Demands of Supply

Craig Dalzell looks at the pressures currently straining UK supply chains and asks why we’ve built such a fragile system.

One day, I want to write a book about the global logistics and supply chain network. Its vital but almost invisible nature absolutely fascinates me. Think about the journey a single item makes from a factory somewhere half a world away, into a shipping container to sit in a sea of shipping containers at a megaport, onto a ship, train or lorry (or some combination of all three) then through a maze of processes and transfers before arriving at your door just a few days or weeks later. The supply chain to deliver that is quite possibly the most complex and interconnected network that humans have yet built with the possible exception of the internet.

In normal times, when it goes wrong it can be fairly spectacular (like ships getting stuck in the Suez canal and causing weeks of delay) to dramatic but almost invisible – in 2019 some 229 million containers were transported somewhere around the world but fewer than 1,000 of them were swept off a ship and lost at sea. Chances are, the latter has never happened to you or anyone you know (though if it has, please get in touch! I’d love to hear the story).

Closer to home we’re seeing strains on the UK’s supply chains and a fight over the causes of those strains. In one corner, the fault is entirely due to the pandemic running out of control through the UK causing drivers and other key logistics workers to go off sick or pre-emptively self-isolate as a result of contact with someone who tests positive. In another corner, the disruption is all the fault of Brexit raising barriers to the transportation of goods as well as causing large numbers of EU citizens who drove the lorries to leave the UK – against causing shortages and disruptions.

Neither option seems to be the sole answer. The pandemic doesn’t seem to have caused as much disruption elsewhere (though few countries have allowed the virus to run as rampantly unchecked as the UK has) and other countries have been affected by Brexit though those most proximate to it – France and Ireland – stepped up their contingency plans to a much greater degree and had a much broader customer base than just the UK with Ireland in particular decreasing its reliance on the UK for transshipment by increasing direct ferry routes to the rest of the EU.

I suspect the truth lies in a combination of the two. Brexit has reduced overall capacity in the logistics network by increasing the time and complexity of trades whilst reducing the number of staff but the system has been resilient enough to cope in the short term even if it has meant potentially dangerous extensions to hours worked.

But on top of this Covid can strike anyone, anywhere with little notice. If you are waiting for a delivery to a warehouse that doesn’t show up because the driver fell ill and it took time to find another, that might affect your schedule for sending goods further downstream. Add another couple of breaks in the supply chain at similar short notice and it doesn’t take long for the entire system to collapse.

Rather than over focus on the causes of the collapse I’d like to open a discussion on why the collapse happened at all. It’s fairly self evident that any complex system will fail if subjected to enough pressure but we should be able to ask if the combined effects noted above – perhaps alongside any other factors – could reasonably add up to “enough”. In other words, would any country’s supply chains collapse as the UK’s has if subjected to the same strain or was the UK’s supply sector uniquely fragile? And what could be done to make the sector more resilient before the next crisis hits?

Decades of erosion of workers’ rights, wages, the casualisation of labour and a form of globalisation that gives more Freedom of Movement to money and tax-dodging corporations than it does to people adds up to the extension of supply chains such that sectors from car manufacture to food production routinely see components in the production process shipped to oddly distant places because the “economics” somehow make it cheaper that way.

This year, the Scottish Climate Assembly called for a wide-ranging platform of policies of which a couple were a call to deliberately use tax and trade policies to discourage these kinds of imports – which are a major driver of climate changing emissions – and to substitute them either for goods manufactured closer to their final destination (which in Scotland would also allow domestic law to ensure the goods themselves meet high environmental standards and aren’t produced at the cost of exploiting workers) or to simply eliminate throw-away or underused consumer goods by allowing us to lease or borrow them from outlets such as Resource Libraries.

Creating a more Circular Economy in this way would give us access to better goods, for less money, would dramatically cut the cost of those goods to the environment and would reduce the amount of goods we need to transport around the country and around the world. There are many benefits to saving the world with a Green New Deal. Until this pandemic hit, I hadn’t quite appreciated that preventing a global supply chain collapse and the resulting economic ruin might be one of them. Given that we know future crises are coming and that they are likely to be both worse and more frequent than those we’ve seen in previously “normal” times, perhaps it makes sense to start planning for them now and to make our economy – both the visible and invisible bits of it – as resilient as possible.