Supply delays hitting some customers

Even before Brexit officially arrives at the end of the month there are indications that the industry is starting to stockpile ahead of anticipated problems with imports.

This week has seen miles of tailbacks on both sides of the major ports as firms struggle to get supplies across the channel ahead of the Brexit deadline of 31 December. At the time of writing, there remain significant delays for hauliers in accessing cross-channel routes in Kent.

Adding to the visible evidence comes a flash report from IHS Markit and the Chartered Institute of Procurement and Supply (CIPS), which indicates that the delays at ports are hitting some sectors of the economy.

The channel is affected in two main ways – being reliant on stocks of products, as well as relying on the fortunes of its customer base to trade out of the recent challenges.

In a recent interview, Darren Hedley, UK&I managing director at Insight, revealed that some vendors were already pushing order dates back to January and February, and many distributors were stockpiling equipment to relieve the pressure in the new year.

The survey from IHS Markit and CIPS touched on the impact of stockpiling as well as digging deeper to get a feeling for how customers were feeling at this stage in the year.

Duncan Brock, group director at CIPS, said the survey had indicated that job losses had moved to the slowest rate since the pandemic started, which was a positive, but on the flip-side, some supply chain challenges remained.

“Though manufacturing was buoyed up by Brexit panic-buying and saw the fastest rise in purchasing since August 2013, delivery times increased at the third-highest rate since 1992, which meant many essential materials were not getting through. Manufacturing companies were also paying the price of goods shortages with the highest rise in cost inflation since June 2018 as shipping and commodity prices soared,” he said.

“In services, the watchword was ‘wait’. Clients delayed placing orders as potential Brexit disruption loomed large and more lockdowns restricted footfall in consumer-facing businesses, resulting in new orders dropping for the third month in a row,” he added.

Chris Williamson, chief business economist at IHS Markit, said there had been stockpiling and concerns were still high around the prospect of a no-deal Brexit.

“The UK economy returned to growth in December after the lockdown-driven downturn seen in November, adding to signs that the hit to the economy from the second wave of virus infections has so far been less harsh than the first wave in the spring,” he said.

“While job losses continued to be reported during the month, it was encouraging to see the rate ease to the lowest since the start of the pandemic. Business optimism about the year ahead also remained buoyant, reflecting the light at the end of the tunnel created by the roll-out of the Covid-19 vaccines. Optimism waned slightly compared to November, however, largely due to rising concerns over a no-deal Brexit,” he added.