The UK chemical supply chain is feeling the pinch as businesses grapple with soaring operating costs, tough trading conditions, and ongoing uncertainty, as highlighted in the latest Quarterly Chemical Supply Chain Trends Survey from the Chemical Business Association (CBA)*.
For over 14 years, this survey has been a vital source of insight into the sector’s health, reaching out to the CBA’s wide-ranging membership. It collects feedback from manufacturers, distributors, transport and logistics firms, and service providers all across the UK chemical supply chain.
The findings for Q2 2026 reveal that companies are struggling with the increasing costs and complexities of doing business in the UK. A mix of rising operational expenses, weak demand, global disruptions, and lingering uncertainty is taking a toll on confidence, investment, and growth within the chemical supply chain.
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Shipping Costs and Freight Disruption Remain Key Concerns
Logistics is one of the most visible areas feeling these pressures. A staggering 87% of respondents pointed to rising shipping costs as a major concern.
Additionally, nearly three-quarters (73%) faced issues stemming from ongoing disruptions in ocean freight, with the blockade of the Strait of Hormuz adding to the challenges.
There’s also been a notable rise in reports of road haulage capacity issues compared to last year. In Q2 2026, 31% of respondents indicated they were facing problems in both the UK and EU, a significant jump from 8% and 13% in Q2 2025.
Yet, logistics challenges are just one piece of the larger puzzle affecting the sector.
Order Books, Sales and Margins Under Pressure
A quarter (25%) of respondents noted that their order books have worsened since Q1, and the same percentage reported slower sales.
Looking ahead, expectations remain low. Only 18% of respondents anticipate an increase in sales, a drop from 33% just six months ago.
Profitability is under significant strain. Just about one in three respondents (30%) reported an uptick in sales margins, while a larger portion, 36%, noted that their margins have taken a hit compared to the previous quarter.
Looking ahead, only 6% anticipate an improvement in margins for the next quarter, underscoring the ongoing cost pressures that are weighing heavily on businesses throughout the UK chemical supply chain.
Employment outlooks mirror this tough scenario. A notable 68% of respondents expect their staffing levels to stay the same in the near future, but 16% are considering the possibility of downsizing in Q3.
Several broader issues are impacting confidence and investment choices, including taxation, business rates, soaring energy costs, and the growing complexity of regulations.
CBA Highlights Growing Pressure on Competitiveness
“The latest survey sheds light on just how tough the business landscape has become for companies in the UK’s chemical supply chain,” says Tim Doggett, CEO of the CBA.
“Firms are grappling with rising costs across the board—from logistics and energy to taxation, employment, regulation, and compliance. The cumulative impact of these factors, coupled with weak demand and ongoing uncertainty, is putting immense pressure on competitiveness, leaving many companies struggling just to maintain their current position.”
Doggett points out that there isn’t a single culprit behind the sector’s challenges. Instead, businesses are feeling the effects of a series of policy decisions, added regulatory demands, and the overall cost of doing business in the UK.
“Every delayed shipment, price hike, and material shortage reflects the tough choices businesses must make regarding jobs, investments, and future strategies. While each individual issue might seem manageable on its own, together they are shaping decisions about investment, hiring, and growth.”
“Small and medium-sized enterprises (SMEs), which are the backbone of the UK’s chemical supply chain, are feeling the pinch more than ever. They’re grappling with rising costs, fierce international competition, and a maze of regulatory challenges, often without the resources to weather prolonged disruptions on multiple fronts.”
Industry Closures Raise Concerns Over Long-Term Capability
Doggett points out that we’ve already seen several notable closures, cutbacks in operations, and even some companies deciding to leave the UK market entirely.
“Once we lose investment, skills, and supply chain capabilities, it’s incredibly tough to rebuild them, and the impact on local communities can be quite severe.”
Despite these challenges, Doggett highlights the vital role the chemical supply chain can play in bolstering the UK economy.
“The UK chemical supply chain has tremendous potential to drive economic growth, enhance domestic manufacturing, and boost national resilience. The new Prime Minister’s pledge to roll out a 10-year plan for Britain, along with his goal to reindustrialise the country, is certainly encouraging. However, achieving these goals hinges on having a strong, competitive, and resilient chemical industry and supply chain.
“Businesses that are making significant investments in manufacturing facilities, research and development, new technologies, and skills often have to think decades into the future. The government needs to align its thinking and planning with these long-term timelines, providing the clarity, consistency, and certainty that businesses require to invest confidently.”
Long-Term Policy Clarity Needed to Support Growth
Doggett wraps up by stating that the decisions made by the government in the coming months will be crucial for the sector’s future competitiveness.
“The choices made by the government in the near future will greatly influence the sector’s ability to innovate, expand, and create jobs. What we need now is more clarity, a clear policy direction, and a long-term commitment to fostering an environment where businesses can thrive.”
*The survey sample polled 44 members.
