One in ten UK businesses believe they would likely go bankrupt if goods were delayed by just 10 to 30 minutes at customs as a result of Brexit, new research has revealed.
The study by the Chartered Institute of Procurement & Supply (CIPS) showed that a range of businesses are worried that the longer they are delayed, the more likely it is that their businesses could go bankrupt.
The proportion of companies that said they would go out of business increased to 14 per cent if customs delays reached one to three hours, and 15 per cent at 12 to 24 hours.
The findings come from a survey of 1,310 UK and EU-based supply chain managers – the professionals responsible for navigating customs and negotiating with suppliers around the world.
The concerns about longer queues at UK borders relate to a potential increase in paperwork and checks required to clear customs when Britain leaves the EU.
John Glen, an economist at CIPS, said:“The UK economy could fall off a cliff on Brexit day if goods are delayed by just minutes at the border.
“Businesses have become used to operating efficiently with exceptionally lean, frictionless supply chains, where quick customs clearance is a given.
“Customs delays would not only affect businesses, but would also lead to a shortage of products on shelves and an increase in prices for consumers as well.”
Many UK businesses are taking steps to mitigate the risk of increased delays at the border, with 28 per cent saying they will stockpile goods. Four per cent have already started to do so, while 23 per cent said they are planning to stockpile in the future.
Other steps being taken by companies to alleviate the potential impact of customs delays include building greater flexibility into contracts (21 per cent) and looking for alternative suppliers outside the EU (also 21 per cent).
Half of UK firms said they would struggle to find the suppliers and skills they need in the UK if they were forced to re-shore parts of their supply chain post-Brexit.
Conversely, almost two fifths (38 per cent) said they cannot prepare at all as future trade arrangements are still too unclear.
As the UK and EU prepare to finalise a deal based on the Chequers plan at the EU Summit on 18-19 October, nine per cent of UK supply chain managers said they would prefer a no-deal scenario.
“The Brexit deadline is drawing nearer and while most businesses are trying to prepare, they are limited on what they can do until a final Brexit deal has been agreed,” Glen said.
“Stockpiling goods is an option for some businesses, but many do not have the facilities available to store surplus stock, and those working with perishable goods simply won’t be able to.
“Companies are also struggling to ‘onshore’ their supply chains to the UK due to a lack of suitable alternatives.”
He urged the government to ensure goods continue to “flow seamlessly across the border” after Brexit “to prevent an economic meltdown”.
“Negotiators also need to agree a deal quickly to ensure they give businesses adequate time to prepare,” he added, “with the majority of UK supply chain managers stating they need at least a year to prepare for Brexit, once the final deal has been agreed.”
