Descartes Report Highlights Impact of Brexit and COVID-19 on Supply Chains: Early Preparation Remains Key to Avoid Expensive Disruptions
Descartes Systems Group, the global leader in uniting logistics-intensive businesses in commerce, today announced the findings of its latest Brexit research report: Beyond Brexit: The Realities of Brexit for UK-EU Cross Border Trade.
Following its 2020 research on Brexit preparedness of UK companies, this latest report analyses how business has been affected by both Brexit and the COVID-19 pandemic and the level of uncertainty around the future. Undertaken by SAPIO Research during March 2021, the interviews with supply chain managers assessed the specific elements of EU trade that have been affected, the resulting disruption and the expected performance of supply chains in 2021.
Key findings include:
- Mixed performance: 43% of businesses have been impacted negatively by Brexit in 2021 – but 19% of businesses are thriving in a post-Brexit world.
- Disruption reality: 90% of businesses have faced disruption since the end of the Brexit transition period.
- Economic impact of Brexit: 53% expect their 2021 turnover to be lower than if the UK had remained in the EU – and the average reduction is 29%.
- Pandemic impact: 76% had their Brexit response disrupted by COVID-19.
- Early preparation has proven key to success, with those businesses that started their customs filing preparations in 2019 (24%) and early 2020 (33%) thriving most.
As predicted in Descartes’ 2020 research, Brexit has had a negative impact on both business and the economy. Of the companies surveyed, 90% have experienced disruption in their ability to trade in and out of the EU in 2021 – with 20% experiencing significant disruption since the transition period ended. Despite the high level of concern revealed in the 2020 survey, 40% of companies have actually experienced worse-than-expected EU supply chain performance, according to Descartes’ latest report. Additional key findings include:
- 80% of businesses reported disruption to their cross-border trade with the EU or Northern Ireland (NI), rising to 93% for medium and large enterprises
- 40% have experienced delays in their supply chains
- 37% have experienced increased cost of imports
- 36% have had to manage customs declarations
The combination of COVID-19 on top of Brexit created unprecedented challenges for businesses of every size, in every market. Confidence has been affected. Three quarters (76%) of companies confirm that COVID-19 disrupted their Brexit response.
However, a significant finding is that almost one fifth (19%) are actually thriving in a post-Brexit economy, with 35% of electronics, computer and telecommunications companies enjoying a positive outcome. Preparing early proved essential, allowing these companies to take a holistic approach by working closely with experts who understand the complexities of global trade and by putting solutions in place for customs declarations.
The research findings underline that with the next phase of Brexit changes – an end to deferred import declarations from July 2021, and safety and security filings required from 1st January 2022 — there are lessons to learn about the value of preparation and acting ahead of deadlines. When it comes to successful global trade, planning is not just essential for compliance – it makes a tangible difference to successful business operations.
“Brexit has thrown many businesses into a spin, but the companies that prioritised Brexit preparation are thriving and provide a best practice blueprint that the rest of the market can now follow,” said Pol Sweeney, VP Sales and Business Manager UK, Descartes. “Our research highlights that with the changes due from July through to January 2022, early preparation is, once again, crucial to avoiding expensive disruption.”