As the UK’s withdrawal from Europe two months ago continues to cause uncertainty and confusion, businesses are being urged to rethink their supply chain strategies and see Brexit as an opportunity to build more diverse and resilient supply chains, as part of adapting to new realities.
The call comes from Chris Mills, director of account management, transportation at C.H. Robinson Europe, the multi-modal transportation platform provider, after witnessing various trends in vehicle utilisation on movements between the UK and EU over the past weeks.
Mills said: “The impact of Brexit will not be short-lived and will likely add to existing vulnerability in the supply chain of many industries. We have heard anecdotal feedback that vehicle utilisation is down by a fifth (20%) for UK-EU trade. This is affecting UK exporters, importers, and transport carriers. The impact of Brexit on UK-EU trade can also be seen in recent data from the Road Haulage Association which indicated that loads to the EU have reduced as much as 68% year on year.”
The EU accounts for about 54% of all goods imported to the UK and the EU is the UK’s largest market, accounting for almost half of all British exports. Britain’s departure from the European Union after 47 years means firms that export or import goods are required to complete additional administrative requirements such as providing customs and safety declarations, rules of origin, and health checks – extra layers of regulation that calls for British and international companies to adopt new approaches for business continuity.
Mills is urging both UK manufacturers and logistics operations, to build a more diverse and resilient logistics approach when it comes to future supply chain management strategies and to rethink their existing models in order to navigate new trading relationships.
He says: “It’s clear Brexit has posed and will continue to pose major uncertainty for supply chains for the foreseeable future, particularly road transportation, as they face ongoing challenges trying to adapt to the new trade rules.
“During the current climate, manufacturers may want to take stock of their supply base and potentially look increasingly at local sourcing. They also may want to explore what modes of transport provides the most efficient solution in a post-Brexit trading environment.
“In tandem with this, transport carriers need to understand where supply chain thinking is heading and respond accordingly, which might mean looking closer to home for new business opportunities.
“Consideration also needs to be given to the opportunity afforded by new international markets opening up due to some of the new free trade agreements that Britain has signed with non-European countries around the world, like Singapore and Turkey, in the wake of Brexit. This may present new business opportunities for British manufacturers and transport carriers alike.
‘‘Businesses need to have such strategies in place that will enable them to understand quickly what’s going on and to react at speed. This is critical for their longevity and performance -and it’s where third party, technology-enabled platforms can have a huge role to play. Powered by artificial intelligence, they can generate business-critical intelligence that can help logistics operators understand where risks lie in and where opportunities are for new efficiencies so that supply chains react accordingly.
“Brexit causes uncertainty for supply chains on top of existing uncertainties caused by global geopolitical and economic trends. However, we are convinced that companies and transportation carriers, can respond to this uncertainty by rethinking their strategies to deliver long-lasting improvements in resilience, flexibility, and bottom line performance.’’