Supply Chain Weekly Wrap-Up 02/12/2021 – 02/18/2021

Brexit causing supply problems for small UK manufacturers

New post-Brexit trade restrictions have increased the cost of parts and raw materials for two thirds of small British manufacturers, a survey last month revealed. The majority of the 300 firms surveyed reported some level of disruption. The survey adds to the picture of disruption from new customs checks, which came into force on January 1^st for goods traded with the EU.

“Price hikes in the supply chain have been immediate, and we are hearing tales of lead times being extended on raw materials.” said Nick Golding, managing director of consultants South West Manufacturing Advisory Service. Some 65% of manufacturers reported higher costs and 54% said they had greater difficulties exporting goods to the EU.

The UK government has said many of the difficulties being faced are ‘teething problems’, and last week said it would make £20 million ($27.7 million) available to help small firms get used to the new rules.

Read more here.

German automakers fear production snags from Czech virus border checks

Restrictions at the German-Czech border risk severing automotive supply lines and could spark a wave of production stoppages, according to Germany’s VDA automaker association.  From now on, only German citizens and residents are allowed to enter Germany from the Czech Republic and Austria’s Tyrol region, two zones where more infectious variants of Coronavirus are widespread.

BMW and Volkswagen operate plants near Germany’s borders that depend on car part supplies from the Czech Republic in particular. Entry restrictions and delays may cut supply lines that can force auto production to halt in a matter of hours. Some of the sites such as BMW’s Dingolfing factory also employ workers residing in the Czech Republic.

“We are watching the situation closely and hope that parts are able to move smoothly across the borders,” said a VDA spokesman. VW Group said its plant in Zwickau, Saxony, which builds the ID3 and ID4 EVs, and Porsche’s plant in Leipzig, have not yet been affected by parts shortages and it did not foresee any problems for the time being.

Click here to read more.

Post-Brexit Northern Ireland volumes being shipped via Scotland instead of Dublin

Huge market distortion is taking place across the UK port sector as supply chains adapt to post-Brexit trading. Volumes have increased to ports in Scotland, Northern Ireland and England, but huge market distortion can be seen, with volumes between the Republic of Ireland and Wales down to around 50%. The first week of January was expected to be quiet, but by week three the routes into Northern Ireland were recovering far quicker than those into the Republic of Ireland.

The change has been brought about by Northern Irish businesses that historically moved goods through Dublin, but are now opting to ship cargo through ports in Scotland due to additional complexities, cost and time. Managing Director of DFDS Northern Ireland, Nick McCullough, said that the decision by traders to take other routes was causing some concern for the ferry company Stena Line, compounding what had been a difficult start to the year.

“We saw a significant impact from 1 January, with turnover down 23% and GB-NI volumes down 32%, to the point that we had days that felt like a disaster,” said McCullough. “It’s still slow and the recovery is far slower than expected, to the point that we are taking it day by day. There was no light in the tunnel on 1 February, but now we’re seeing glimmers.”

Interested in reading more? Click here.