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Economy slows as supply chain disruption and energy costs hit

Mar 31, 2026 | ,

The UK economy is showing clear signs of slowing, with growing pressure on importers and exporters, as supply chain disruption and rising energy costs begin to feed through. 

While headline indicators suggest marginal growth, underlying conditions point to a more fragile environment, which is shifting the focus towards control and adaptability, with forward planning, flexible routing and improved visibility becoming key to maintaining performance.

Demand moderates but remains supported by structural activity

The latest PMI data is still expanding, with the composite index at 51.0 marking eleven consecutive months of growth. However, the pace has slowed, and business confidence has eased to a nine-month low.

UK GDP was flat in January, with three-month growth of 0.2%, reflecting a slowdown rather than a contraction. More recent data suggests goods sectors are losing momentum, but activity remains in expansion territory.

Manufacturing output in March edged close to stagnation (50.1), while overall activity continues to expand, marking an extended period of growth. Demand patterns are becoming more selective, with some buyers delaying orders due to cost pressures, while others are maintaining or even accelerating purchasing to secure supply.

Export demand remains mixed, but still present. Some manufacturers reported modest increases in overseas orders, supported in part by customers bringing forward purchases and building inventory to mitigate future disruption.

This points to a market that is not weakening uniformly, but instead becoming more dynamic, with pockets of resilience alongside more cautious spending.

Input costs rise sharply, reinforcing the need for supply chain control

Cost pressures are accelerating across goods sectors, driven by higher fuel costs, transportation charges and energy-intensive inputs.

Manufacturing input prices recorded their sharpest increase in over three decades, with around 47% of firms reporting rising costs. This is feeding through into output pricing, with manufacturers increasing selling prices at the fastest rate since April 2025.

At the same time, supply chains are becoming less predictable. Around 25% of manufacturers reported longer supplier delivery times in March, reflecting extended transit times from Asia and disruption linked to rerouting and network congestion.

While these pressures are significant, they are also increasingly visible and measurable. For many businesses, this creates an opportunity to take earlier action, whether securing capacity in advance, adjusting routing strategies or reviewing supplier and inventory models to reduce exposure.

Interest rate outlook shifts as inflation risks re-emerge

At its latest meeting on 19 March, the Bank of England’s Monetary Policy Committee voted unanimously to hold the base rate at 3.75%, in line with expectations.

While acknowledging signs of weaker economic activity, policymakers highlighted the risk that rising energy costs could feed into wages and domestic pricing. The Committee signalled a more cautious stance, removing earlier guidance that pointed towards rate cuts and instead emphasising a readiness to act if inflationary pressures strengthen.

Markets interpreted the shift as a more hawkish tone, suggesting that borrowing costs may remain higher for longer if energy-driven inflation persists.

For goods-focused businesses, this reinforces the need to manage both cost inflation and financing conditions, particularly where inventory and working capital requirements are increasing.

Inventory strategies shift as businesses balance risk and demand

Changing conditions are driving a more proactive approach to inventory management. Some businesses are increasing stock levels and bringing forward orders to protect against future disruption, while others are taking a more cautious approach in response to cost pressures.

This is creating more uneven demand patterns, but also supporting short-term volume in key sectors. At the same time, inventory levels remain relatively tight overall, reflecting the ongoing impact of supply chain delays.

For supply chains, this reinforces the importance of flexibility — balancing stock availability against cost, while maintaining the ability to respond quickly as conditions change.

US and EU markets provide stability, but cost pressures remain a factor

The United States and EU continue to provide relatively stable demand conditions, supporting UK trade flows.

US inflation remains moderate at 2.4%, with interest rates held at 3.50%–3.75%, while the EU is close to target at 1.9%. These conditions are helping to sustain demand, even as global uncertainty increases.

However, both markets remain exposed to rising energy costs, which could influence pricing and demand if sustained. For UK exporters, this means opportunities remain, but with increasing sensitivity to cost and lead time.

Stay ahead of changing conditions with Metro

Metro helps importers and exporters turn market complexity into a controllable, manageable process.

Whether adapting to rising costs, mitigating supply chain delays or optimising inventory flow, Metro provides the insight and operational support needed to maintain performance in a changing market.

To discuss how current economic and supply chain conditions could impact your business, EMAIL Laurence Burford, Chief Financial Officer.

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Trade growth in a fragile environment

Mar 31, 2026 | , , , , , , , , , , ,

The latest Global Trade Observatory Outlook, based on insights from more than 3,500 senior supply chain executives, highlights a contradictory confidence in trade growth, while the conditions that support growth are increasingly fragile.

Global goods trade reached record levels in 2025, exceeding $26 trillion, but growth is expected to in 2026 slow as cost pressures and operational complexity increase.

Recent developments underline how fluid the global trade environment has become.

The European Union has approved a trade agreement with the United States, but only with strict safeguards in place. Conditional clauses and review mechanisms have been built in to protect against policy shifts and ensure compliance.

At the same time, the UK’s own trade position with the US remains under review, creating uncertainty around tariffs, market access and regulatory alignment.

For businesses, this introduces a more complex planning environment, because trade agreements are no longer fixed frameworks, but are increasingly conditional and subject to change.

Disruption Is now continuous

Alongside policy uncertainty, operational disruption continues to reshape supply chains.

The Middle East situation has already tightened capacity, extended transit times and increased reliance on alternative routing. Air freight availability has reduced in certain markets, while multimodal and inland solutions are absorbing diverted volumes.

At the same time, cost pressure is building across the supply chain, though nearly half of supply chain executives had been expecting moderate or sharp cost increases, with transport, labour and customs compliance costs rising.

These pressures are no longer isolated. They are systemic.

Inventory strategies are also shifting. With 44% of businesses increasing stock levels, delays today risk translating into availability gaps in the coming weeks. 

Buying cycles are tightening, with orders placed later but expected to arrive faster. The tolerance for delay is reducing, because there is less margin for error.

Confidence Is now built on capability

Despite these challenges, businesses remain confident.

This confidence is not reliant on improving conditions. It is based on improved capability, with 46% of businesses planning to use new trade routes, and a further 23% actively evaluating alternatives. 

It is this ability to adapt, rather than the expectation of stability, which will drive growth, with success depending on:

  • Rapid route adjustment
  • Cost control under pressure
  • Maintaining flow during disruption
  • Navigating changing regulatory conditions

Logistics is no longer a support function. It is a performance driver.

Supporting Trade in Volatile Conditions

The companies that succeed will be those that can absorb disruption, adapt quickly and maintain control across increasingly complex supply chains.

Metro works with UK importers and exporters to maintain control in exactly this environment.

Multimodal Flexibility
Integrated sea, air, road and rail solutions allow rapid adjustment to changing capacity and cost dynamics.

Route Optimisation & Corridor Expertise
Dynamic routing strategies avoid congestion, mitigate risk and maintain transit reliability as conditions shift.

Carrier Relationships & Capacity Access
Established partnerships help secure space and maintain flow when availability tightens.

Cost & Performance Control
Consolidation, mode optimisation and advisory support help manage inflationary pressure while protecting service levels.

Visibility & Decision-Making
Real-time tracking and performance insight enable faster, more informed decisions when disruption occurs.

If your supply chain is being impacted by regulatory change, rising costs or network disruption, EMAIL Andrew Smith, Managing Director to learn how we can help you adapt and continue to grow with confidence.

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Middle East disruption continues to reshape global supply chains

Mar 18, 2026 | , , , , , , , , , , , , , , , , , , ,

Middle East linked disruption extends well beyond the region, with growing implications for global supply chains. 

As capacity tightens, routes are reconfigured and costs come under pressure, supply chains are entering a more complex and less predictable phase.

Air freight capacity tightens

Air freight markets are among the most immediately affected. Reduced capacity through key Gulf hubs — which typically handle a significant share of global cargo flows and particularly Asia — has forced airlines to reroute services and limit network coverage.

Market data indicates that capacity reductions in parts of the Middle East and South Asia have been significantly steeper than the decline in volumes, creating a sharp imbalance between supply and demand. As a result, rates on some key east–west corridors have risen by more than 50% week on week, with spot pricing increasing at an even faster pace.

Cargo is increasingly being redirected via alternative gateways such as China and Hong Kong, placing additional pressure on corridors that were previously less affected. This is tightening capacity across Asia–Europe routes and contributing to delays, space shortages and short-notice schedule changes.

At the same time, rising fuel costs and the introduction of war risk-related surcharges are adding further upward pressure, while rate validity is shortening as carriers respond to rapidly changing conditions.

Ocean disruption drives congestion, diversion and equipment imbalances

Ocean freight is facing a different but equally significant set of challenges. The effective closure of the Strait of Hormuz — a corridor that typically handles a substantial share of global energy flows — has led to a dramatic reduction in vessel transits, with movements down by around 95% compared to normal levels.

Shipping lines have suspended services into the Arabian Gulf and are diverting vessels to alternative ports, where cargo is being discharged and held for onward movement. This is creating a knock-on effect across surrounding regions.

Ports outside the Gulf are now absorbing unexpected volumes. Congestion levels at key contingency hubs have reached critical levels, with some locations operating at or near full capacity and vessel waiting times extending well beyond normal ranges.

At the same time, an estimated 200,000+ TEU of capacity remains effectively trapped within the Gulf, contributing to equipment shortages in Asia as empty containers are unable to return to origin markets. This imbalance is expected to place further pressure on export flows in the coming weeks.

Rising bunker costs are also beginning to influence vessel operations, with some operators reducing sailing speeds to manage fuel consumption, adding further variability to transit times.

Costs rise as surcharges and fuel pressures build

Across both air and ocean freight, cost pressure is becoming more pronounced. Emergency surcharges linked to fuel volatility, war risk and network disruption are being introduced or expanded across multiple trade lanes.

Air freight rates have already increased sharply on key routes, while ocean carriers are implementing additional charges to reflect higher operating costs and longer routing distances. In parallel, regulatory scrutiny is increasing, particularly around how surcharges are applied and communicated.

For shippers, this is creating a more complex cost environment, where pricing can change quickly and visibility is reduced.

The past few weeks have highlighted how quickly supply chain assumptions can change and how important it is to have flexible, well-informed contingency options in place.

Metro is supporting customers by identifying alternative routings, securing capacity across air and ocean networks, and maintaining close operational control as conditions evolve.

To discuss how this situation could impact your supply chain, or to review practical routing and cost options, EMAIL Andrew Smith, Managing Director at Metro, for a direct and informed response.

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Ocean rates move unevenly as conflict, congestion and pricing strategies reshape the market

Mar 18, 2026 | , ,

Ocean freight spot rates are entering a more volatile phase, as Middle East disruption, port congestion and carrier pricing strategies combine to reshape conditions across the main east–west trade lanes.

Recent market data shows a widening gap between how different trades are performing. 

On Asia–Europe routes, spot rates have risen sharply in some cases, with week-on-week increases approaching 20%, while other indices suggest more modest movements of only a few percentage points.

This disparity reflects a market where pricing is no longer moving in a single direction. Instead, shippers are seeing a broad range of rates depending on timing, routing and carrier strategy, with some short-term quotes significantly above prevailing averages.

On the transpacific, the picture remains more subdued. While some indices show modest increases of around 3–5%, underlying demand remains relatively soft, which is limiting upward pressure and keeping overall rate levels more stable.

Although the main east–west trades do not directly transit the Middle East Gulf, the impact of the conflict is feeding into global ocean networks.

The continued disruption to Red Sea and Gulf routing is extending voyage distances and increasing vessel utilisation. This reduces effective capacity across the global fleet, helping to support rates despite relatively cautious demand.

Congestion builds across alternative hubs

As vessels divert away from affected areas, pressure is building at alternative ports across Asia and the wider region.

Transhipment hubs are absorbing higher-than-normal volumes, often arriving on disrupted schedules. This is leading to congestion, longer waiting times and reduced operational efficiency.

The knock-on effect is being felt across supply chains, with delays extending beyond the immediate region and into connecting services on Asia–Europe and intra-Asia routes.

This congestion is also contributing to rate increases, particularly on trades closest to the disruption, where spot pricing has risen by double-digit percentages since the situation escalated.

Carriers adopt firmer pricing strategies

Alongside operational disruption, carrier behaviour is playing a growing role in shaping the market.

Pricing strategies have become more assertive, with carriers introducing higher FAK levels, applying emergency surcharges and taking a firmer approach to contract negotiations. In some cases, new rate levels have been set significantly above recent spot benchmarks, even as softening continues to appear in parts of the market.

Fuel-related and war risk surcharges are also being layered onto base rates, reflecting higher operating costs and increased insurance premiums. This is creating a more complex pricing structure, where total landed costs are less predictable and subject to change at short notice.

Regulatory attention is also increasing, with the FMC in the United States and authorities in China and India signalling the need for greater transparency around pricing and surcharge application.

Short-term support, longer-term uncertainty

In the near term, these combined factors are helping to support ocean freight rates and prevent the sharp declines that might otherwise follow the post-Chinese New Year period.

However, the outlook remains uncertain. Much will depend on how demand develops in the coming weeks and how carriers manage capacity through blank sailings and network adjustments.

If disruption persists, longer sailing distances and ongoing congestion are likely to continue absorbing capacity. At the same time, any sustained weakness in demand could limit how far rates can rise.

For shippers, this creates a market that is not only volatile, but also increasingly difficult to interpret without close visibility of both operational conditions and carrier behaviour.

With rates moving in different directions and pricing structures becoming more complex, clarity is becoming just as important as cost.

Metro works closely with customers to break down market movements, challenge assumptions and identify the most effective routing and pricing strategies across global ocean networks.

If you would like a clearer view of where rates are heading and how to position your supply chain - EMAIL Andrew Smith, Managing Director at Metro, for a detailed, shipment-specific discussion.

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