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The roadmap out of lockdown

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Peter Ward, UKWA CEO, discusses the challenges and opportunities ahead as lockdown lifts.

So, the PM has unveiled his roadmap out of lockdown as Coronavirus cases drop thanks to the roll-out of the vaccine. Retailers are predicting a ‘big bang’ of pent-up consumer demand as non-essential stores are allowed to trade again, and hospitality businesses open their doors. Confidence is returning, and with it, fresh opportunity for those 3PLs ready to meet the demands of the new post-pandemic world.

On the other hand, also on the immediate horizon is long list of new controls at the border, due to be rolled out in April and July, coinciding with what members of UKWA’s Logistics Users Group are calling the ‘Revenge Recovery’. There could be trouble ahead.

UKWA’s survey of members last month, investigated the impacts of the EU-UK Trade and Cooperation Agreement and the introduction of new customs and border procedures from 1st January. Results showed that a ‘free’ trade agreement it is not.

SMEs have been hardest hit by Brexit and 80% of UKWA respondents from that category confirmed that they have experienced delayed dispatch of orders to the European Union, while 56% reported backlogs of stock as a result.

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The largest contributing factors seemed to be a lack of carrier services.

78% said they had experienced delayed intake of orders from the European Union, with 81% citing the unpreparedness of EU traders as the major issue.

53% reported being affected by ‘double duty’ and Country of Origin rules, while 54% said they had lost business and had seen transfer of warehousing and distribution activity to the European Union.

The Government has repeatedly insisted that these ‘teething problems’ were to be expected and The Rt Hon Michael Gove MP has been robust in defending that position. However, now we face further disruption as customs checks and sanitary/phytosanitary import controls come into operation from 1st April.

Our concerns are shared by peer industry trade bodies and so, once again, we have joined forces to request a meeting with the Chancellor of the Duchy of Lancaster. Our aim is not to focus on the so-called ‘teething problems’, but to offer continued – indeed, renewed – support in helping the government ensure it is properly prepared for the challenges ahead.

UKWA’s message has long been that we are here to help. We – along with our trade association colleagues - are keen to provide direct feedback and evidence from the ‘coal face’ on Brexit impacts to date and, importantly, propose potential solutions that we believe could relieve pressure on Government departments and help address some of the concerns we share relating to the further process changes.

We are looking for a constructive discussion with Michael Gove and others in the Government with influence on the roll out and management of Brexit. We have a clear agenda aimed at working together with the Government to ensure that the forthcoming changes are implemented successfully and with minimum disruption to business and risk to employment.

We believe that continued co-operation between Government and our industry is essential, providing a valuable conduit for the Government to fully understand what is happening on the ground, and for the industry trade and professional bodies to highlight how best we in the private sector can contribute to the delivery of workable and cost-effective solutions that benefit us all.

In the meantime, our ‘virtual’ Logistics Users panel discussion on 3rd March, revealed real optimism on the part of retailers and a clear appetite to work with 3PL partners to maximise opportunities for growth.

Joining us on the panel were senior supply chain directors from major brands, including Urban Outfitters, Pentland Group, John Lewis and Mercedes Benz, discussing the transformational changes within the logistics sector over the last twelve months.

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These changes have massively re-shaped the world of retail logistics. Existing e-commerce giants, such as Amazon, Boohoo and ASOS have seized the day and are booming, but traditional retailers have had to find new ways to get stock to their house-bound customers, whether using stores for ad-hoc fulfilment and click-and-collect or, as with the supermarkets, investing in new warehousing and expanding delivery fleets.

Retailers are looking at radical new strategies for serving their customers going forward, including massive reconfiguration of their logistics networks to move stock closer to consumers, improve agility and meet delivery expectations. Multiple SKUs in multiple locations are needed, along with increased inventory. Few have appetite for either the investment or the disruption associated with bringing this ‘in-house’ and are looking to their 3PL partners to take up the challenge.

Necessarily, 3PLs will need to be properly prepared for data integration -  making the transition from legacy B2B systems to interfacing with consumers on behalf of the retailer, as well as ensuring that robust risk management and security systems are in place to protect that data.

Brexit obviously has added another layer of complexity and retailers are expecting 3PLs to ‘step up’ and manage the additional administrative burden, while they focus on their core activity, development of brands and honing competitive advantage.

Comments from our Logistics Users panel were illuminating on all these questions. If you missed it, look out for the recording on UKWA website. (https://www.ukwa.org.uk/market-intel/logistics-users-discussion-panel-weds-3rd-march-2021/)

It is important that we listen, understand the requirements of the new post-Brexit and post-pandemic world, and capitalize on the structural shifts driven by ecommerce to support our customers and ensure that they - and we – are fully prepared and fit for the future. 

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