The Food and Drink Federation’s (FDF) Business Confidence Report for the third quarter shows confidence fell by 55% to -51% as a result of the ongoing labour shortages and associated issues that are impacting supply chains.
This is the lowest net confidence rate amongst food and drinks firms since the height of the pandemic in the second quarter last year (-65.2%) and the biggest drop in confidence since the FDF first began reporting in 2018.
Severe supply chain disruption was found to be the biggest cause for concern amongst businesses, particularly the transportation of goods with 93% experiencing delayed or missed outbound deliveries and 75% reporting delayed or missed inbound deliveries.
Labour supply issues are also not likely to be resolved soon, with half of the respondents to the FDF survey expecting the permanent supply to decrease, with 54% seeing a decrease in the fourth quarter of this year.
Labour shortages continue to remain across a range of roles in the food supply chain. The most common shortages were HGV drivers, temporary agency workers and process, plant and machine operatives.
Meanwhile, firms highlighted that product margins are being squeezed, driven by the supply chain disruption and rising production costs.
A majority of businesses said they anticipate continued price rises, with 97% of respondents expecting consumer price inflation to increase in the current quarter.
Ian Wright, Chief Executive at the FDF, commented: “These results – compiled before the Prime Minister’s disappointing announcement this week – demonstrate that confidence levels across our sector have been hit by continuing supply chain disruption.
“On top of this, the confection of increasing uncertainty about Omicron, the UK’s changing trading relationships, and the re-ignition of inflation, all threaten to undermine resilience across the sector. Many businesses now expect disruption and reduced service levels to continue right through 2022 and into 2023.”
NAM Implications:
- If this is the effect on business…
- Think knock-on re consumer…
