So we recently passed the 5 year mark since Brexit. At the time, I found Newsnight on BBC made for compulsive watching with every day throwing out an even more ridiculous situation than the last. What ever happened to that bus with the 350 million pounds on the side of it. Or whatever the number was, I don’t think it matters as the number was made up anyway!
The one clear thing at the time was that nobody new how it would all play out. We could talk about the political ramifications, to social impacts, or how it would influence percy pig stocks (the M&S sweet, it was one of the highlighted big risks as I think it is made in Belgium.. but this being a Supply Chain site.. lets look at the supply chain impact
Below we have 7 data points that tell us some key things that happened, but here is a summary.
In short.. it was a big factor, but maybe not the doomsday scenario that was feared. The UK is poorer for it today that had it not gone ahead. It has brought customs back into focus but this trend was maybe coming anyway. The biggest impact on the UK is on having an available workforce in the type of roles that typically make up the supply chain.
There was quite a bit of coverage at the time around the immediate impact, but we probably saw a bigger impact from Holyhead closing as a short term issue than with Brexit. There were some initial shocks and delays but the biggest issues observed are the ones that take time to materialise. Changing supplier to focus on home country suppliers was a gradual move. This is borne out by the numbers below. But big macro shifts often push the local supply/demand economics to a point where capacity can’t react. Prices increase, lead times increase in these scenarios. So all of that played out. It has prompted companies to view supply chain resilience not as an academic concept, but one with real implications. We address more of the points below. Was it good or bad.. it doesn’t really matter.. it happened. Its a good approach to have in supply chain.. it happened, so now what!
1. The Initial Shock: Supply Chain Disruptions Post-Brexit
Data Point: A study by economists at Aston University found that Brexit reduced annual UK exports to the EU by 17% and imports by 23%.
Evidence: The introduction of customs declarations and checks led to significant delays at key ports, such as Dover and Calais. This increased bureaucracy resulted in higher costs and longer wait times for exporters, particularly affecting small and medium-sized enterprises (SMEs).
Insight: The immediate aftermath of Brexit introduced substantial trade barriers, disrupting established supply chain operations and highlighting the need for businesses to adapt to new regulatory environments.
2. Supply Chain Adaptations & Resilience Building
Data Point: In May 2021, 47.8% of UK businesses that made supply chain changes reported using more UK suppliers due to the end of the EU transition period.
Evidence: To mitigate border disruptions, companies increased stockpiling and warehousing within the UK and EU. Additionally, there was a shift towards nearshoring and diversifying suppliers to reduce reliance on cross-border supply chains.
Insight: Businesses proactively adjusted their supply chain strategies to enhance resilience, focusing on local sourcing and supplier diversification to navigate the complexities introduced by Brexit.
3. Impact on Key Sectors
Data Point: UK food exports to the EU dropped by 16% post-Brexit, with SMEs being disproportionately affected.
Evidence: The food and beverage sector faced increased costs and bureaucracy, leading some EU-based retailers to reconsider their UK operations. The automotive industry, reliant on just-in-time (JIT) supply chains, experienced disruptions due to added trade friction.
Insight: Sector-specific challenges underscored the varying impacts of Brexit, with industries like food and automotive experiencing significant operational hurdles due to new trade barriers.
4. The Role of Technology in Post-Brexit Supply Chains
Data Point: A survey indicated that 8 out of 10 companies identified Brexit as the biggest supply chain disruption, prompting investments in digital solutions.
Evidence: Companies adopted digital customs solutions and blockchain technology to automate paperwork, streamline compliance, and enhance traceability in response to increased regulatory requirements.
Insight: The necessity to navigate complex post-Brexit regulations accelerated the adoption of technological innovations, leading to more efficient and transparent supply chain operations.
5. Labour Shortages & Workforce Challenges
Data Point: The Road Haulage Association estimated a shortage of up to 100,000 HGV drivers in the UK, exacerbated by Brexit.
Evidence: The end of free movement led to a reduction in EU workers, impacting sectors like logistics, manufacturing, and agriculture. This resulted in staffing challenges and increased operational costs.
Insight: Labour shortages highlighted the interconnectedness of UK and EU labour markets and underscored the need for policies to address workforce gaps in critical sectors.
6. UK-EU Trade Agreements & Policy Shifts
Data Point: The Trade and Cooperation Agreement (TCA) introduced new trade barriers, contributing to a weakening UK-EU supply chain and reduced trade competitiveness.
Evidence: Ongoing negotiations and policy shifts created uncertainty, with businesses needing to stay adaptable to evolving regulations and trade agreements.
Insight: The dynamic nature of UK-EU relations post-Brexit necessitated continuous monitoring and flexibility from businesses to maintain supply chain efficiency.
7. Lessons Learned & The Future of UK-EU Supply Chains
Data Point: A report by Boston Consulting Group projected that UK trade would grow by only 0.7% annually between 2023 and 2033, lagging behind GDP growth.
Evidence: Companies that quickly adapted their supply chains emerged stronger, while those slow to respond faced ongoing challenges. The need for agility and strategic planning became evident as businesses navigated the post-Brexit landscape.
Insight: The experience of the past five years emphasized the importance of resilience, adaptability, and proactive strategy in managing supply chains amid geopolitical changes.
These data points and evidence illustrate the multifaceted impact of Brexit on supply chains, highlighting both the challenges faced and the strategies employed to overcome them.
Here are links to the data sources:
The Initial Shock: Supply Chain Disruptions Post-Brexit
- “Brexit is ‘stifling’ exports and imports, report finds” – Financial Times
Supply Chain Adaptations & Resilience Building
- “Brexit supply chain changes in the UK” – Statista
Impact on Key Sectors
- “The pain of exporting cheese after Brexit: ‘triple cost, triple delay’” – The Times
The Role of Technology in Post-Brexit Supply Chains
- “Navigating post-Brexit impact with smart logistics solutions” – Maersk
Labour Shortages & Workforce Challenges
- “Brexit” – Wikipedia
UK-EU Trade Agreements & Policy Shifts
- “Brexit is ‘stifling’ exports and imports, report finds” – Financial Times
Lessons Learned & The Future of UK-EU Supply Chains
- “UK trade to lag GDP over next decade, report warns” – The Times
