The effects of Brexit on the logistics chain
Following a period where the Covid crisis took centre stage, the consequences of Brexit are now beginning to become noticeable in the United Kingdom. Supply and staff shortages threaten the logistics sector and disrupting already strained supply chains.
The effects of the UK’s decision to leave the EU are starting to become apparent. Disruptions such as order delays are generating shortages and have pushed retail stocks to their lowest level since 1983.
The reasons why Brexit is now affecting the logistics chain are clear. As the Covid crisis dissipates and normality is being somewhat restored, the real effects of this new commercial reality affecting trade between the United Kingdom and the European Union is now apparent.
Not only that, now is when both circumstances have created a perfect storm that has brought the supply chain to a standstill, where local issues are exacerbated with the issues related to international logistics (port blockages, shortage of containers, decompensation between supply and demand of maritime transport).
In other words, now its Brexit’s turn to threaten post-pandemic recovery, painting a worrying picture for the British economy.
It is not only trade barriers that are causing delays. Brexit has led to a decline in the number of immigrants and even the departure of many workers from the country. If that were not enough, the pandemic has also stalled training processes needed to cope with the post-Brexit situation with better guarantees. All of this has led to a shortage of staff, which particularly threatens transport and logistics.
One specific example is the estimated 90,000 and 100,000 truck drivers needed in the United Kingdom. There is also a pressing shortage of warehouse staff. This situation generates a vicious circle involving tough competition between companies to attract these types of employees, which in turn pushes up wages. Companies such as Amazon, DHL and Whistl are targeting incentives to attract workers.
Such is the situation that certain business organisations are calling on the government to broaden the scope of interpretation of Brexit to making it easier to hire staff and retain the momentum of productivity.
The result of all these factors has led to product shortage that is affecting grocery stores, wholesale suppliers of construction materials, household items and office machinery.
The concern is paramount in the catering sector. So much so that McDonald’s has been forced to stop serving smoothies and other dairy products in their stores due to stock shortages. Another large fast-food franchise, KFC, has even been forced to close down premises due to the shortage of its main raw material, chicken.
Bear in mind that this supply shortage situation is adding to an already complicated scenario, such as that of the automobile industry, whose production has been hampered all year by the low availability of electronic components, such as semiconductors.
In short, the UK faces an exceptional challenge, especially when we look at the Christmas campaign, which will see an increased demand for staff and greater speed in the supply chain.
History of a forecasted collapse
It is not as if the impact of Brexit on the British logistics sector came as any surprise. Several tests and mechanisms were actually put in place during the years of negotiations with Europe to minimise the impact of Brexit even in the worst-case scenarios.
The United Kingdom began closing deals with European ferry lines at the start of 2019 with to ensure the flow of goods with Europe and minimise border delays, diversifying traffic to secondary ports to improve the resilience of the supply chain. Truck traffic jam drills were also conducted to improve the performance of the road network around the English Channel.
Yet no one counted on the outbreak of the pandemic, which has ultimately acted as a big smokescreen that has prevented us from assessing the effects of Brexit on logistics to date.
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