Brexit and logistics strategy

As the deadline on Brexit moves back to Halloween, corporate attention turns to reassessing the balance of risk to supply chains – the levels of inventory needed to secure supply, the costs of extending contracts, and the potential horrors of trying to find well-located warehouse space.

Many have already committed to plans on holding more inventory, while others have held back. But have the risks receded or has the period of uncertainty just been extended? Is the extra time a trick or a treat?

According to a survey conducted by the United Kingdom Warehousing Association and reported in The Guardian in January 85% of members surveyed had received Brexit-related inquiries, with about 75% being unable to take on more business from new customers. Storage costs were said to have soared by up to 25% over the preceding three months.

So, have those who moved quickly to secure storage contracts ahead of the original March 29th Brexit date lost out, or were they wise to secure space early?

There is plenty to suggest that the winners are those who started thinking about their plans for Brexit early. They had the pick of locations and were able to consider how to use those facilities to full commercial effect. By committing to a plan in advance of the March 29th date they may have had some additional costs on storage and inventory to take into account, however, they have been able to secure their supply chains and provide tangible reassurances to their customers on future service performance.

These businesses now face a further challenge. With the deadline on Brexit shifting to the autumn, the period of uncertainty over the shape of trading arrangements has lengthened and many of the businesses that entered into a twelve-month contract in March – to cover any transitional disruptions – will now have to weigh-up whether or not to extend their contracts by a further six months or longer.

Those organizations that held back on committing to Brexit plans might, to some degree, feel vindicated by their decision and may be counting some interim cost savings. However, as the autumn deadline approaches things could become a little scary – particularly so, as the new exit date coincides with the big seasonal events such as Black Friday and the ramp-up to Christmas.

Many businesses will consider the risks of being caught with inventory on the wrong side of the Channel at such a critical period, as just too high. But how easy will it be to find additional warehouse space at this point in the protracted Brexit process? Is there still space available?

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