CIPS: Brexit and COVID-19 cause chaos at EU-UK customs
More than half of businesses importing and exporting goods between the EU and UK have faced delays since 1 January, when Britain officially left the bloc, a situation which is likely to get worse before it improves, according to the Chartered Institute of Procurement and Supply (CIPS). Research conducted by CIPS found 60% of companies transporting goods into the UK from the EU had faced delays in the past three weeks, and more than third (37%) of the 185 UK and EU supply chain managers questioned had experienced impediments of several days. Importers on the other side of the channel are faring better; goods entering the EU from the UK were less likely to be hampered, though 45% reported facing delays this month. Stringent new paperwork introduced at customs as a result of Brexit is the biggest sticking point, according to 27% of respondents, though many believe the additional layer of red tape is simply compounding ongoing hold-ups caused by COVID-19 safety measures and procedures - a necessary but time-consuming hurdle.
CIPS survey key findings:
- More than 50% of businesses importing and exporting goods between UK and EU face delays
- 60% experience EU-UK delays, 45% face UK-EU setback
- Nearly a quarter warn of stock shortages should situation continue
- 27% believe new Brexit paperwork is to blame, while 11% still see COVID-19 measures as biggest hurdle
Many supply chain managers had foreseen the delays ahead of the Brexit deadline and implemented measures to combat the initial wave. Regardless, the current situation could spell disaster for consumers. Many respondents to the CIPS survey are concerned that, should the situation continue unchanged, the delays will begin to have a significant impact on their ability to meet demand. Almost a quarter (23%) forecast they will begin to run low on stock in the next few weeks - and the outlook is not bright. CIPS says as the backlog increases, so too will the intensity of delays.
“Delays will get worse before they get better”
“Worryingly, it is likely the delays at the border will get worse before they get better,” warns Dr John Glen, CIPS Economist. “Traffic through the border since January 1st has been low compared to historical levels, but with December stockpiles depleting it won’t be long before trade traffic increases and more pressure is placed on these new border processes.”Glen says the delays may have far-reaching consequences for manufacturing industries, who will be forced to halt or slow production as the supply chain deals with the backlog. “As the transportation of goods grows so will the queues, and businesses may be forced to limit or halt production to cope with any potential stock shortages
The White House Launches Supply Chain Task Force
The Biden Administration has released its 100-day supply chain assessment for semiconductor manufacturing and advanced packaging, large-capacity batteries, critical minerals and materials, and pharmaceuticals. After a year in which supply chains throughout the nation were decimated by the pandemic, the new task force intends to get the country back on track.
These measures come just in time. Semiconductor shortages have crippled the nation’s automotive manufacturers, and the new Innovation and Competition Act will strain ties between the U.S. and China. The United States needs to invest in resilient and secure supply chains, as well as help its manufacturing companies survive the pandemic.
What’s Happened Already?
Since February, the administration’s COVID-19 response team has vaccinated 137 million Americans, worked with semiconductor manufacturers, expanded rare earth element mining outside of China, and addressed supply chain cyber vulnerabilities. “Unfair trade practices by competitor nations, private- and public-sector prioritisation of low-cost labour and a focus on short-term returns over long-term investment have hollowed out the U.S. industrial base”, said the White House.
To address risks and vulnerabilities, the administration will also prioritise the following steps:
- Commit US$60mn to develop novel platform technologies to boost API production
- Develop a domestic lithium battery supply chain to combat the climate crisis
- Support manufacturers of advanced battery cells and packs with US$17bn in loans
- Invest nearly US$75bn in semiconductor manufacturing
- Give US$100mn in grants to state-led supply chain apprenticeship programmes
In addition, the White House recommended that the nation should establish a Supply Chain Resilience Programme backed by US$50bn in domestic supply chain investments.
An International Effort
Although the United States has recently doubled down on hardline stances against foreign trade competition—one need only look at its recent Senate bill—the scale of its supply chain transformation programme requires partnership. “Even as the U.S. makes investments to expand domestic production capacity for some critical products, we must work with allies to secure supplies of critical goods that we will not make in sufficient quantities at home”, the White House stated.
In the coming months, the U.S. will work with international allies such as the Quad and the G7 in order to diversify its networks, ensure human rights compliance, and source critical minerals and materials. And though the nation is aggressively investing in R&D and competitive technology, it wants to maintain its global trade ties. “U.S. investments abroad must incentivise environmentally and socially responsible production”, the administration wrote. “We must engage our partners to promote global resilience”.