What’s driving the supply chain issues across the UK?

Last month, McDonald’s announced that it had temporarily run out of milkshakes and bottled beverages at stores in England, Scotland, and Wales. With only a cursory glance, this may not seem like an issue worthy of international headlines. In actuality, it signals a growing issue in the UK that goes far beyond dessert.

The one-two-punch of COVID and Brexit have created supply chain disruptions in the food and beverage industry. In particular, there is a massive shortage of truck drivers, which is making it difficult to get products to stores and restaurants.

As a result, Nando’s PERi-PERi Chicken had to close nearly 50 stores due to chicken shortages. Dairy giant Arla has been unable to make deliveries at hundreds of grocery stores. Pubs are running low on Carling and Coors.

Even BP had to close a number of sites because it couldn’t supply enough unleaded or diesel gasoline.

I previously wrote about my predictions for how Brexit would impact the hospitality industry, including labor shortages — and these supply chain issues are following similar patterns. For example, the Road Haulage Association says the United Kingdom is short around 100,000 truck drivers, 20% of whom are EU nationals that left the country after Brexit.

To attract drivers, some companies are offering £1,000 signing bonuses. However, some argue that these tactics are more likely to lure existing drivers from other companies, rather than attracting new employees to the field, and that efforts should instead focus on recruiting and training new hires.

Unfortunately, the UK is not the only place that is facing serious driver shortages. In the United States, the trucking industry was already short nearly 61,000 drivers the year before COVID-19 hit, according to the American Trucking Association. The pandemic has only exacerbated this issue, as motor vehicle departments and training schools experienced temporary closures — effectively drying up the already fragile pipeline of new drivers.

To combat these issues, companies are raising driver pay and actively recruiting women to the field. But, only time will tell how effective these efforts will be.

In the UK, there is a growing call for the Government to provide visas for EU drivers. But, thus far, Prime Minister Johnson’s administration has resisted, and is instead focusing on making more HGV tests available to British nationals — a move that the industry says will only go so far.

As the holiday season rapidly approaches, there is a ticking clock to get these supply chain issues rectified. Otherwise, we will likely be facing more than missing milkshakes — and bigger consequences for the stores and restaurants that can’t stock their shelves.

Danilo Diazgranados is an independent investor in the global food and wine, financial services, real estate, and the hospitality sectors.

Investor in and lover of fine wine and restaurants.