LONDON (ICIS)-According to sources, logistics problems in Europe continue to plague chemical companies. Driver shortages and port congestion have strained already tight supply lines, although buyers may begin to adapt to longer delivery times for orders.

Europe has been hit by a shortage of heavy goods vehicles (HGV) drivers, resulting in delays and increased costs for transporting chemicals.

This situation is most serious in the United Kingdom, where EU drivers cannot be reached, causing truck capacity to fall into trouble and panic buying fuel.

"Truck drivers are short...especially in the UK. Supply is an issue due to the lack of drivers," said an isocyanate and polyol buyer.

According to people in the vinyl chloride industry, in some cases, delays due to lack of driver access or COVID-19 infection can cause unplanned production to stop.

"We have a contract, and the only worry is the driver," it said.

"A driver was about to load onto the Glasgow [UK] site. The driver tested positive for COVID-19, [and] it took half a day for another truck driver to arrive at the site. Our production had to be closed for several hours ."

Limited policy response The UK has issued 5,000 temporary emergency visas to EU drivers after boycotting this move earlier this year, but trade groups question whether short-term visas are sufficient to attract workers.

“There is a shortage of 400,000 drivers in Europe and 120,000 drivers in Poland. Why would a European come to the UK as a temporary worker for three months?” Tim Doggett, chairman of the Chemical Business Association, told ICIS at the end of September. The visa period was later extended to six months.

Dorothee Arns, director general of the European Chemical Distributors Association (Fecc), said that there are also driver shortages in other parts of Europe, but to a lesser extent.

"In continental Europe, the driver shortage is obvious, but not as pronounced as in the UK. This is more of a subtle development that will intensify as the baby boomers approach retirement age in the next few years," she told ICIS.

She added that, unlike the UK, the situation in Europe has not deteriorated further, but this may be the result of other shortages and price spikes up and down the value chain.

"We haven't heard that the situation gets worse in the summer," she said.

"Some automobile manufacturing or other industrial manufacturing bases-especially in Germany-have to be temporarily closed because of lack of semiconductors, certain raw materials or semi-finished products."

The current surge in energy prices in Europe has reduced the attractiveness of producing products with lower profit margins in the region, leading to production cuts.

"In some cases, due to the recent increase in natural gas prices, chemical plants have reduced the production of higher-than-average energy-intensive chemicals," Arnes said.

Due to prolonged delivery times and difficulty in purchasing inputs, as well as a sharp rise in inflation, the sharp rebound in European manufacturing has slowed slightly in recent months.

Higher demand puts pressure on the already disordered global supply chain network. The different regional speeds of economic and demand recovery during the pandemic make ships and containers often appear in the wrong place. Compared with mid-2020, certain routes The cost has soared more than ten times.

In the approaching Christmas period, the increase in demand is expected to only increase further, which has exacerbated port congestion in many major chemical trading centers in Europe.

"Port congestion is still a problem," said an epoxy resin trader.

"Felixstowe [United Kingdom] was particularly bad, but we also saw problems in Rotterdam-The Netherlands]. The lack of drivers is also the cause of this situation... [with a] The accumulation of unmovable empty containers and Delays in continuing transportation."

According to reports, conditions at the Port of Felixstowe have become so tight that operators are moving bulk cargo to other places due to the lack of congestion caused by the lack of drivers who remove containers from the terminal.

Market versatility Although some logistics issues have not yet ended, participants are becoming more and more accustomed to dealing with these issues, despite the extremely limited ability to build inventories in a tighter value chain.

"I think customers are adapting to the extended delivery time, so even if the supply is still tight and the inventory cannot be established, [have] reduced panic buying," the epoxy resin trader said.

In other cases, players can obtain raw materials but find themselves unable to deliver their products.

An isocyanate player said: "We can get the raw materials, we can produce them on time, and then we can't ship them."

Other operators are solving this problem by establishing product stores near the required location, which is different from the "just in time" method of logistics, but it will increase the cost of the entire chain.

"We found a solution in a short period of time... We will store the product in [UK] to ensure supply," said the isocyanate and polyol buyer.

"We want suppliers to pay for warehousing costs, because stopping...our or OEM [original equipment manufacturer] production is more expensive than storing TDI, MDI or polyols locally."

"It is a better solution to put the materials there instead of stopping OEM production, [this may cost] millions," it added.

Due to limited warehouse space, especially for hazardous chemicals, a broader increase in storage response may prolong already tight availability.

As the situation may remain volatile in 2022 or even longer, chemical companies will need to continue to adapt to future challenges.

Homepage photo: Containers at the Liege Logistics Multimodal Terminal in Belgium. Photo credit: Xinhua News Agency/Shutterstock

Tom Brown's Focus Article

Additional reporting by Heidi Finch and Vicky Ellis

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