Iceland and Tesco warn of Christmas shortages from HGV driver crisis – as it happened

Graeme Wearden

from on 2021-08-25 18:19 (#5NR61)

Rolling coverage of the latest economic and financial news

Latest: Business leaders call for relaxation of post-Brexit visa rules
Greggs chicken bakes hit by supply shortages, reports say
Iceland boss warns that supply chain crisis threaten Christmas
Need to put HGV drivers on list of essential skilled workers
Richard Walker: Self-inflicted wound after Brexit
Supply chain crisis affecting retailers stocks and food ranges
Coop boss: Food shortages worst I have seen
FTSE 250 record high..Takeover battle may put Morrisons into FTSE 100

7.19pm BST

And finally... here's our news story about how the UK supply chain crisis could scupper the festive season, unless the HGV driver shortage is tackled fast.

The government is under pressure to relax post-Brexit migration rules to unblock Britain's worst supply-chain crisis since the 1970s, with business leaders warning that continued disruption could ruin Christmas.

At the moment we're running very hard just to keep on top of the existing demand and there isn't the capacity to build stocks that we'd like to see."

The simple solution is that HGV lorry drivers need to be added to the essential and skilled worker list" he said.

The British people repeatedly voted to end free movement and take back control of our immigration system. Employers should invest in our domestic workforce instead of relying on labour from abroad."

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

7.06pm BST

UK farmers are warning that unpicked fruit and vegetables up and down the count will go to waste, because of the labour shortage, my colleagues Joanna Partridge and Richard Partington write.

We've got big issues with pigs backing up on farm because slaughterhouses are only operating four days a week because they haven't got enough butchers to process the pork. We've got dairy farmers that are really struggling to recruit the workforce they need, in Wales and in Bath,"

7.01pm BST

Some late retail news. Frasers Group has updated the City on its proposed pay package for Michael Murray, should he succeed his future father-in-law Mike Ashley as CEO, as planned.

Frasers is proposing that Murray, the former club promoter who has become Ashley's right-hand man as head of elevation", should receive a salary of 1m per year.

The Board believes that the significant increase in value of the shares to be achieved before Michael's share option award vests is suitably challenging but achievable and would be evidence of the success of the Group's elevation strategy and Michael's leading role in this.

6.37pm BST

In a development that could intensify the crisis in the UK's supply chains, Yodel's delivery drivers are voting on whether to go on strike.

Yodel has seen fit to pick a fight with its loyal workforce in the midst of a chronic, nationwide driver shortage."

5.24pm BST

Insurers could face disciplinary action after the City watchdog said UK firms were not ready for stricter rules on price hikes on car and home insurance.

The Financial Conduct Authority said too many firms were failing to meet existing regulatory standards and were also unlikely to be prepared for tougher rules meant to ensure insurers offered better value for money policies to existing customers from this October.

The FCA is increasingly focusing on broader outcomes for consumers and making sure that they receive fair value for products, not just tick-box" compliance.

This is a clear warning from the FCA that they think some insurance firms will not be able to meet the new regulatory standards unless they improve quickly, in time for October."

4.56pm BST

Back in the City, the FTSE 250 index of medium-sized companies has hit a new closing high.

But it couldn't quite hold onto the 24,000-point mark which it scaled for the first time this morning, ending 0.4% higher at 23,986.

4.53pm BST

Tesco chairman John Allan has also warned of the prospect of shortages on supermarket shelves at Christmas.

Speaking on BBC Radio 4's World At One, Allan echoed Iceland's Richard Walker's point this morning that allowing HGV drivers in from abroad (such as via the skilled workers' list) would help alleviate problems.

We are very short of drivers, it's a combination of many EU drivers having decided to go home and also the ageing age-profile.

I think certainly Brexit has been a contributor to that but also improving economies, higher wages in some of the countries that they've come from historically, have also led to that flow.

4.20pm BST

In the energy sector, America's oil stockpiles have dropped to their lowest since since January 2020, amid increased demand for energy.

US crude inventories fell by 3 million barrels in the last week to 432.6 million barrels, slightly above forecasts of a 2.7m decline, and further below the peaks hit in the first lockdown.

Crude oil inventories fell 3.0 million barrels in the August 20 week to 432.6 million, down 14.8 percent from the level a year ago. pic.twitter.com/cMT6YgLWBl

United States #Crude #Oil #Inventories fell by 2.979 million barrels to the lowest level since January of 2020 in the latest week, marking the 3rd consecutive drop in crude stocks and more than market forecasts of a 2.683 million drop.#WTI #BRENT #DGCX #FUTURES pic.twitter.com/DXWMcutaRv

Charts on US petroleum inventories in million barrels - EIA #OOTT pic.twitter.com/cJ0Kfo0QOh

3.51pm BST

Back in the UK, private companies that sell Covid-19 tests to holidaymakers have been told to get on the right side of the law" by the competition regulator, after widespread allegations of poor service triggered a government crackdown.

Days after the health secretary, Sajid Javid, said cowboy" PCR test firms could be removed from the government's list of approved providers, the Competition and Markets Authority issued a separate warning.

3.24pm BST

In the shipping industry, a key measure of freight costs has dropped back from its highest level in a decade, following the full reopening of the world's third-busiest port in China.

Baltic Dry Index Falls 0.19% to 4,193
Capesize -1.57% to $50,662
Panamax +1.06% to $33,633
Supramax 58k tons +1.29% to $37,249#DryBulk #Shipping #2020Bulkers $DSX $EGLE $GBLK $GNK $GOGL $SBLK pic.twitter.com/FJ3MURymLe

3.09pm BST

In New York, the tech-focused Nasdaq index has opened at a fresh record high.

The Nasdaq Composite has picked up another 17 points, or 0.1%, to nudge 15,037 points, as technology companies continue to shine.

Moderna finalizes submission to FDA for full approval of its COVID-19 vaccine.

It's not yet clear how long the FDA will take to review the application. https://t.co/iYIlKP84h9

(Reuters) - The Nasdaq opened at a record high on Wednesday, lifted by gains in technology-related stocks, while broader markets remained subdued ahead of a U.S. monetary policy update this week. https://t.co/GP8LrOXLf0

The minutes of the latest Fed meeting have already made it clear that most committee members believe tapering should start before year end. But given that there are still three meetings left this year, markets will look for any clues as to which meeting will see the starting gun fired.

In our view, more progress needs to be made towards full employment, and September is thus unlikely, but it is a close call between November and December.

2.18pm BST

Supply bottlenecks and labor constraints are weighing on US manufacturers (just like in the UK!) warns Greg Daco of Oxford Economics, but the broad trend is upward:

Durable goods #orders modest slip -0.1% in July
motor vehicles, machinery, metals, computers
aircraft, elect equip

Core capital gds orders flat

Shipments +2.2%: broad-based
Core shipments solid +1.0%

Still solid trend despite supply bottlenecks & labor constraints pic.twitter.com/sPAv7GFhux

New orders for durable goods edged 0.1%, pulling back from a record $257.6 billion in June to $257.2 billion in July. Nondefense aircraft & parts orders, which can be highly volatile from month to month, plummeted 48.9% in July, dragging down transportation equip. sales by 2.2%. pic.twitter.com/hbwxhRb8nU

2.09pm BST

Here's Aaron Anderson, SVP of Research at Fisher Investments, on the slight drop in US durable goods last month:

Demand for durable goods is healthy, but supply is an issue. Particularly tied to input bottlenecks and shortages, which are curbing production and pushing prices higher.

There is sufficient manufacturing capacity to overcome most supply shortages, but it will take time, especially in areas like semiconductors, which are hampering the production of autos and other goods."

The 0.1% m/m fall in durable goods orders in July was entirely due to a plunge in the ever-volatile commercial aircraft component.

The underlying details suggest that growth in business equipment investment will slow in the third quarter, but it remains strong by past standards.

If we remove Transportation then Durable Goods came in positive and beat expectations, 0.7 vs 0.5. pic.twitter.com/LwUmQklVCY

2.04pm BST

In the US, durable goods orders have dipped, driven by a drop in aircraft orders.

Orders for long-lasting goods dropped 0.1% in July, after a 0.8% increase in June. That's better than the 0.3% fall expected.

July prelim durable goods orders down less than expected at -0.1% vs. -0.3%. Dig deeper--Cap Goods Orders (non-defense ex-aircraft) flat m/m, but actually hit an all-time high and are up 16% y/y. Businesses are spending. pic.twitter.com/yqt0CyMFcG

US July Prelim Durable Goods Orders Report - CB
US Census Bureauhttps://t.co/CPcuo4EVaF pic.twitter.com/JbOiAPI8pE

1.38pm BST

In the eurozone, the European Central Bank believes the Delta variant of Covid-19 is likely to have only a limited impact on the euro zone economy.

ECB chief economist Philip Lane has told Reuters that the eurozone remains on course for robust growth this year and in 2022, as it recovers from the shock of the pandemic.

The fact that (Delta) has not required more extensive measures and that localised measures have been reasonably effective does indicate that, in terms of the overall economy, the impact is quite limited so far."

1.00pm BST

Travel news: Gatwick airport is to press ahead with plans to convert its emergency runway for routine use, in a sign that the aviation industry expects demand to rebound in full soon after the coronavirus pandemic.

London's second biggest airport will launch a public consultation next month on a scheme to enlarge capacity to a potential 75.5 million passengers a year - despite still only serving about a quarter of its pre-Covid traffic in August.

12.45pm BST

The UK government must allow retailers to recruit HGV drivers from abroad to avoid a supply chain crisis that could ruin Christmas, a senior supermarket chain boss has warned.

Richard Walker, Iceland's managing director, said the UK faced a shortage of 100,000 HGV drivers that was already causing 30-40 deliveries to its stores to be cancelled daily, and would upend plans to begin building Christmas stock from next month.

We've got a lot of goods to transport between now and Christmas and a strong supply chain is vital for everyone.

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."

12.14pm BST

PoliticsHome are reporting that bakery chain Greggs is the latest high-profile food outlet to be hit by supply chain disruption, with shortages affecting some chicken-based products like its popular chicken bake.

Here's more details:

PoliticsHome understands that disruption to poultry supplies, which last week forced Nando's to temporarily close 50 stores, is also impacting Greggs, which has over 2,000 stores nationwide.

The Greggs menu has several items containing chicken, including the chicken bake, the chargrill chicken oval bite, and several chicken-filled baguettes. The bakery confirmed a small number of products had been affected by ongoing supply chain disruption, but stressed that its broad menu meant it had been able to mitigate the impact.

Exclusive: Greggs is the latest household name to be impacted by supply chain disruption

Like Nando's & KFC, it is dealing with chicken shortages amid the UK's ongoing labour crisis

The bakery stressed only a small number of products are affected https://t.co/aff0cpEr03

"When you don't have people, you have a problem - and this is something we are seeing across the whole supply chain," says British Poultry Council's Richard Griffiths, who represents chicken producers

Co-op boss has said food shortages are worst he's seen https://t.co/aff0cpEr03

12.07pm BST

Back on the threats to Christmas... recruiters warned overnight that the UK labour crisis is set to continue until next year, increasing the risks of empty shelves.

The Recruitment and Employment Confederation (REC) reported that demand for workers will remain high into the autumn, leading to shortages of staff and a knock-on impact on the economy.

We're well into the recovery now, and our surveys show that demand for labour remains high. Even with a large number of people coming off furlough in August and September, it's likely that high demand for workers will continue to cause shortages through the autumn.

There will be particular pressures in logistics, food manufacturing and hospitality as we gear up for Christmas, and hiring for this period has already started.

The latest #JobsOutlook shows that employers' intentions to hire permanent and temporary staff remain high.

This survey includes data from 600 employers about their short and medium-term plans for #hiring permanent and #temporarystaff.

Find out more: https://t.co/L2YdQmoIV6 pic.twitter.com/vnMhIOiTHB

There are short- & longer-term issues here. Peak demand this autumn will be affected by shortages, even with furlough ending. Businesses are working hard to address this - but Government also needs to stay close and support. This is about food on shelves, not politics. (/2)

12.00pm BST

EY has been fined more than 2.2m by the UK accountancy watchdog for failing to properly challenge Stagecoach bosses when auditing their accounts for 2017.

The Financial Reporting Council (FRC) has also sanctioned Mark Harvey, EY's auditing engagement partner, fining him 100,000 for his role reviewing Stagecoach's financial statements.

11.54am BST

Jobs news this morning: takeaway company Just Eat is creating 1,500 jobs in the North East, through a 100m investment in a customer services hub in Sunderland:

11.45am BST

In the City, the FTSE 250 index has hit a fresh record high this morning - rising over the 24,000-point mark for the first time.

The FTSE 250 (which contains medium-sized companies too small for the FTSE 100) has been boosted by hopes of a UK economic recovery - despite the threat from supply chain issues.

The travel sector continues to enjoy some strength amid hopes for the easing of restrictions with a dip in the pound also helping to lift the UK's flagship index.

Weaker sterling boosts the relative value of the overseas earnings which dominate the FTSE, though the more domestic FTSE 250 was also moving higher too, reaching a new record level early on.

This continuing global corporate raid suggests bidders still see a lot of untapped value in the UK market. The danger is that if it doesn't let up soon London will be left looking like a bit of wasteland for stocks."

11.20am BST

The supply chain crisis could spark a spike in legal action between UK companies in the run-up to Christmas, predicts Mark Stefanini, partner at global law firm
Mayer Brown.

But, firms could argue that circumstance beyond their control prevented them fulfilling their obligations, he points out:

Supply chain issues often lead to litigation, and it's very likely we will see legal disputes between purchasers and suppliers in the lead up to Christmas. In these disputes, we expect that force majeure' clauses, which alter parties' obligations and/or liabilities when a circumstance beyond their control prevents them from fulfilling those obligations, will take centre stage, as businesses continue to claim that they should be extricated from their obligations because of the knock-on effects of Brexit and the pandemic.

Whether or not a business can actually engage a force majeure provision will depend entirely on their individual contract. In recent months, force majeure provisions have become an increasing focus in contractual negotiations, so one would hope that businesses are better prepared to handle supply chain-related disputes than they were this time last year."

10.47am BST

Although the UK's HGV driver shortage is a domestic problem, pandemic supply chain problems are a rather wider issue.

In Germany, manufacturers are also worried about disruption caused by shortages of semi-conductors, plastics and metals, and the risks of another wave of Covid-19

Concerns are growing in the hospitality and tourism sectors in particular. By contrast, companies assessed their current situation as somewhat better than in the previous month.

Supply bottlenecks for intermediate products in manufacturing and worries about rising infection numbers are putting a strain on the economy.

BREAKING! #Germany's #Ifo Index drops more than expected in August. Remains high, but the expectations subindex dropping faster, underpinning that the German #GDP growth outlook is deteriorating. pic.twitter.com/LO51pryndz

Germany's #IFO indicator has confirmed what we already knew: the pace of economic recovery in the second half of the year has lost some momentum via @DailyFX https://t.co/uUfOPRpEcM

10.36am BST

There's a very good piece on the FT about the UK's shortage of HGV drivers, which explains how it fits into wider problems in our 21st-century economy.

Shifts can be long and gruelling, with unpredictable and unsociable work patterns. Pay has been slipping relative to other jobs -- so some drivers find they're caught in bind where they aren't available to help with childcare, and don't earn enough to allow their partners not to work too.

Young people, especially those who want to have kids & actually see them, don't see it as a good deal. The workforce is ageing. pic.twitter.com/wHMMThdBx3

The story of Britain's empty shelves, like that of its unpicked strawberries and unprocessed chickens, is the story of how migration combined with a weakly regulated labour market and hugely powerful retailers have allowed some goods and services to become unsustainably cheap. The system shaved money off our shopping bills but it wasn't resilient. Remain voters are right to say Brexit helped to cause the current crisis, but wrong to say everything was fine without it. Brexit voters are right to say migration helped suppress driver pay, but as the Netherlands shows, Brexit wasn't the only way to resolve it.

The labour shortages are a moment of reckoning. If we just use them to bicker about Brexit, we'll drown out the real lessons in the noise.

The story of Britain's empty shelves, like that of its unpicked strawberries and unprocessed chickens, is of how migration combined with a badly regulated labour market and v.powerful retailers have allowed some things to become unsustainably cheap. https://t.co/bKElQXPmTX

10.18am BST

It's not just food and toys that are being affected by supply chain woes either.

It is expected that supply chains will continue to be disrupted to some extent over the coming months and we will continue to work with our partners to minimise the impact on our customers.

Grafton Group, the building materials company that owns Chadwick's & Woodie's in Ireland, reported record half year profits this morning thanks to surging materials prices and "exceptional demand" from builders. Full story on @businessposthq https://t.co/3auRyrDW8h

9.45am BST

Iceland's Richard Walker isn't alone in warning that Christmas could be disrupted this year.

Gary Grant, founder and executive chairman of toy retail chain The Entertainer, told MailOnline that problems shipping goods in from overseas could lead to disruption.

What is unique to us is that Christmas is a fixed date, so we are under extreme pressure at the moment to move as much stock as we can but are significantly behind with the shipment of products.

There's not a shortage of toys, but what will happen as when we get nearer to Christmas the suppliers will not have to back-up stock that we've previously relied upon. So the range of stock we have may be narrower.'

Buy Christmas toys NOW! Retailers warn of festive chaos as Brexit and Covid strangles global supply chains https://t.co/aMYvFH6nbx

9.39am BST

Back on Monday, Iceland's Richard Walker also warned that the UK faces a 2nd crap' Christmas unless HGV drivers are temporarily added to the skilled workers' list:

HGV driver shortages should be replaced with UK workers - but this will take time. Before then, we've A LOT of goods to move around for Xmas. Temporarily adding EU drivers to the exempt list as skilled workers' is the answer. Nobody wants a 2nd crap Xmas
https://t.co/1Hm5f0TRju

9.22am BST

Christmas is at risk from the supply chain crisis unless the government adds HGV drivers to its skilled worker list quickly, the managing director of supermarket chain Iceland has warned this morning.

We've had deliveries cancelled for the first time since the pandemic began, about 30 to 40 deliveries a day.

Of course we've got Christmas around the corner, and in retail we start to stockbuild really from September onwards for what is a hugely important time of year.

We've got a lot of goods to transport between now and Christmas, and a strong supply chain is vital for everyone.

These men and women, these HGV drivers, have kept the show on the road for 18 months during the pandemic and it's criminal that we're not viewing them as skilled workers.

It's not a light switch that'll happen overnight.

I think the market will correct itself. But the problem with bringing in UK workers is that will take six months.

We need to find these people, train them up, they need to get Class One licences. We've got Christmas to sort out between now and then.

The average age of a HGV driver is 56. We need to recruit more domestically, but that will take time. In the meantime, let's get them on the skilled worker list so that we can bring more drivers and get our supply chains running.

8.27am BST

The supply chain crisis is also hitting the UK tourism sector, as hoteliers and bar owners try to juggle a surge in holidaymakers and staff shortages.

Hospitality is the first to get locked down and the last to reopen and a lot of people have not been able to get onto furlough and have struggled. It is really hard to find chefs.

We've reduced covers, we've reduced opening hours and on a day-to-day basis we've had to look at how many staff we have got in and manage it accordingly."

You can substitute drinks a lot more easily than food. It's just random stuff that is not available - it's just bizarre.

Guacamole, tortilla chips and one week it was orange juice and another week it was apple juice and cranberry juice. It is random stuff and it is just down to distribution."

Traditionally we would normally have thousands of people from EU countries here working in hospitality having been trained in their own countries and that has more or less been cut off entirely.

We used to have lots of people from northern cities working in places like Newquay for the summer and they problem they have is there is no housing as every landlord who has got a rental property has converted it into a holiday let.

8.16am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Britain's supply chain crisis is deepening by the day, with retail stocks running low, supermarkets struggling to get their normal food ranges onto the shelves, and hospitality firms facing shortages.

It's quite striking, I don't think we can dismiss this as a flash in the pan. Now that lockdown has been eased, we're seeing a truer reflection of the impact of Brexit and issues building up before the pandemic.

We could see this persisting for longer than people expect. Skills shortages could go on for a few years, the impact of Brexit on our ability to attract workers from the EU is not going to go away quickly and the process of training was quite significantly disrupted by the pandemic, when people were not working and furloughed."

UK plunges towards supply chain crisis due to staff and transport disruption. Covid and Brexit have seen stock levels at their lowest for 38 years. https://t.co/RuUVFjm5aI

The shortages are at a worse level than at any time I have seen"

McDonald's has confirmed it has run out of milkshakes and bottled drinks at its UK venues amid a national shortage of delivery drivers --> https://t.co/qd3OHDKBhl #McDonalds #milkshake #logistics #SupplyChain #supplychainmanagement #Brexit #Staffing

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."

We are cutting back and prioritising lines and cutting out on things, so there just won't be the totals of Christmas favourites like we are used to."

Post-Brexit staffing issues: Shortage of festive favourites like pigs in blankets and gammon looms https://t.co/vtUSUV5h8C pic.twitter.com/s9jCtVGUbL

Longer-semi trailers (LSTs), which are up to 2.05m (6.8ft) longer than the current limit of 13.6m (45ft), could save up to one in eight journeys by fitting more freight in, according to a nine-year trial by the Department for Transport (DfT).

The Government had initially planned to conduct a 15-year trial until 2027, but last year consulted on ending the scheme early after it concluded that the experiment had yielded enough data.

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