IN Brief:
- Eighty seven per cent of surveyed businesses identified escalating shipping costs as a critical concern.
- Road haulage capacity problems increased sharply across both the UK and European Union.
- Weak margins and subdued orders are limiting recruitment, investment, inventory, and resilience.
Chemical Business Association members continue to face rising operating costs, difficult trading conditions, and weak confidence, with logistics disruption among the most widespread pressures recorded during the second quarter of 2026.
The association’s Quarterly Chemical Supply Chain Trends Survey found that 87% of respondents regarded escalating shipping costs as a critical concern. A further 73% experienced problems linked to continued ocean freight disruption, while the blockade of the Strait of Hormuz added uncertainty to the movement of chemicals, feedstocks, fuels, and related industrial materials.
Road haulage capacity also tightened markedly. Thirty one per cent of respondents experienced problems in both the UK and European Union, compared with 8% and 13%, respectively, during the second quarter of 2025.
The survey drew responses from 44 member businesses, including manufacturers, distributors, transport operators, logistics providers, and service companies. The CBA has tracked conditions across the sector for more than 14 years, covering orders, sales, margins, employment, and operational constraints.
One quarter of respondents reported weaker order books than during the first quarter, while the same proportion recorded slower sales. Only 18% expect sales to increase during the coming months, down from 33% six months earlier.
Margins are following a similar pattern. Thirty per cent reported an improvement, while 36% experienced deterioration from the previous quarter and only 6% expect margins to strengthen during the next three months.
Staffing plans remain cautious, with 68% expecting employment to remain unchanged and 16% considering headcount reductions during the third quarter. Taxation, business rates, energy prices, employment costs, regulatory complexity, and policy uncertainty were also identified as barriers to investment.
“Businesses are facing rising costs on multiple fronts, from logistics and energy to taxation, employment, regulation and compliance,” said Tim Doggett, chief executive of the Chemical Business Association. “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.”
Chemical logistics offers less freedom to switch between vehicles, routes, and storage sites than general cargo. Dangerous goods requirements, product compatibility, trained drivers, tank specifications, cleaning standards, packaging approvals, and site restrictions reduce the number of assets suitable for each movement.
A shortage across the general haulage market can consequently become more severe within specialist fleets. Capacity may appear available in headline terms while the required vehicle, driver qualification, or loading equipment remains unavailable for a particular chemical product.
Ocean disruption extends well beyond the immediate freight invoice. Longer and less predictable transit times increase working capital, force businesses to hold more safety stock, and make production planning harder when materials arrive outside the intended manufacturing window.
Alternative routes can introduce different customs procedures, documentation, ports, carriers, and storage requirements. Emergency purchases may keep production moving, but they frequently carry higher transport costs and less favourable commercial terms.
UK logistics expenditure has already increased substantially across labour, transport, property, energy, and compliance, with overall costs rising by 53% over the past decade. Chemical businesses carry those general increases alongside specialist handling and regulatory obligations.
The consequences extend into food production, pharmaceuticals, electronics, automotive manufacturing, construction, water treatment, energy, coatings, plastics, and other downstream sectors. Reduced domestic chemical capacity can lengthen lead times and increase dependence on imported materials across several industrial supply chains.
Commercial and technical activity remains evident, with stronger attendance at Chemspec Europe reflecting continued demand for sourcing, manufacturing, and process partnerships. The constraint lies in converting that activity into sustained UK investment.
Doggett warned that closures, reduced operations, and market exits remove skills and infrastructure that are difficult to replace. Chemical warehouses, laboratories, transport fleets, and manufacturing sites require specialist approvals and trained staff, so lost capability cannot be rebuilt quickly when demand returns.
The survey presents a sector managing overlapping rather than isolated pressures. Businesses can absorb a temporary rise in freight or a single compliance change more readily than several years of weak demand, higher costs, and uncertain policy.
Investment will depend on greater stability across energy, regulation, taxation, transport, and industrial policy. Without that foundation, businesses will continue protecting current service at the expense of the facilities, skills, inventory, and technology required for longer term resilience.
