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Supply Chain Survey - Brexit customs delays could bankrupt one in 10 firms

Customs delays of just half an hour could cause one in 10 businesses to go bankrupt, a survey of supply chain managers has found.

A CIPS survey of 1,310 EU and UK-based supply chain managers found 10% of firms believed their businesses would likely go bankrupt if goods were delayed at the border by between 10-30min. This increased to 14% for delays of 1-3hr, and 15% for 12-24hr.

John Glen, CIPS economist, said even small delays could cause the UK economy to “fall off a cliff’ because businesses have become accustomed to frictionless trade.

“The UK economy could fall of a cliff on Brexit day if goods are delayed by just minutes at the border. Businesses have become used to operating efficiently with exceptionally lean, frictionless supply chains, where quick customs clearance is a given,” he said.

Glen added that to “prevent an economic meltdown” government needs to ensure goods continue to flow seamlessly across the border after Brexit. He said a deal needed to be agreed quickly to give businesses time to prepare. The majority of supply chain managers said they needed at least a year to prepare once a deal has been agreed.

The survey found just 4% were in full support of prime minister Theresa May’s Chequers plan for a common rulebook for goods. Just under two fifths (38%) said Chequers was a good attempt at solving the trade problem, while 31% said it was a flawed and unrealistic proposal.

Nearly one in 10 (9%) of respondents said they would prefer the UK leaves without a deal than with the Chequers plan.

UK businesses are taking steps to mitigate the risk of delays. Nearly a quarter (24%) are planning to stockpile goods in the future, 4% already are. More than a fifth (21%) are building more flexibility into contracts and the same percentage are looking for alternative suppliers outside the EU.

However, 48% of respondents said they could not make any preparations as future trade arrangements were still too unclear, and half of companies said they would struggle to find suppliers and skills in the UK after Brexit.

“The Brexit deadline is drawing nearer and while most businesses are trying to prepare, they are limited on what they can do until a final Brexit deal has been agreed,” said Glen.

“Stockpiling goods is an option for some businesses, but many do not have the facilities available to store surplus stock, and those working with perishable goods simply won’t be able to.

“Companies are also struggling to onshore their supply chains to the UK due to a lack of suitable alternatives.”

The survey was conducted between 21 August and 10 September 2018 and included 1,075 UK firms and 143 EU businesses.

Source: cips.org