MAJOR FALLS IN ORDER BOOKS AND SALES - SUPPLY CHAIN ISSUES WORSEN 15th September 2021
The latest Supply Chain Trends Survey from the Chemical Business Association shows a sharp fall in order books and current sales as well as a deteriorating outlook for future margins.
The September survey also reveals that member companies continue to face serious supply chain issues, notably a significant shortage of UK road haulage capacity due to HGV driver shortages which is delaying or preventing vital materials from reaching customers in the manufacturing and process industries, key utilities, and the health sector. This includes the supply of water treatment chemicals and which the Chemical Business Association highlighted to Government as a potential risk on several occasions as far back as June, and which became a reality in the last week or so.
Tim Doggett, Chief Executive of the Chemical Business Association, said, “The business situation for our member companies has worsened considerably over the last three months. Almost without exception, they are also having to deal with significant national and international supply chain issues – from the shortage of shipping containers and major hikes in shipping costs to the chronic shortage of HGV drivers. These issues are weakening the industry’s ability to recover from the impact of the Covid pandemic and the aftermath of Brexit. The Chemical Business Association are one of the organisations who have led the campaign to highlight the issue of HGV driver shortage and to assist in finding solutions. We are encouraged that the Government has recognised the problem and has begun to take steps to resolve it, but it’s important to realise that there are no quick fixes. We will continue to work with Government and other stakeholders to find both short and medium-term remedies, as well as long-term solutions to the problem.”
The Chemical Business Association’s Supply Chain Trends Survey was conducted between 1-10 September 2021 and is based on responses from its member companies.
ABOUT THE SURVEY
Our Supply Chain Trends Survey asks companies to provide information on order books, sales, sales margins, and employment, on a ‘better–worse–same’ basis. To measure short-term trends, the analysis ignores responses answering ‘same’ and focuses on the positive or negative balance provided by the difference between the ‘better-worse’ responses. The September survey also included four questions to measure the impact of current supply chain constraints.
- • CURRENT ORDER BOOKS – Significantly worse
Members are asked if their order books have been better, worse, or the same during the last three months since June 2021. The current survey showed a fall in strength of order books of more than 30% from the figure reported in June which was 34%, and which is now down to just 3%.
- • SALES VOLUMES – Major decline in current sales; future sales forecast to increase
Respondents are asked to compare their current sales volumes with the preceding three months and indicate their expectations for the next three months. Current sales volumes have fallen dramatically during the last three months, to such an extent that they are now showing a negative balance of -5%. This is a fall of 47% compared to the June level of +42%. However, there is an improving positive balance for the next three months of future sales of +18% (June 2021, +6%).
- • SALES MARGINS – Current margins falling and forecast to remain negative
Companies compare their current sales margins with the preceding three months and forecast their trend over the coming three months. Current sales margins remain marginally in positive territory at +2%, although again we have seen a decline when compared to June 2021 which was +11%). Members expect future sales margins to remain negative at -13%, little changed from the figure reported in June of -15%).
- • EMPLOYMENT – Weakening, but remaining positive
Member companies are asked if their employment levels will be higher, lower, or remain the same over the next three months. The employment trend remains positive but has weakened to +23% from +34% reported in June 2021.
- • SUPPLY CHAIN CONSTRAINTS – UK road haulage becoming critical
Some 83% of our member companies surveyed report shortages of shipping containers – a repeat of the same high figure as reported in June 2021. Shipping costs continue to escalate with 94% of companies reporting issues (June 2021, 87%). The number of companies facing issues with UK road haulage has increased dramatically to 93% – an increase of more than 30% from the figure reported in June 2021 (61%). Issues with EU road haulage remains broadly stable at 78% (June 2021, 77%).