Rising costs and uncertainty continue to w…

UK chemical supply chain businesses are continuing to face high operating costs, challenging trade conditions and ongoing uncertainty, according to the Chemical Business Association’s (CBA) latest Quarterly Chemical Supply Chain Trends Survey*.

The survey – which has provided valuable insight into the health of the sector for more than 14 years – is distributed to the Association’s extensive membership and gathers responses from manufacturers and distributors, transport and logistics companies, and service providers from across the UK’s chemical supply chain.

The Q2 2026 findings paint a picture of a sector grappling with the cost and complexity of doing business in the UK. Rising operational costs, subdued demand, global disruption and continued uncertainty are combining to impact confidence, investment and growth across the chemical supply chain.

Logistics remains one of the most visible manifestations of these pressures. Escalating shipping costs impacted the majority of respondents, with 87% citing it as a critical concern. Nearly three quarters (73%) also experienced problems resulting from continued disruption to ocean freight, while the blockade of the Strait of Hormuz created further challenges.

Reports of road haulage capacity issues increased significantly compared with the previous year, with 31% reporting problems in both the UK and EU, up from 8% and 13%, respectively, in Q2 2025. However, logistics challenges are only one part of a much wider picture.

One quarter (25%) of respondents reported that their order books were worse than in Q1, while the same percentage experienced slower sales. Looking ahead, only 18% expect sales to rise in the coming months, compared with 33% six months ago.

Profitability also remains under pressure. Less than a third (30%) of respondents reported improved sales margins, while 36% said margins had worsened compared with the previous quarter. Only 6% expect margins to increase in the next quarter, underlining the sustained cost pressures facing the sector.

While 68% of respondents expect staffing levels to remain unchanged in the coming months, 16% indicated that they may need to reduce headcount during Q3.

Respondents also highlighted a range of broader issues affecting confidence and investment decisions, including taxation, business rates, high energy costs and increasing regulatory complexity.

“The latest survey highlights just how challenging the business environment has become for companies across the UK’s chemical supply chain,” says Tim Doggett, CEO of the CBA.

“Businesses are facing rising costs on multiple fronts, from logistics and energy to taxation, employment, regulation and compliance. The cumulative effect, combined with subdued demand and continuing uncertainty, is placing increasing strain on competitiveness and leaving many companies working hard simply to stand still.”

According to Doggett, no single measure is responsible. Rather, businesses are feeling the combined impact of successive policy decisions, additional regulatory requirements and the wider cost of operating in the UK.

“Behind every delayed shipment, price increase and material shortage are businesses having to make difficult choices about jobs, investment, and future plans. While individual measures may appear manageable in isolation, collectively they are influencing decisions on investment, recruitment and growth. SMEs, which form the backbone of the UK’s chemical supply chain, are disproportionately affected. They are dealing with rising costs, international competition and increasing regulatory complexity, often without the capacity to absorb prolonged periods of disruption across multiple fronts.”

Doggett explains that there have already been several high-profile closures, reductions in operations and decisions to exit the UK market altogether. “Once investment, skills and supply chain capability are lost, they are extremely difficult to rebuild, and the consequences for local communities can be severe.”

He adds: “The UK chemical supply chain has enormous potential to support economic growth, strengthen domestic manufacturing and improve national resilience. The new Prime Minister’s commitment to bring forward a 10-year plan for Britain, alongside his ambition to reindustrialise the country, is therefore welcome. However, neither can be achieved without a strong, competitive and resilient chemical industry and supply chain.

“Businesses making major investments in manufacturing facilities, research and development, new technologies and skills must often plan decades ahead. Government must think and plan on the same long-term timescales, providing the clarity, consistency and certainty businesses need to invest with confidence.”

Doggett concludes: “The decisions taken by Government over the coming months will have a significant bearing on the sector’s ability to innovate, grow and create jobs. What is required now is greater clarity, clear policy direction and a long-term commitment to creating an environment in which businesses can flourish.”

*The survey sample polled 44 members.