Descartes’ Brexit Readiness Report highlights UK businesses’ ill-preparedness, leaving supply chains at unprecedented levels of risk

Economy & Politics | Reports

Descartes Systems Group, the global leader in uniting logistics-intensive businesses in commerce, today announces the findings of its Brexit Readiness research to understand the readiness of UK businesses that trade with the EU for the end of the Brexit transition period on 31st December 2020.

Undertaken by SAPIO Research during July 2020, the interviews with supply chain managers assessed companies’ general expectations around the impact of Brexit; the levels of concern surrounding specific changes to the UK-EU trading arrangement; firms’ preparedness; and the steps that have already been taken to prepare for the impact of Brexit on their supply chain.

Key findings include:

  • Two thirds of businesses have had their Brexit preparations disrupted by COVID-19.
  • Less than a quarter (23%) have high confidence in their ability to cope with the extra administrative burden of Brexit.
  • Two thirds (67%) of large firms are very or extremely concerned about longer delays in their supply chain impacting the business post-Brexit.
  • Fewer than one in five (18%) of UK businesses are prepared for a ‘no deal’ Brexit.
  • Almost three quarters (72%) are concerned about the customs brokerage market’s capacity post-Brexit.
  • Two fifths (40%) are concerned about customs declarations impacting their business post-Brexit.

With just a few months until the Brexit deadline, the lack of clarity surrounding the deal still under discussion between the EU and UK is undermining business certainty. Just over half (52%) think a UK-EU trade deal is unlikely to be achieved in 2020 and only one in ten (10%) supply chain managers claim to have total certainty regarding the impact of Brexit on their business.

Furthermore, despite the consensus regarding the likelihood of a ‘no deal’ Brexit, fewer than one in five (18%) are prepared for a ‘no deal’ exit from the EU. Worryingly, given the implication on UK consumers, that preparedness drops to just 3% of companies within both food & drink and healthcare/ medical sectors.

Delays to the supply chain (45%) are the biggest concern regarding the impact of Brexit on cross border trade. However, the larger the organisation, the greater the concern regarding supply chain delays: 56% of supply chain managers in firms with over 1,000 employees are worried about delays to the supply chain. The impact of such delays also raises serious concerns: two thirds (67%) of larger firms are very or extremely concerned about longer delays in their supply chain. Over two thirds (68%) of supply chain managers within healthcare are also concerned about supply chain delays. Tariff payments (40%) and customs declarations (40%) are the next highest concerns.

These findings underline a key fact: those organisations and supply chain managers with existing experience of customs declarations are far more worried about the implications of Brexit on the business than those who have yet to discover the complexity of customs processes. Significantly, with consumer behaviour having fundamentally changed during COVID-19, this inexperience is likely to catch out many smaller sole traders who have moved to an ecommerce model during the pandemic.

Pol Sweeney, VP Sales and Business Manager UK, Descartes, comments: “Membership of the EU has masked the complexities of customs for many, many businesses. Since the Single Market came into force there have been no customs formalities between the UK and EU for nearly 28 years, over which time international trade has grown and evolved significantly. The fact is that Brexit will have vast implications for any company importing or exporting out of the UK. Our research highlights the need for organisations to act now to ensure the right systems, processes and skills are in place in time.”

For the full research findings, please visit: https://www.descartes.com/lp/brexit-readiness-whitepaper

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