Iceland boss fears supply chain crisis could 'cancel' Christmas

Iceland boss fears supply chain crisis could ‘cancel’ Christmas as he reveals stores are selling of bread amid daily shortages of food and drink

  • Iceland supermarket boss Richard Walker fears the ongoing supply-chain crisis could ‘cancel’ Christmas
  • Co-op chief executive Steve Murrells warned current food shortages are the worst he has ever seen them  
  • A perfect storm of labour shortages and problems with global shipping are causing issues for industry
  • Bosses have warned customers may face a shortage of certain foods and a smaller range of presents 

The boss of Iceland has warned that Christmas  could be ‘cancelled’ this year after revealing that the supermarket chain has been suffering daily shortages of food and drink products because of a supply chain crisis caused by a perfect storm of Covid and Brexit.

Richard Walker, the managing director of the British retail giant, told BBC Radio 4’s Today programme: ‘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 said Iceland is currently operating short of a 100 full-time drivers due to a chronic shortage of lorry drivers which retailers have blamed on post-Brexit migration rules and the impact of Covid, warning that this ‘is impacting the food supply chain on a daily basis’.   

‘We’ve had deliveries cancelled for the first time since the pandemic began, about 30-40 deliveries a day. Things like bread, fast-moving lines, are being cancelled in about 100 stores a day. Soft drinks are 50 per cent less in terms of volume, so it is having an affect at shelf,’ he added.

Steve Murrells, Co-operative Group chief executive, told The Times that the shortages were ‘at a worse level than at any time I have seen’ and revealed the company had reduced several ranges on offer in stores. It is also now retraining members of staff to drive lorries, with around 14,000 European drivers leaving Britain last year and only 600 of them returning.  

Retail bosses have been warning that the industry faces a shortfall of as many as 90,000 lorry drivers as the impact of the Covid pandemic and post-Brexit migration rules strangle supply chains and threatens a shortage of popular gifts and staple foods. 

Experts say the shortage is due to a combination of factors including EU employees returning home after Brexit and Covid restrictions causing the cancellation of 40,000 HGV tests. They also cited poor wages and the closure of a tax loophole for some drivers. 

The impact of supply chain shortages is already being felt on the ground in Britain, with US fast-food giant McDonald’s running out of milkshakes and bottled drinks this week, while Nando’s and KFC have similarly reported a shortage of chicken.  

Even schools are being warned to stock up on food for hot meals. David Visick, Federation of Wholesale Distributors communications chief, said: ‘September is going to be an incredibly challenging month for food distributors who are struggling to find enough delivery drivers.’ 

The supply of popular Christmas products is likely to be hit by domestic labour shortages and issues with global shipping 

Retail bosses yesterday warned the industry faces a shortfall of 90,000 lorry drivers as a perfect storm of Covid and Brexit strangles supply chains. Picture: Stock

Steve Murrells, Co-operative Group chief executive, told The Times the shortages were ‘at a worse level than at any time I have seen’ as other retail bosses warn of a huge shortfall. Picture: Empty shelves in Co-op in July


Richard Walker (left), the managing director of Iceland, and Co-op’s chief executive Stevel Murrells (right) have raised the alarm about a supply chain crisis caused by a perfect storm of Covid and Brexit

A lack of lorry drivers and food processors is being partly blamed on the new Brexit visa regime introduced on January 1, which penalises lower-skilled migrants in favour of those with qualifications. 

But global factors are relevant too, bosses say, including Chinese port closures and a lack of shipping containers. US Vice President Kamala Harris urged Americans to buy Christmas toys early due to a shortage there. 

Nick Allen, chief executive of the British Meat Processors Association, told MailOnline Britain has so far been unable to shake its dependency on EU workers who have been leaving due to the pandemic.

The supply of new workers is also being held back by stricter visa rules introduced on January 1.

The most common complaint among UK retailers and food producers is the shortage of lorry drivers, which the Road Haulage Association currently puts at 100,000.

Thousands of prospective drivers are waiting for their HGV tests due to a backlog caused by lockdown, while many existing ones have left the UK after Brexit or to be back with their families during Covid.

Importers are also suffering a financial hit, with dramatically rising transport costs caused by a global lack of shipping containers and a slowdown in freight movements resulting from port closures.

Chinese authorities recently shut Ningbo-Zhoushan port, which is one of the world’s largest container terminals, due to a Covid outbreak.

Gary Grant, founder and executive chairman of toy chain the Entertainer, said the cost of shipping a container from Asia had increased from $1,700 to more than $13,000 (£8,000) over the past year.

Britons are now being warned to buy Christmas presents early, as issues with shipping from Asia means shoppers may soon be offered a smaller range of products, with demand for best-selling items like PlayStation 5s and Barbies threatening to outstrip supply.

Meanwhile, a dearth of workers in the UK means meat processors are already six weeks behind with their preparations – which typically start in July – raising the spectre of labour-intensive items like pigs in blankets not being ready in time.

Some producers are responding by cutting the number of animals they rear for the festive period, with the supply of turkeys set to be 20percent lower than last year, according to the British Poultry Association. 

It is believed the shortage is partially as a result of many butchers leaving the UK or turning to driving lorries due to a surge in the popularity of online shopping.  

As the crisis worsens, the boss of the British Retail Consortium has called for the Government to act to help solve the shortage of drivers.

Helen Dickinson, chief executive of the BRC, said: ‘The UK faces a shortfall of 90,000 HGV drivers and it is consumers who will ultimately suffer for this. So far, disruption has been minimal thanks to the incredible work by retailers and their suppliers.

‘Retailers are increasing pay rates, offering bonuses and introducing new driver training schemes, as well as directly supporting their suppliers in the movement of goods, but Government will need to play its part.

‘We are calling on the Government to rapidly increase the number of HGV driving tests taking place, provide temporary visas for EU drivers, and to make changes on how HGV driver training can be funded.’ 

There have also been some issues with the availability of potatoes, according to catering firm Lynx Purchasing, which said this had been driven by floods in producing countries such as Germany and the Netherlands.

A lack of lorry drivers and food processors is being partly blamed on the new Brexit visa regime introduced on January 1, which penalises lower-skilled migrants in favour of those with qualifications.

But global factors are relevant too, bosses say, including Chinese port closures and a lack of shipping containers. US Vice President Kamala Harris urged Americans to buy Christmas toys early due to a shortage there.

Nick Allen, chief executive of the British Meat Processors Association, said a labour shortage meant the industry was already ‘well behind’ on getting ready for Christmas.

He told MailOnline: ‘You’d normally start to prepare pigs in blankets and gammons at the beginning of July and they’d go into the freezer and come out at Christmas time, but we’re six weeks behind and not seeing any light at the end of the tunnel.

‘The shelves aren’t going to be empty but it’s hard to see how there won’t be shortages of these things and the choice will get less.’

Britain has so far been unable to shake its dependency on EU workers who have been leaving due to the pandemic, Mr Allen explained, while the supply of new workers is being held back by stricter visa rules introduced on January 1. 

The supply of turkeys set to be 20 per cent lower than last year, according to predictions from the British Poultry Association

The impact of supply chain shortages is already being felt on the ground, with McDonald’s running out of milkshakes and bottled drinks this week. Picture: Stock

Now delivery driver shortage is a threat to school dinners: Caterers are warned to stock up on food amid fears they could be caught in crisis that may also hit Christmas 

Schools are being warned to stock up on food for hot meals over fears they could be caught up in a growing driver shortage that also threatens Christmas .

The end of the holidays next month will add to a crisis that has hit big names including McDonald’s, Nando’s, KFC, and Beefeater.

Deliveries of milk and fresh produce to supermarkets and corner shops have been disrupted, while supplies of canned and bottled drinks are rationed.

The fact that a firm the size of McDonald’s has effectively run out of milkshakes has alerted many to an issue threatening widespread disruption to Christmas.

The Federation of Wholesale Distributors (FWD) warned: ‘Wholesalers are keeping a close eye on availability across the range of products that schools buy, and have been encouraging them to stock up early where possible.

‘They are working closely with schools and suppliers to flag any potential risks.’

Trade bodies such as the British Retail Consortium (BRC) and Logistics UK have warned Business Secretary Kwasi Kwarteng the driver crisis is worsening.

David Visick, FWD communications chief, said: ‘September is going to be an incredibly challenging month for food distributors who are struggling to find enough delivery drivers.

‘Schools come back, workplaces are reopening fully for the first time in months, and the tourist catering trade is still at full capacity.

‘The knock-on effect will be further disruption to food and drink supplies for village shops, local pubs, and all the restaurants which have been unable to trade fully for the last 18 months.’

A shortage of lorry drivers, put at more than 90,000, has disrupted deliveries across the economy, including manufacturing and construction. Experts say it is due to a combination of factors including poor wages, the closure of a tax loophole for some drivers, and EU employees returning home after Brexit.

 

‘Covid is one of the reasons why people are going home and not going back again but it fundamentally down to our post-Brexit immigration policy,’ he said.

‘I try to avoid blaming Brexit – our politicians gave us an immigration policy and it was their choice. With a million job vacancies in the country its night on impossible to fulfil all our needs.’

The most common complaint among UK retailers and food producers is the shortage of lorry drivers, which the Road Haulage Association currently puts at 100,000.

Thousands of prospective drivers are waiting for their HGV tests due to a backlog caused by lockdown, while many existing ones have left the UK after Brexit or to be back with their families during Covid.

Dixons Carphone is attempting to fill 180 driver vacancies by offering applicants a £1,500 signing-on bonus and a £1,500 retention bonus, while salaries have been boosted by at least nine per cent, according to The Sunday Times. 

Meanwhile Amazon is reportedly offering £1,000 joining bonuses to new employees to work in warehouses in Coventry, Darlington, Dartford, Redditch and Swansea.

Importers are also suffering a financial hit, with dramatically rising transport costs caused by a global lack of shipping containers and a slowdown in freight movements resulting from port closures.

Chinese authorities recently shut Ningbo-Zhoushan port, which is one of the world’s largest container terminals, due to a Covid outbreak.

Gary Grant, founder and executive chairman of toy chain the Entertainer, said the cost of shipping a container from Asia had increased from $1,700 to more than $13,000 (£8,000) over the past year.

‘The cost of containers – as well as a shortage of them – is proving very difficult across many industries, not just ours,’ he told MailOnline.

‘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.’

Mr Grant said the products most likely to be impacted were the ones already selling well, including Paw Patrol, Barbie and Rainbocorns.

‘Shoppers need to buy early. I’m a retailer, so sceptics would say that I’m going to tell people to do that,’ he said.

‘I’m not encouraging people to go and panic buy. But there is going to be shortage of certain goods, so the way to get around that is to buy early.’

Global shipping demands on maintaining a steady flow of containers from Asia to the West, including the return of empty ones. This is currently being disrupted by the slow processing of shipments in Europe and the US, as well as port closures in China.

Alex Veitch, general manager of public policy at Logistics UK, said: ‘Shippers around the world have been affected by a number of factors, most notably the impact of COVID-19 which has led to port closures, the subsequent displacement of containers, rising costs and difficulties securing capacity.

‘Many shippers have shifted their goods to air or rail freight where possible, but shipping dominates the global freight market and we call on shipping lines to do all they can to improve the situation for their customers.’ 

McDonald’s became the latest restaurant chain in the UK to be hit by supply shortages yesterday with no milkshakes or bottled drinks available in any of its outlets.

The fast-food giant, which has 1,250 restaurants, has stopped serving the drinks this week but said staff are ‘working hard to return these items to the menu as soon as possible’.

A spokesman told The Independent it was ‘experiencing some supply chain issues’. A shortage of delivery drivers has disrupted supplies to supermarkets and hospitality. 

Fresh food and drink supplies to Beefeater pubs and Subway outlets were also affected yesterday.

Industry experts say the lack of drivers is a result of Brexit and the pandemic. A spokesman for Beefeater said supply chain issues had led to shortages of bottled beer and chicken.

Subway outlets in London and Norfolk have reportedly put up posters about a lack of ingredients – but this was not confirmed by the company. 

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