Half-hour delays could bankrupt 10% of businesses

posted by Jacki Buist
in Risk
12 October 2018

Additional paperwork and checks will cause headaches or worse for many businesses, according to the latest CIPS Brexit survey of supply chain managers.

Companies on both sides of the Channel risk going out of business if  the customs process takes longer, according to a CIPS survey of 1,310 UK- and EU-based supply chain managers. As the statistics above show, even a delay of between 10-30 minutes threatens 10% of firms, with that risk rising to over 60% if the delays run into days. For UK firms, this increased to 14% for delays of 1-3 hours, and 15% for 12-24 hours. 

John Glen, CIPS economist, said even small delays could cause the UK economy to “fall off a cliff’ because businesses are 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.

The survey, which ended 10 September, also revealed that 56% of respondents based in the UK do not know how long it currently takes for their firm’s goods to clear customs with the EU.

If Brexit creates queues at customs

Even a delay of 10-30 minutes would affect UK businesses’ decision to export to the EU, and fulfil some customer orders. Almost 10% said they would need to raise the cost of their products to customers, and 6% would have to remove some products from sale. However, around a quarter of UK businesses said that a delay of any kind would have no major impact. 

In anticipation of border delays, almost a quarter of UK businesses are planning to stockpile goods and raw materials, the report said, and over 4% have already started. Building greater flexibility into contracts and finding alternative suppliers outside the EU are the next most popular mitigating options being considered (21% each), but almost a third (30%) have made no preparations yet.

The UK economy could benefit from reshoring post-Brexit, with 35% of UK businesses with EU suppliers claiming they are looking for alternative suppliers in the UK – but there are challenges to overcome if this is to happen. Half of UK companies with EU suppliers will struggle to find UK replacements or skills for their supply chain, and 39% expect that working with a UK supplier will be more expensive than working with an EU supplier. A third of EU-based respondents (32%), however, say that they think it will be cheaper to work with an EU supplier. 

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