Expert comment: Fuel supply problems could be a long-term issue

Categories: Salford Business School

Huge queues at petrol stations have developed over the past few days as supplies come under pressure from a lack of HGV drivers and panic buying. Jonathan Owens, logistics and supply chain expert from the University of Salford Business School, looks at what is happening now and what might happen next.

He said: “We have seen many instances recently of downstream supply chains problems, such as food shelves empty, no or reduced deliveries, and now the fuel crisis is upon us. 

“What our supply chains cannot cope with very well is volatility and this has been happening at multiple stages of the delivery process. Normally, a supply chain can cope with a 5% shift in variation due to unusual demand changes, such as ‘spiking’ caused by the customer being spooked into a panic buying mode. 

“The current fuel crisis, driven predominantly by the shortage of HGV drivers who are specialised in fuel delivery, is expected to calm down slightly, due to stocking up at the weekend.  But this maybe a false dawn because people are still preferring to drive to work as against to using public transport.  So with more traffic on the road it could be feasible to expect higher fuel utilisation, and demand is still there. The big question remains if the consumer will remain spooked. 

“If they do, this is not going away quickly and will cause problems in other areas in the supply chain.  The government will be under extreme pressure to calm the panic buying and keeping this in place for the school Autumn break period at the end of October. They have succeeded before, and the key message is there are no significant problems upstream with fuel supplies.

“This year our Christmas will be significantly different, just as it was last year.  Companies are now making the strategic decision what will be their big seller as so many products will not arrive in time for the festive rush.  This has been due to the hugely stretched supply chains of getting the goods to the UK.  Once they are here, it will be getting them onto the downstream supply chain delivery channels and this won’t be easy, as these will be clogged both with rail and road distribution.  Therefore, we should all be objective and managing our own expectations for the festive period this year.” 

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