If you are a manufacturer, distributor or retailer in business in the UK today you will have, or will operate and maintain a supply chain. With the UK perhaps no longer having access to single market trading, Brexit will cause new cross border regulations to be put in place both here and throughout the EU. These are more than likely to have a bearing on the way your supply chain operates, simply because of the delays the extra customs checks will cause. Highlighted here are four that you may or may not be aware of.
1. The Port of Dover handles 17% of all UK trade, worth around £112 Billion (2017). That is a massive amount of goods through the port on a daily basis. Post-Brexit extra custom checks of goods vehicles going out will cause traffic tailbacks and delays of phenomenal proportions. A Chartered Institute of Procurement and Supply (CIPS) survey of 1,310 EU and UK-based supply chain managers found 10% of firms believed their businesses would likely go bankrupt if goods were delayed at the border by between 10-30min. This increased to 14% for delays of 1-3hr, and 15% for 12-24hr.
If you import and export through Dover it is worth considering doing some in house analysis on how delays of this nature will affect your business, and maybe even look at alternative routes into and out of the UK
2. 12,788 commercial vehicles cross the borders between Northern and Southern Ireland daily. Stopping even just 1% of those commercial vehicles to carry out extra customs checks will seriously delay goods crossing the border.
The amount of vehicles that cross the Irish border on a daily basis indicates how much stock is moved through Ireland and further into Europe using the Irish border as a gateway. If you operate in Ireland, then now is the time to examine and even plan for the delay. Maybe you should consider making more stock or stockpiling stock from suppliers to avoid the delays of getting enough components so that you can continue to operate.
3. Food imports and exports of animal origin are subject to veterinary checks at borders. Currently these checks are carried out by Border Inspection Posts (BIPS), located throughout Europe. These goods must be presented at designated BIPs for the veterinary checks to be carried out. Once passed, good produce is issued with a Common Veterinary Entry Document (CVED) allowing the produce to have free circulation within the EU. A no deal or hard Brexit would end the freedom of movement currently enjoyed by UK Food importers and exporters throughout Europe.
It’s time to consider your cool chain. Has your current supplier the ability to keep your food cold or frozen that little bit longer? Maybe you need to consider using cold storage facilities, located close to borders, allowing for overnight storage if the delays are going to be substantial. You could take into consideration freezer transportation if you don’t have it already.
4. Many of the pharmaceutical suppliers in the UK have been looking at the effects of that Brexit will have on the industry, and have been planning accordingly, with several suppliers electing to make more and/or stockpile. One major supplier has decided to have slow release storage facilities dotted throughout Europe as a precaution, in case changes to border controls delay vital stocks getting delivered. Others have spent millions of pounds developing extra UK-based testing facilities to prepare products for distribution and have had to factor in other costs, such as making and storing the extra stock.
At this moment it seems as though the pharma industry is better prepared for Brexit than most other sectors. It may be that they have had to prepare to avoid the dire consequences that a break in supply chain delivery would cause. Only 30% of UK companies have put plans in place for post Brexit operations, with the majority of companies saying that they can’t put a plan in place until they know what Brexit ideal has been agreed, and if it is going to be hard, soft or in fact no deal at all.
John Glen, CIPS economist, said even small delays could cause the UK economy to “fall off a cliff’ because businesses are so accustomed to frictionless trade.
“Businesses have become used to operating efficiently with exceptionally lean, frictionless supply chains, where quick customs clearance is a given,” he said.
“Delays would also lead to a shortage of products on shelves and an increase in prices for consumers”, Glen added.
As Brexit looms closer, and with no sign of an agreed deal; failing to examine the way your supply chain currently operates, not planning to accommodate the inevitable changes to border controls, and take a look at how that will affect to your supply chain is pure folly. Especially when there is so much information readily available, and experts who are willing to advise and help.
Some companies however are taking steps to prepare for any disruption to their supply chain caused by the potential of delays at borders. From planning to stockpile and store more goods, negotiate more flexible contracts, to sourcing alternative suppliers outside of the EU.
These steps in their turn create another set of problems. You decide to make more goods, great. Now you will need to have not only the budget, but also the capacity to store more stock. You will have to ensure that your suppliers can provide increases in the stock/components/ingredients required by you to make more. Is this a viable option for you if you have perishable goods? If so, then you will have to ensure that you make stock that has an extended shelf life.
If you need to invest in cold storage facilities, cool chain equipment, cold containers, or the services of a 3PL who specialises in cold storage, then you must also consider investing in the technology that ensures that goods will be stored at the correct temperature, and ensure that if the 3PL you choose to handle this for you also has the capacity and technology that can cope with the new demands Brexit will bring.
In conclusion, we have highlighted just a few of the potential supply chain problems leaving the EU may bring, but we don’t think for a minute we have covered all of them. Now is the time for planning. You may have already started, and might be some way down the line. If so great, but our advice is don’t be one of the 70% who haven’t even started looking at it yet. All the issues raised are real-world problems and should be given consideration when you start to create your own ‘Surviving Brexit’ personalised business plan.
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