The United Kingdom is due to officially leave the European Union on 29th March 2019 and it is still unclear whether a “no-deal” Brexit is a likely outcome. It is widely agreed that a “no-deal” Brexit would be a bad outcome for both the UK and the European Union.
One of the many concerns surrounding a “no-deal” Brexit is the border disruption that could be seen due to increased customs delays. Some experts are warning that the disruption could last for up to six months. If this prediction proves to be correct, we will undoubtedly see major shortages in industries such as food and medicine. To counteract this potential delay, the UK Government has asked drug companies to create stockpiles in the UK with at least six weeks worth of supplies.
Most drug companies have obliged, however some believe that stockpiling is not an effective way to combat the delays, but rather alternative supply routes should be considered for high priority goods. The health secretary said the NHS should prepare to use alternative routes in the event of disruption on cross-channel routes, including the use of planes to fly in supplies.
While stockpiling is likely to be a major inconvenience for the drug and food companies, it provides a unique short-term increase in business for logistics and warehousing companies. The UK Warehousing Association (UKWA) is reporting that around 75 per cent of their 700 members are operating at full capacity. To put this in context, warehouses would usually operate at around 85-90% capacity. Similarly, The Food Storage and Distribution Federation (FSDF), which represents 350 warehouse owners and 75% of all commercially available frozen and chilled food warehouses in the country, said its members were turning customers away.
As a result of this, warehousing costs have increased by up to 25% over the past 3 months. This is good news for logistics and warehousing industries as they will likely benefit from the increasing uncertainty surrounding Brexit. However this was not always the case, as the sharp fall in the value of the pound caused fuel prices to increase dramatically, and the departure of many eastern European workers on whom the industry relied caused labour costs to increase.
Personal Stockpiles –
It’s not just companies that are stockpiling food and medicine though. In fact, ITV News reports that one in five Britons are considering stockpiling food in case of a “no-deal” Brexit – and 5% of Britons have already started!
The main issue is that it is not so easy to stockpile medicine as most medicines are only available through a monthly prescription, so it is not possible to stockpile six-month worth of medication. It is therefore up to the drug companies to provide a continuous supply of medicine and prevent shortages, but this may be difficult given the current lack of warehouse space.
What are your thoughts? Let us know if you have considered personally stockpiling or if you will be asking your Supplier to?