February 14, 2019
Brexit has been – and remains – deeply controversial, and the exact nature of Britain’s exit from the EU seems so shift with every news cycle.
No matter what your feelings on the issue, as Britain prepares to divorce the European Union any business with customers on both sides of the channel must evaluate how the various scenarios will impact their operations…and plan accordingly.
While the March 29th deadline is getting closer, if Britain approves the Brexit deal that’s been hammered out with the EU there will be a transition period that runs at least through the end of the year 2020. This time frame will give businesses the opportunity to prepare for the new post-Brexit rules.
The problem, however, is that there’s a real possibility no deal will be approved by the end of March…meaning no transition period.
Keep in mind — a no-deal Brexit doesn’t mean there will be no rules at all. Britain will still be subject to World Trade Organization (WTO) rules and tariffs – there are concerns of short- and medium-term disruptions of business with shipments backed up on both sides of the channel. For this reason, stockpiling on the part of UK businesses – particularly of food and pharmaceutical products – have been reported due to concerns around interruptions to the EU supply chains.
In a study conducted by Retail Economics and Squire Patton Boggs, a third of UK retailers feel “underprepared,” while 52% feel “some preparation” followed by 15% feeling “very prepared.”
Considering that 44% of the UK’s 2017 exports went to other EU countries, a no-deal Brexit represents the very real threat of business disruption for companies who warehouse their EU-destination stock in UK warehouses. Until the UK agrees to new tariffs and quotas, trade will likely be impacted because the EU and UK will no longer share the same rules. Instead of goods moving freely between the UK and the continent there will now likely be delays in both directions for border and customs checks.
As a result, according to MarketWatch, roughly one in three British businesses will shift at least some “operations away from the UK as part of their preparations for a disorderly Brexit” and additional companies are considering such a move.
What does this mean for Ingram Micro Commerce & Lifecycle Services clients?
At the very least, companies with consolidated warehousing/fulfillment in either the UK or European countries should analyze what percentage of their sales are shipped out of the UK to Europe or out of Europe to the UK.
If the percentage is sizable, consider either setting up a secondary location where you have a substantial amount of business, or manage your shipments of new products into warehouse facilities in both locations to balance stock. Depending on product turn-over, you may also want to consider stockpiling product at one or more facility.
Our fulfillment operations in both the UK and Europe are available to help our clients implement stocking or rebalancing strategies– protecting against unexpected product delays or tariffs during this transitional period.
If you’ve not yet evaluated your options, please contact your account manager to discuss taking action now so you won’t be caught without enough stock – or with too much stock – on one side of the channel or the other.
Breaking up is hard to do. Let us help weight your options.