Supply chain issues have been a significant challenge since the pandemic began in 2020, affecting so many more industries than just automotive. As a direct result, UK businesses relying on importing raw materials and intermediate products from abroad, have struggled, and international supply chains are under more pressure than ever.

In their recent comment, the Society of Motor Manufacturers and Traders (SMMT) highlight that with every sector, it’s likely that consumers will find it difficult to get some of the things they need at a time when they want it, as we progress throughout 2022. And whilst the SMMT also recognise that automotive service and repairs are essential, they emphasise that industry is already working flat out to make sure parts are delivered as quickly as possible.

In fact, the SMMT state that automotive manufacturers and independent supply chains are doing all they can to ensure rapid delivery of parts, but most of these common global factors are beyond their control. Such as;

Navigating the Global Parts Shortage

The closure of factories and key Asian ports during the pandemic led to a global shortage of electronic components on a catastrophic scale.

These shortages include printed circuit boards, semiconductors and microchips, and has affected the supply of new cars, electronic devices and home appliances, leaving manufacturers struggling to meet rising global demand and resulting in substantial backlogs. 

Not only has this resulted in September 2021 seeing the lowest number of new cars registered in the UK for that month since 1998, according to SMMT research, but the BBC has also reported that prices for second-hand cars have risen sharply at unprecedented rates since.

Shipping

The cost of shipping globally have also increased, reaching a record high in September 2021, when the average cost of shipping a standard large container was four times higher than in September 2020. 

These high prices have stemmed from a global shortage of capacity caused by shipping firms mothballing 11% of the global shipping fleet during the pandemic in expectation of a lull in demand, as reported by Drewry. However, demand remained high and has since increased – resulting in significant backlogs.

Fuel and Energy Price Hikes

The soar in global gas prices have mainly caused by high post-lockdown energy demand and the Russian conflict. However, unlike domestic consumers who are protected by the consumer price cap for energy, business customers haven’t been shielded from increasing prices. In fact, according to the Office of National Statistics (ONS), around one in four UK firms reported that in Q4 2021 their production or suppliers had been affected by rising gas prices. What’s more, the Chartered Institute of Procurement and Supply (CIPS) highlight that some businesses have considered ending production as gas prices render their operations financially unviable.

This is because business energy is different to domestic energy; fixed-price contracts are typically in place for one, two or three years and business energy tariffs also don’t come with a price cap like standard variable deals do, meaning the prices can be far too damaging for some businesses to recover from.

Talent Gap for Commercial Drivers

The pandemic limited the number of HGV driving tests available last year, with over 30,000 test slots lost according to the Road Haulage Association (RHA), therefore limiting the number of drivers entering the industry. Brexit also made it difficult to source talent from Europe, which has been further complicated by the pandemic. And what’s more, the Department of Transport then temporarily relaxed the rules on driver hours, generating a mixed reaction with some suggesting there are other long-standing issues that both COVID-19 and Brexit have contributed to. I.e., unpredictable hours and lower pay compared to other sectors.

However, as reported in Export, the Institution of Export and National Trade, the driver shortages gap in the UK is gradually “stabilising”, as driver tests have increase by more than half, business introduce significant pay increases and younger recruits are more encouraged to become commercial drivers.

Despite the challenges of the past 24 months, those of tiered nationwide lockdowns and global shortages, the automotive industry has proven its resilience. It continues to deliver great service and repairs to keep the vehicles on our roads and their drivers safe, which is always of the upmost importance.

Because of this, it’s so important to remember that working with repairers has to be balanced with a consideration of customers and their expectations too.

The Importance of Keeping Communication Lines Open

At ECSG, we are specialists in technical claims handling, and we believe that through collaboration and honesty, everyone, regardless of fault, should have access to market leading services and be treated fairly and respectfully.

For us, our clients are at the heart of what we do. We’re an Ethical Claims Services Group and it’s important to us to be able to support them throughout their entire claims process, keeping them up to date with progress along the way.

We believe that communication really is key to handling a vehicle insurance claim well and respectfully. Explaining what’s happening and how long processes are expected to take is vital, and with ECSG, those expectations will be managed from day one by everyone that touches the claim.

To find out more about our professional motor claims handling platform, reach out today.