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SERVICE UPDATE

Latest update 2 3 22

Service update

Since the announcement of the removal of domestic legal restrictions, due to the pandemic, in England from 24th February, and similarly in Scotland and Wales from 21st and 28th March respectively, demand has increased markedly, which is fantastic news for the hospitality industry.

Some of the challenges we faced last autumn remain however including:

Labour shortages

Longer lead times on vehicle repairs

Sickness - which is still at higher than normal levels due to Covid-19 still being present.

Supply levels are generally holding up well, although tube strikes this week added an additional challenge of congestion on London streets, and the Ukraine crisis is starting to show signs of impact on supply lines and prices, (see below for a more detailed explanation) which we are closely monitoring.

Overall, we are seeing some pressure points in a small number of depots starting to emerge, and are working right now with customers to address and alleviate these. Your account team will contact you should any of your deliveries be affected and we will communicate regular updates as we move towards a ‘business as usual’ picture for the industry over the next few weeks.

The situation in Ukraine

We are all thinking of those who are directly and indirectly affected by the ongoing conflict in Ukraine, those who live there, as well as those who are members of our communities here in the UK. Like many other businesses, Bidfood is currently exploring the most effective avenues of providing direct support to Ukraine.

Last week in our update, we highlighted that Ukraine is the third biggest supplier of wheat, and a major supplier of maize and sunflower oil. In fact, roughly 30% of sunflower oil is grown in Ukraine and future prices of sunflower oil have jumped significantly this week as a result of the conflict. This is due to concerns over the potential blockage of ports in that region, should the Russian army move further into Ukraine, or if the sanctions that have been imposed start to affect supply and prices. We have also heard reports of seed crushing plants that have been damaged by missile attacks, along with major growing areas for sunflowers being destroyed.

It’s also worth noting that Russia is known to be the world’s largest exporter of fertiliser, gas and wheat. The war between both nations could therefore have a wider impact on some of the world’s core commodities and delay any easing of the current high levels of food inflation.

To build up a picture of any supply risks to products sourced from both countries, we have compiled a list of those sourced directly from Russia and Ukraine, and we are currently reviewing stock holding on these. In fact, there are just 12 products on that list, mostly honey, oils (one sunflower oil and one rapeseed oil), and coriander. Although Ukraine is a major supplier of wheat and oils on world markets, these are not directly supplied to Bidfood in any major quantities.

Whilst we do not expect any significant availability issues on those lines, we are aware that this does not reflect the full picture. Some fish products, for example, a number of cod and pollock lines, are Russian in origin but are processed elsewhere. Sanctions would undoubtedly cause disruption to supply across the industry, potentially affecting cod, pollock, fish fingers and other processed fish products, including stocks caught pre-conflict and post-conflict. As yet we do not know when sanctions will take effect from, and the details of what they will affect.

There is also a wide range of products that use Russian or Ukraine sourced ingredients in their manufacture. For example, crisps or chips cooked in sunflower or blended oils, sunflower spreads, as well as the many products that contain wheat, or wheat-flour. At present, we are working closely with suppliers to understand the current and potential impact that the conflict could have on availability of these ranges.

There is also, of course, the potential impact on wider food, energy and fuel inflation to consider, which has the potential to affect product, and operating costs across the supply chain. However, the scale of this is very difficult to determine at the moment. We will keep you updated in future communications as we understand more about these macro-market impacts.

Cyber security

It has widely been reported that this war is also being waged online between both countries. Whilst the UK’s National Cyber Security Centre has indicated that it is not aware of any current, specific threats to UK organisations in relation to events in Ukraine, it has called on organisations in the UK to bolster their online defences to cyber threats. This is partly because of the international consequences that cyber-attacks on Ukraine may have.

Whilst there are no absolute guarantees that any business would be fully protected in the event of an attack, at Bidfood we are risk averse in the area of cyber security, and have invested heavily in systems, processes and measures that enable us to robustly protect, detect and respond to cyber threats.

We have increased our sensitivity level for email threats, communicating this higher level of alert across our teams. We also have robust security incident response and IT disaster recovery measures, a strong and well protected back-up regime, as well as a comprehensive Business Continuity Plan in place. These would enable us to invoke an effective response at very short notice, and minimise the amount of systems that would be affected by an attack.

We will continue to keep you updated as the situation evolves. Please be assured of our continued commitment to maintaining the highest levels of service to you and your team.

Jim Gouldie

Supply Chain and Technical Services Director Bidfood



 

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