Europe chemicals supply chain a ‘disaster’ as lack of truck drivers worsens

LONDON (ICIS)–Bottlenecks continue to disrupt chemicals production in Europe, with many sources citing a lack of truck drivers over the summer months as the key factor disrupting “disastrous” supply chains.

However, a lack of drivers is not the only issue impacting the sector.

Logistics have been described as “terrible” and “horrible” by market participants in the European petrochemicals industry, and the prospect of any near-term change remains muted.

“Trucking is a disaster. It’s the holiday season and drivers are going home. Freights keep increasing and they cancel deliveries, move dates etc,” said one polyethylene terephthalate (PET) trader.

The trader acknowledged that if demand was slow, the lack of truck availability would not be such a concern, but this view was not universally held across the market.

“Trucks have been horrible honestly. I work in the US and Asia, and I have not seen such tightness for no good reason,” said a PET producer.

“It is not because of demand, it’s because there is a major shortage of supply in terms of drivers… They’ve added salt on the wound with the new [EU] mobility package,” it added.

Transport is not just impacting PET sales. For instance, transport is possibly one of the largest factors effecting both the propylene oxide (PO) spot and contract markets.

“It comes down to transport. There’s no transport [capacity] spare, so there’s hardly an option to do spot PO, even if we have the material,” said one PO producer.

Another producer cited the high energy costs as another cause for the shortage of trucks for drivers who are self-employed or work as contractors.

“Logistics are terrible, it’s not really working, it’s deteriorating. It’s not because the cost is increasing, it’s the service that is getting worse,” a source said.

Another source pointed to a lack of both drivers as well as spare capacity; adding to that, it said delays on railways are recurrent.

OFF-ROAD LOGISTICS PRESSURES
Rail-related problems have also been widely discussed across the market, as deferred maintenance has impacted service on the system, and the hot weather slows down deliveries.

Congestion on the roads is not the only issue disrupting supply chains, with  low water levels on the Rhine meaning barges will not be able to carry as much cargo, making this alternative less viable as a substitute for trucks.

Chemicals companies have heavily invested in designing barges that can cope with this issue, but any solutions are not yet at a place which can cope with the high volumes of traffic.

Ports have also come under pressure on the labour side, as port and dock workers recently took strike action for higher pay, which could also slow unloading times down or put further pressures on costs in the long term.

There is still quite a lot of traffic for barges and terminals, with one methanol producer highlighting the impact of this on the industry.

“It was extremely busy, and still is. I think there was a rather big backlog which has improved a little, but for how long I do not know,” said one source at a shipping terminal.

“It is not only methanol that is pretty active. Other products, like ethanol and styrene are going crazy.

“I have been in the business for 37 years. What I have seen in the last couple of weeks, I have not seen before, and I am not sure how long it will take to resolve,” the source concluded.

Front page picture: Containers at the logistics hub in Duisburg, Germany
Source: Sergii Kharchenko/NurPhoto/Shutterstock

Focus article by Morgan Condon            

Additional reporting by Zubair Adam, Eashani Chavda, Caroline Murray, Nazif Nazmul, Nicole Simpson, and Nel Weddle