Supply chain woes costing UK businesses £12.2 billion annually - CILT(UK)
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LATEST NEWS

Supply chain woes costing UK businesses £12.2 billion annually

27 March 2023/Categories: CILT, Industry News, Freight Forwarding, Logistics & Supply Chain, Operations Management, Ports, Maritime & Waterways, Brexit, Coronavirus


SUPPLY chain delays - caused by strict COVID lockdowns, climate change, the national energy crisis and the war in Ukraine - are costing the UK economy a staggering £12.2 billion a year in lost revenue, according to new analysis by TMX Global – a world-leading end-to-end supply chain consultancy.

TMX Global UK Head of Country, Gerry Power, said the UK annual economy is worth £2.6 trillion (US$3.13 trillion)[1], and with supply chain disruption costing companies 0.47% on average in lost revenue[2] around the world, UK businesses are forfeiting an astonishing £12.2 billion a year in sales.

“The UK Spring Budget brought some cautiously optimistic news for the British economy, with inflation rates looking set to drop and a recession no longer on the cards. However, we’re far from being out of the woods; the UK economy is set to shrink by 0.2%, and the imminent corporation tax increase, coupled with ongoing supply chain issues, will put continued pressure on businesses,” Power says.

He continues: “Whilst global supply chain disruption is easing slightly, challenges such as delays, capacity constraints, congestion and elevated prices continue to impact the bottom line, costing businesses across the nation more than £12.2 billion in lost sales.”

According to the International Monetary Fund (IMF)’s paper Supply Bottlenecks: Where, Why, How Much, and What Next?[3] supply constraints cost the UK and eurozone one year of growth, with the paper revealing that manufacturing output and GDP would have been about 6 and 2% higher respectively in 2021.

Power comments: “Analysis from the IMF reveals half of the rise in manufacturing producer price inflation would not have occurred in the absence of supply bottlenecks – and the blow to the economy from supply chain disruption is equivalent to about one year’s growth in normal pre-pandemic times for many countries throughout Europe.”

Supply chain turmoil has come in many forms over the past three years – including the Suez Canal blockage, vehicle factory shutdowns due to microchip shortages, strikes throughout the nation, poor weather, power shortages in Chinese factories, labour shortages and higher energy and food prices globally caused by the war in Ukraine. And of course the impact of the UK’s exit from the EU continues to loom large. EU suppliers remain hesitant to do business with the UK, and 80% of UK businesses cite Brexit as the biggest supply chain disruptor.[4]

Power added: “The big question is whether these pressures fall away in the next few years, as the global supply chain adapts, or whether the costs will be forever ‘baked into’ the transport expenses of companies worldwide, pushing up inflation and the cost of living in the UK permanently.”

TMX Global advises some of the world’s largest companies on their supply chain, infrastructure, project management and property needs – including Marks & Spencer, Coca-Cola Bottlers Japan Inc, Uniqlo, Asahi and Maersk.

The world-leading end-to-end supply chain consultancy opened a physical UK office at the end of last year and now works with globally respected brands throughout the UK.

Heading up TMX’s European operation is industry leading expert Gerry Power, who has more than 25 years’ experience in supply chain and business transformation. Gerry has held senior roles at TNT and Toll Group as well as executive positions at a number of disruptive tech start-ups in the supply chain space.

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