If anyone had said at the start of this year that Brexit would play second fiddle on the news agenda, then you would have got some very strange looks. What could possibly dislodge the issue that has divided and engaged the nation since 2016, particularly when this would be the year that the UK would be endeavouring to secure a trade deal with the EU to give businesses some certainty?
Well, we all know what happened next.
Navigating a way through the uncertainties of a no-deal, or even a last-minute deal Brexit, and the continuing issues relating to Covid-19, is preoccupying every business in the UK with trade that has been affected by the pandemic and which relies on goods going to and from the EU. We are one of those companies, and our Managing Director James Bates has been giving his thoughts on the situation to Electronics Sourcing
Covid has impacted the electronic component supply chain in 2020. How do you envisage the market will perform in 2021?
It is difficult to say for certain, and will very much depend on the success of a vaccine in being able to build the economy back without the need for periodical lockdowns. The supply chain has been impacted with shortages in specific materials, delays to manufacturing due to local restrictions and reduced capacity in sea and air freight. This is already delaying development, restricting manufacturing output and driving up costs.
However, I expect confidence to gradually increase over time as the growth areas (in green energy, electric vehicles etc) and new opportunities are maximised.
How do you envisage Brexit will impact your business and within the supply chain?
We have probably seen a bigger impact from Covid on the supply chain than we will see from Brexit. In my view the worst has already happened
, said Bates (pictured, right).
The main impact is on the level of accountability. We will have to increase our due diligence on products purchased from the EU. Many manufacturers don’t understand their compliance obligations and we spend time helping them to reach our standards. This will be a big learning curve for UK distributors or manufacturers working on behalf of European counterparts.
What are the positive forces that will push the electronic component distribution industry forward over the next 12 months?
Megatrends don’t go away
, said Bates.
They simply develop into new specialised industries and we will not see any different in 2021. I do think however, there is a revised appreciation of our lives and freedoms which has even led businesses to be more grateful for the opportunities available to them. “Local is the new Global” may be a poor catchphrase, but the sentiment has meaning which suggests big isn’t necessarily better.
In terms of the supply chain, in recent weeks there has been something of a perfect storm that has had a huge impact on the time it is taking for goods to reach their destination. A combination of the backlog of orders caused by manufacturing lockdowns throughout the world, the peak pre-Christmas period, and increased orders from the UK due to pre-Brexit uncertainties, has led to bottlenecks at ports such as Felixstowe. Freight forwarding company PFE Express has reported
that while vessels are at maximum capacity on the lucrative shipping routes from Asia to Europe, ships are not returning quickly enough to reload again, and therefore cannot keep up with demand.
It is a challenging situation even before the possible impact of a no-deal Brexit. PFE report that
all major UK ports are now overloaded
and shipping lines are seeking to reduce their UK capacity.
Rapid has factored circumstances such as this into our Brexit planning
, says Bates.
We are carrying more stock of high selling product lines from the Far East than we normally would, so if any customers have volume requirements in the short term please get in touch with us so we can ensure that there is no disruption to your service
These next few weeks are obviously key, and we will of course update customers on what to expect and what may have changed on January 1st.