Brexit-related delays could bankrupt businesses

Lack of certainty about the UK’s Brexit deal has created new stress points within supply chains and it’s estimated that up to 11% of businesses could go bankrupt if there are delays at border posts, according to Duncan Brock, group director  of the Chartered Institute of Procurement & Supply (CIPS) in the United Kingdom. Brock said it was near impossible to make decisions about supply chains at present – be it sourcing, procurement or logistics – without understanding the future relationship between the UK and Europe. “Brexit has introduced some real uncertainty into the system and there are no answers at this stage. In the UK we are not used to delays. We have lean supply chains that rely on the effective flow of cargo through our ports,” he said. “The UK is an island and we have had a very seamless

flow of materials. We are very used to the status quo.” But several surveys by CIPS over the past years have revealed some very big concerns. According to Brock many export and import contracts between the UK and some European countries institute penalties after just two hours of being late. “If the cargo is not received within12 hours you don’t pay at all. If you think of an exporter having that sort of exposure to what should be a lean supply chain then it becomes very worrying.” He said should these delays occur and customs penalties be imposed, CIPS estimated that 11% of companies would close down. He said the enormity of the situation was brought into sharp relief in March when the French decided to test the new system of moving cargo between France and the UK. “Customs officials decided to check every truck at Calais and in 12 hours there was a queue 26km long waiting to get through the border. Imagine that impact on the supply chain. We don’t have any space to park all these lorries.” He said in Kent there was a Brexit response plan being touted which involved taking over old

airfields to park trucks if there were any customs delays. “There are these plans to offset customs delays, but we could avoid all of that by the use of technology,” he said. “But the UK, the Irish and Europe have not invested in the technology to implement frictionless borders and so we are very worried about the Brexit impact on our supply chains.” Many export and import contracts institute penalties after just two hours of being late. – Duncan Brock