UK – Europe supply chains face challenging times
As we return to Multimodal after a break of over two years, it seems appropriate to review some of the trends affecting the freight industry in the UK.
Much has changed as a result of the events of last year. To an extent, the political and economic issues that pre-dated our last meeting here in May 2019 have also had their effect. Covid, Brexit and global disruption to the trade of various kinds have all played their part, and Dachser, along with all stakeholders in the UK’s supply chains, has met the challenges with their innate flexibility and perseverance.
Impact of Brexit
Brexit impacted on all European supply chains. The increased customs procedures and documentation required, as a consequence of the UK leaving the European Union, have monopolised most freight operators’ resources. Paramount to this new scenario, Dachser invested in additional personnel for customs clearance, which complements their already extensive storage capacities, centrally managed IT systems and logistics processes.
Maintaining the positive working relationship we enjoy with our customers has been crucial. UK exporters are adapting to the new European distribution map. Many have decided to establish storage and distribution facilities at locations within the EU, moving inventory from UK manufacturing sites in more sizeable loads than previously. Others are consolidating smaller shipments into full truckloads to facilitate a single or, at least, minimal customs clearance costs. Onward delivery of individual shipments across the borders of Europe has been affected and is less seamless than it was traditionally.
Dachser’s extensive European network of logistics facilities, distribution centres and daily haulage services from four sites in the UK; has helped the business adapt to the changes. An integrated IT system with commonality across the network to enable accurate tracking, data transfer, and delivery instructions and confirmation have been a blessing in challenging times.
Dynamic growth of e-commerce
The lockdowns and travel restrictions imposed by the pandemic have drastically altered the buying patterns of consumers in the UK. The surge in DIY and home-based leisure activities, in particular, has been well documented, resulting in the sales of these products booming. The means of purchasing has also undergone considerable change. Now online sales are becoming the dominant channel.
The sudden growth in online shopping and the dynamic activity in the e-commerce economy made sales forecasting, inventory planning and supply chain engineering challenging to say the least. As far as the DIY sector was concerned, previously infrequent e-commerce consumers migrated online in a big way. This purchasing behaviour was reported by Statista to have increased by more than 50%, jumping from 6% up to 14% of total sales in the first six months of the crisis. More significantly, this level appears to have stabilised in the relatively less-restricted post-crisis period.
Here to stay
The e-commerce boom in the DIY and household goods sector, as well as in many other retail industries, is here to stay; and so too are the logistical challenges of delivering a huge range of products, quickly and efficiently across the UK and Europe, from source regions around the globe. It is clear retailers that have not positioned themselves for an e-commerce future will face particularly severe challenges. They must come up to speed as soon as possible.
DACHSER DIY Logistics, a specialised logistics solution offered by Dachser in the UK and on a global level, helps with these challenges, providing individually tailored logistics services for customers in the DIY, garden and home leisure sectors.
Opportunities with nearshoring
Though more in the nature of a longer-term possibility, the option for UK importers to source materials and manufactured components and finished goods from suppliers in Eastern Europe, North Africa and Turkey rather than China, southeast Asia and the Indian sub-continent, is a more attractive one. In recent months COVID-19 restrictions may have intensified the delays in long-haul freight transport by air and sea. But risks of congestion, shortage of container capacity and high freight rates appear to be critical factors for some time to come.
Consideration of near-shoring has been part of supply chain managers planning for several years. Sourcing from Asia, and China, in particular, was getting more expensive and needed longer lead times. The latter is not ideal, particularly for the fast-moving fashion market.
Road haulage and logistics operators have adjusted to accommodate this trend. Dachser has long-established weekly services to and from Tunisia and Morocco with its own offices and warehouses. Recently, Dachser developed additional connections to Turkey and the Baltics in anticipation of a gradual expansion of the near-shoring option for UK importers.