What are the key issues for supply chain as a result of Brexit?
In a previous blog before Christmas I spoke about the immediate impact of Brexit on the Irish supply chain industry.
6+ months on and we can begin to envision Ireland post Brexit and the adaptability that supply chain will have to demonstrate over the next 18 months.
While the EU’s Chief Brexit Negotiator has assured the Oireachtas last week that his door is open for ideas about how to manage the Border after Brexit, we have yet to receive any specifics.
We have been advised that any concrete plans for the border will not be possible until much later in the talk’s process, possibly the middle of next year. This allows very little time for companies to react once plans are put in place.
Recently a great article was published to show just how “Cross Border” the industry has become. A can of Guinness, synonymous with Dublin, has to cross the border twice before export. This is because Diageo brews beer in Dublin and sends it to Belfast to be canned before it's returned across the Border for export through Dublin Port. This equates to 200 truck movements a week, with an average delay if a border was in place of 30 minutes each way. This would a substantial impact on planning and add additional cost and complexity.
One of the major positives about the EU is a customs free zone where there is also a harmonised safety/certification/specification system. With Brexit, the UK is now able to set its own taxes, duties, tariffs and safety certifications.
In the coming years, companies looking to import into the UK, or UK companies looking to export out, will have to comply with different product requirements around efficiency, safety, testing etc.
This also applies to food companies in Ireland who export to the UK. These companies may need to meet differing Food Safety specification for the UK as it does for the EU. We will also see the return of country of origin forms as well.
A more immediate issue, and one yet to be clarified is over the movement of labour and the status of UK citizens in EU and EU citizens in the UK. Right now supply chain Ireland is beginning to see a shortage of skilled and experienced supply chain managers in some sectors of the industry, especially within food. Over the years the free movement of people across the Irish Sea has helped to patch over some of this shortage. After Brexit, we will need to look further afield to gain these experience.
The euro has always been weaker than the Pound which makes Irish goods more attractive in the UK. Should the UK economy take a major hit after Brexit then we may see a situation where, coupled with increased tariffs, Irish products begin to lose this competitive advantage.
These are just four major issues affecting supply chain Ireland that we can anticipate, regardless of a Hard/Soft Brexit.