Delays to the supply chain are UK companies’ biggest fear concerning the impact of Brexit on cross border trade, but misunderstandings are rife, a survey has found.
Almost half (45%) of businesses surveyed in a report, commissioned by Descartes, considered supply chain delays to be the biggest issue surrounding the end of the Brexit transition period on 31 December 2020.
The survey comes as leaked Cabinet Office documents reveal officials’ concern at the readiness of border systems to cope with the end of the transition period, with “critical gaps” in plans, according to Bloomberg.
And industry body Logistics UK has expressed concern about the readiness of the new Smart Freight System – the IT system that firms will need to use to move goods across the border.
The survey, which involved 502 respondents, of whom 40% were supply chain decision-makers, found the larger the organisation, the larger the concern regarding supply chain delays. More than half (56%) of supply chain managers in firms with over 1,000 employees worried about delays to the supply chain.
Two-thirds (67%) of larger firms were very or extremely concerned about longer delays in their supply chain, along with 68% of supply chain managers within healthcare.
The next most important concerns were tariff payments (40%) and customs declarations (40%).
Only 23% said they had high confidence in their ability to cope with the extra administrative burden of Brexit and only 18% were prepared for a no-deal Brexit.
Worryingly, this number fell to 3% among companies within the food and drink, healthcare and medical sectors.
The survey reflected a lack of clarity around the current status of the UK in relation to the EU.
Only 53% (and 61% of supply chain decision makers) correctly understood that the UK had left the EU and is in a transition period.
A quarter (25%) wrongly believed the UK was still a member of the EU while 16% believed Brexit had been fully completed.
Only 7% of supply chain decision-makers believed nothing would change as a result of Brexit. A fifth (20%) of companies said they were already feeling the effects of changes and 23% expected to experience the full effects during the next three to six months.
A third (36%) did not expect to feel an impact from the changes until 2021.
When it came to the likelihood of an UK-EU trade deal only 48% of respondents thought this would be achieved in 2020.
And only 10% of supply chain managers claimed to have total certainty regarding the impact of Brexit on their business.
Sarah Laouadi, European policy manager at Logistics UK, said: “Despite the government’s assertion that the Smart Freight software will be ready before 1 January 2021, this timeline fails to take into account the time it will take for transport companies, their customers, subcontractors and customs intermediaries to agree and coordinate the necessary business processes at the right time to gain access to the border.
“We are concerned that mass user testing of the software will not be possible until October – or maybe even November. This is far too late for the thousands of companies and tens of thousands of people who build our complex supply chains to redesign their own processes and contractual relations before the transition period ends.
“This timeline brings Smart Freight onstream at the height of the Christmas peak – traditionally the busiest time of year for the logistics industry – the worst possible time for our members to test and train staff in new working practices.”
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