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
Suez Canal expansion plans greenlit by Egyptian president
The Suez Canal is to undergo a two-year expansion project, following the weeklong closure of the channel by the stranded Ever Given container ship in March.
Plans set forth to expand narrow sections of the Suez Canal have been greenlit by the Egyptian president to safeguard against future blockages.
Dredgers will widen and deepen the single-lane stretch close to the southern mouth of the canal, near where the 400m container ship got wedged earlier this year, while a second lane opened in 2015 will be extended to promote two-way traffic and alleviate the impact of bottlenecks.
President Abdel Fattah al-Sisi gave the order to “immediately start implementing the proposed development plan and put in place a timetable for completion as soon as possible”, according to reports. It is understood he expects the work to be fully completed within two years.
Ever Given negotiations rage on
The Ever Given left hundreds of ships stranded and disrupted an estimated $9.5bn in goods each day when it became wedged across a narrow passage of the trade route in March. After a week of dredging, towing and manoeuvring, it was eventually freed from the banks of the Suez Canal in the early hours of 29 March and set course of the Bitter Lakes holding area.
There the vessel, its crew and its cargo have remained ever since, while legal action between Egyptian authorities and the ship’s owners rages on, though SCA chairman and Managing Director, Admiral Osama Rabie, refutes allegations that crew have been detained.
“[There] is no truth in the allegations of detaining the ship crew, pointing to that the SCA does not mind the departure or recrew operations provided the presence of the sufficient number of sailors to secure the vessel and in the light of the presence of the ship captain as he stands as the juridical guardian of the ship and the cargo aboard,” Rabie said in a statement.
The SCA initially sought $916m in compensation to cover refloatation costs, including repairs where the channel was damaged to move the vessel, bonuses for the rescue crews who worked throughout the jam, and a package for “loss of reputation”.
Now the SCA and its chairman and Managing Director, Admiral Osama Rabie, have agreed to reduce the bill by a third. The authority has reportedly offered payment terms for the $600m to the Ever Given’s owner Shoei Kisen. Shoei Kisen has also declared a general average on the goods on board, with shippers liable to shoulder a significant outlay to get the 18,000-plus containers aboard to their final destination in the Nertherlands.