Home Business News UK food and medicine supply chain could reach ‘crisis point’

UK food and medicine supply chain could reach ‘crisis point’

by LLB Reporter
13th Apr 20 11:37 am

Britain’s supply chain of food and medicine could eventually stop as almost half of the country’s haulage companies are now off the road.

The Road Haulage Association (RHA) have warned that many haulage firms are on the brink of going under, and we are reaching crisis point.

Supermarkets, cash and carry’s, factories, distribution centres and ports all rely on lorry firms to move goods around Britain.

An RHA survey found that 46% of haulier’s lorries have been taken of the road since coronavirus started, and many could go bust as the trucks are doing nothing.

Richard Burnett, RHA chief executive said, “The measures the Government have come up with simply don’t work.

“An average haulier will make maybe 2% margin, they’ll have two to three weeks cashflow within their business.

“We’ve got hauliers at the moment who can’t even furlough their staff, because they have insufficient cash to pay those employees.

“We need cash, we need grants, we need help to balance and normalise this cashflow problem, and the loan system simply doesn’t work at this point in time.

“The government will need to provide more radical financial support to ensure they survive. The events and music world has been decimated with the cancellation of concert tours.

“One major haulier has parked-up their 170-vehicle fleet and told their driving force nothing will be moving for at least two to three months with all revenue disappearing overnight.

“Another is in the same situation having had concert tours worth millions cancelled.

“Panic buying is creating artificial peaks with manufacturers working hard to supply retailers and volumes exceeding the normal Christmas peak.

“What we’re seeing now, and have seen so far, is the tip of the iceberg.

“While millions are now working from home, we are still expecting truckers to be out there delivering goods like food and medicine. They are taken for granted and have been for years.”

Burnett added, “Over the past six weeks we have seen container volume from China drop by between 70 and 80% and we are now seeing issues with the flow of raw material, retail product and food from across Europe.

“Air freight into Heathrow has more or less stopped. It’s hard to know how much this volume will decrease from here as more borders are closed or restricted.

“So far, road freight movements in Europe have been exempted from most restrictions and in many countries, rules limiting or banning the movement of lorries at weekends have been suspended to create greater supply-chain resilience.

“Any future lockdown of towns and cities and closure of food and retail outlets will suppress volumes further. The main costs for most businesses are vehicles, which are often leased, plus fuel and wages.

“Businesses are at massive risk from banks and fuel suppliers withdrawing credit and hauliers will collapse quickly if credit is not sustained and extended.

“This problem is compounded by forthcoming regulatory change requiring companies to invest in new, low emission vehicles.

“The measures we are calling for must start now. The industry usually starts planning for the mad panic of Christmas in August, but this is beyond anything we have seen before.”

The Department for Transport said, “As the Chancellor announced, this government will provide £330bn of guarantees, including cash grants of up to £25,000 for several hundred thousand small businesses.

“We will stand behind businesses small and large and will do everything we can to support businesses to get through this.

“Ministers are engaging in weekly discussions with the Road Haulage Association to discuss the challenges facing the sector.”

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