Brexit Uncertainty Continues As Supply Chain Worries
2nd April 2019
Brexit is no Y2K because we STILL don't know what we're facing, say supply chain leaders.
An eleventh-hour debate for leading supply chain professionals reveals continued uncertainty is more damaging for business than a no-deal Brexit.
A ‘one minute till midnight’ Brexit debate, held as part of the influential annual Richmond Supply Chain Forum, has delivered a damning indictment of Government prevarication. Delegates revealed very few of the companies represented have been able to invest significantly in Brexit measures because no one knows what form it will take; and that at least a third of major companies are holding back on investment until there is more certainty.
The debate took place on 28 March, the day before the UK was supposed to leave the EU, at The Belfry, Birmingham. The panel heard from delegates that, while businesses could plan successfully for major potential disruptions such as Y2K, because they knew the nature of the problem, they are unable to properly plan for Brexit because they still have no idea whether it will be hard, soft or even happen at all.
Chairing the debate was David Jinks MILT, Head of Consumer Research at international delivery experts ParcelHero. He reveals: ‘Logistics professionals rightly pride themselves on their adaptability and problem-solving abilities. But both our expert panel and the delegates from many of Britain’s leading exporters and retailers were shocked that our carefully timed "11th hour" debate was suddenly more an "11th week" debate following Brexit’s dramatic rescheduling until April 12 or May 22 or beyond! Panellists and audience alike agreed that business can plan for all forms of Brexit, from no deal to May’s deal to a Customs Union; but what they cannot plan for is ongoing uncertainty.’
Says David: ‘There was a frank and fascinating discussion between the panel and delegates about what measures industry has taken so far to mitigate the impact of Brexit. Contrary to accepted wisdom, our panel revealed stockpiling is not taking place on any significant scale, with only a handful of large warehouse deals being signed with Brexit storage in mind. Delegates and panellist agreed most supermarkets and food retailers would find stockpiling even a week’s supplies of perishable products extremely expensive, ineffective and disruptive to existing supply chains.’
Concludes David: ‘Our debate highlighted one key take-away: supply chain leaders can cope with anything and everything that is thrown at them, but it’s impossible to make plans if you don’t know what will be thrown or even if it ever will be. It’s up to parliament to stop prevaricating and get behind Teresa May’s deal or one of the alternative proposals now, before UK businesses suffer serious damage.’
Joining David on the Brexit debate panel were Ian Ferguson: Head of Supply Chain at Iceland; Neil Gould: representing the Chartered Institute of Logistics & Transport and a Director at Braid; Kevin Mofid: Director, Commercial Research, Savills, and Alex Veitch: Head of Multimodal policy at the Freight Transport Association.
For more details of the costs and challenges facing the UK’s exporters post-Brexit see ParcelHero’s report: Revealed - the True Cost of Brexit: https://www.parcelhero.com/blog/news-updates/revealed-the-true-cost-of-brexit
The basics from the ParcelHero Brexit report -
ParcelHero predicts the effects of a vote to leave the EU would be:
A typical rise of 30% in costs on an imported item due to:
An average 5%-9% added to the price of an item in duties (where duties apply, depending on the item)
Plus VAT of 20% (including shipping & insurance) when buying from countries within the EU - and only reclaimable in you are VAT registered
Plus increased transport costs – the UK outside the EU would be a less competitive market for international couriers
Plus ‘customs clearance’ charges from a courier company: typically around £15
The average SME regular importer/exporter to the EU (excluding ‘one man bands’) will be spending around £163k extra annually, including duties. The UK will face £11bn in new tariffs on imports of £220bn.
A typical £150 purchase from the EU will now cost around £195, an increase of £45 or over 30%.
Businesses and consumers will face a mass of new red tape: Customs forms with proof of origin for every shipment arriving in the UK would be required
SMEs and internet traders will find EU suppliers three times more likely to prefer to trade elsewhere in the EU than with the UK.
The cost of consumer goods will rise by around 32% if the UK follows the model of countries such as European non-EU member Norway. A typical pair of Levis 501 jeans that costs £56 in the UK costs £71 in Norway and £81 in Switzerland; and a £59 pair of Nike shoes costs £77 in Norway and £88 in Switzerland.
British exporters seeking to price goods competitively could easily fall foul of the Union’s protectionist anti-dumping rules and face extra duties
Britain might not qualify for the many favourable trade agreements negotiated by the Union with key countries and markets around the world, including the planned TTIP between the US and EU aimed at removing most customs duties.
Choosing to set our own tariffs would mean moving outside the EU’s Common External Tariff. That entails setting our own duties on 19,000 individual tariff codes – a move leading to increased border delays and red tape for EU businesses looking to trade with the UK.
