Europe chemicals supply chains to remain under pressure in 2022 – FECC chief

Morgan Condon

13-Jan-2022

LONDON (ICIS)–European chemicals supply chains remain under pressure and the woes are expected to continue shaping the landscape of the distribution sector, according to the director general at the European Association of Chemical Distributors (FECC).

Dorothee Arns cited this as the key challenge facing chemicals distributors this year and added that, because of this, the sector wants to improve supply chain reliability so players could benefit from a competitive advantage.

“Fortunately, chemical distributors in their vast majority took already appropriate measures in a proactive manner to cope with the current challenges, because adaptability to rapidly-changing conditions and agility are part of their business model,” said Arns.

Maritime supply chains suffered the most pronounced disruptions last year due to the scarcity of shipping space and containers and increased cost of freight rates.

This led to pressure on ultra-large container ships and bottlenecks creating a lack of availability in terminals, blocking also road networks surrounding them, which Arns identified as a structural issue exacerbating supply-side constraints.

LOGISTICS PRESSURES ASHORE
Pressure has not been discriminatory, with the chemicals industry and downstream markets across the globe both needing careful attention in case of supply chain volatility.

“Responsiveness and agility are key to success for distributors, and this works only if there is a good trend scouting and early alert system in place,” Arns stated.

Shortages have not only affected supply of materials, but also of employment across all parts of the sector, especially in connection at times of increased COVID-19 infection rates.

At the height of lockdown restriction in the second quarter of 2020, border closures within the EU caused significant increases to congestion, but the situation was less dramatic in 2021.

This did highlight the existing structural shortage of truck drivers across Europe, impacted not only by the pandemic, but also made worse by Brexit as there was a particular shortage of heavy goods vehicles (HGV) drivers in the UK.

“This resulted in supply chain constraints and bottlenecks, coupled with massive catch-up effects in demand after the COVID-19 restrictions were lifted – supply chains from raw material suppliers to production plants and then onto the end user were simply overwhelmed,” said Arns.

LEGISLATION COULD IMPOSE FURTHER PRESSURE
Looking ahead, increased regulations coming through in the 27-country EU – such as the European Green Deal, the EU Mobility Package and the Chemicals Strategy for Sustainability – could present more challenges to the industry.

These legislative packages demand significant changes from the industry, outlining considerable targets with tight deadlines attached, with still some ambiguity about how these could be implemented throughout the EU and what impact they will have.

Despite the potential obstacles, Arns is optimistic that this could provide the chemicals industry an opportunity to demonstrate the sustainable solutions it has to offer the wider world while reducing its own carbon emissions footprint.

“In this context, a lot of questions will still need to be answered. For example, where all the renewable energy shall come from, which is the prerequisite for reducing greenhouse gas emissions,” said Arns.

“How quickly can technological and other innovations be achieved? How can the EU’s ambitious climate targets be reconciled with the competitiveness requirements the industry needs to remain successful in global markets?” she concluded.

Front page picture: Shipping containers at the UK’s Port of Felixstowe
Source: Terry Harris/Shutterstock 

Interview article by Morgan Condon

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