas rush, with warnings that there could be a crunch coming in November once festive shopping gets underway. There have already been reports of some people being tempted to panic-buy and stockpile, and this could clearly spiral later in the year. And all this before reflecting on the effects of surging inflation, which has left some families struggling to put food on the table this year.

So what exactly is happening on ground, and can it be overcome in time for Christmas?

COVID and Brexit

The pandemic has contributed to the shortages in a number of ways. Staff shortages at international ports due to pandemic restrictions, together with supply bottlenecks dating back to the blockage of the Suez Canal earlier this year, have made it difficult for the global shipping industry to satisfy the resurgence in demand. Air freight has been hit by reduced capacity too.

In the UK, the "pingdemic" continues to remove many staff from the workforce because it requires them to self-isolate if they get a positive PCR test, with over 26,000 new COVID cases a day being recorded at present. Truck drivers were a particularly noticeable casualty during the peak of the pingdemic in the summer, and are still likely being affected.

Then there is Brexit. We were among many who warned that Brexit would cause a mass exodus of EU nationals, and the initial evidence is now in. A fifth of the UK's current shortage of 100,000 lorry drivers is due to EU nationals no longer having work visas.

Thanks to the UK trade deal with the EU, truck drivers are not on the UK's new skilled worker list that determines who is entitled to a work visa. Interestingly, driving instructors are part of the UK government's skilled worker visa scheme while drivers aren't.

Brexit has also created major problems for UK farming, which relies heavily on migrant workers. For example, weekly chicken production is down by 10% and Christmas turkey production is facing a 20% reduction.

Due to both Brexit and COVID, job vacancies in the UK have topped 1 million for the first time since records began. With much talk of companies offering more money and incentives to fill roles, a Lloyds Bank survey found that one third of businesses were expecting to have to raise pay by at least 2% in the next year. This is likely to entail disputes that could make staff shortages worse. Some lorry drivers are already threatening strike action after being offered a 1% wage increase.

Finally, Brexit and new government regulation are contributing to food-price inflation. A recent study estimated that new regulations will increase consumers' food bills by up to 10% in the next few years.

Process and planet issues

Supply chains were an accident waiting to happen in a pandemic. They are primarily designed for efficiency, with producers having outsourced important aspects of their operations and reduced the number of suppliers per product to as few as possible. The system has also been built around lean manufacturing, where companies strive to achieve "zero inventory" and "just-in-time" production.

This all saves money, but companies lose control and visibility of what they produce and import as a result. When a shock like Brexit or COVID-19 comes along, it only takes one or two supply problems for things to grind to a halt.

Meanwhile, the effect of climate change on food shortages is being ignored in the current debate. From the grain heartland of Argentina to the tomato belt of California to the pork hub of China, extreme weather events in 2021 have reduced food supplies and sharply increased food prices.

What could make a difference?

Clearly, some of these issues cannot be improved in time for this festive season, so we have to be realistic that not all products may be available when we want them. But there are some things that could ease the situation:

1. Visa changes

To make the best of things, retailers have been calling on the UK government to help with worker shortages, but the response has been disappointing. The government has refused to grant visas to allow in more migrant workers, for example. An urgent rethink is needed with regards to who constitutes a key worker and the relevant visa rules.

2. Incentives for lorry drivers

Meanwhile, some employers have been incentivising new drivers with increased pay and signing-on bonuses of between Pound 1,000 and Pound 2,000. Sadly, others have been increasing drivers' hours without improving their pay.

But clearly the low-wage, precarious employment model is not working for lorry drivers, with many reportedly being lured away from general supermarket logistics to work in better conditions in online food deliveries. To stay competitive, logistics companies should consider offering new deals that include not only better hours and pay but incentives like healthcare benefits, and a more clearly defined route for drivers to rise to senior roles like driving assessor or transport hiring manager.

3. Local shopping

Consumers can also play a role in taking away some of the strain by buying local. This has been a growing trend in recent years, with initiatives such as fruit-and-vegetable box schemes and farmers' markets changing not only what we eat, but where we get it from. Buying local may ease some pressures on international supply chains by reducing our dependence on supermarkets in winter 2021. Buying and ordering early to avoid disappointment will also help the system to cope by better understanding demand patterns.

Beyond this Christmas, there are various longer-term moves that are important, ranging from attractive apprenticeship-training for key jobs to developing initiatives to make the supply chain more local and less wedded to efficiency at all costs. For now, however, the system needs a band aid. We appear to be about two months away from a crisis, and everyone must put a shoulder to the wheel to minimise the effects.

Authors: Jas Kalra - Assistant Professor in Supply Chain Management, Newcastle University | Jens Roehrich - Professor of Supply Chain Innovation, University of Bath The Conversation

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