Much needed updates to IT systems designed to enable smooth trade between the UK and the EU from January are being delayed because of missed Brexit deadlines and are likely to heap further chaos onto already struggling ports.
Prime Minister Boris Johnson has announced Brexit negotiations will continue this week but the industry says further stalling will make it harder for the software suppliers to build the web of systems needed to process freight after Brexit.
Japanese car manufacturer Honda have paused production at their Swindon factory due to running out of parts while IKEA have been forced to apologise to customers after suffering stock shortages because of the hold up at UK ports.
As talks between the UK and the EU continue to run on, it makes it more and more difficult for the development, delivery and implementation of the needed systems to be finalised by the start of January.
Steve Bartlett, chairman of the Association of Freight Software Suppliers, said: “We still don’t know which tariff system to load onto our systems. How much longer are we going to have to wait? Time is not on our side.”
Bill Pugsley, the chairman of Business Application Software Developers Association’s Brexit working group, said the software industry had been prepared for a no-deal Brexit but it would be difficult to now adapt systems to a deal at such a late stage.
“If we end up with a deal, software may not be able to cater for that fact. We have a situation where people could have to revert to paper systems.”
The Irish World reported last week that builders could soon find themselves running short of materials due to a gridlock at UK ports holding up crucial deliveries in the run-up to Brexit.
John Newcomb, the chief executive of the Builders Merchants Federation, told The Irish World last week that Brexit could further complicate things for the UK’s ports that have been struggling since November’s lockdown, describing the issues as ‘a perfect storm of capacity issues along with availability and then leading to price increases’.
John Newcomb, the chief executive of the Builders Merchants Federation, told The Irish World: “It’s probably the single biggest concern I have right now because we’re being asked, quite rightly, to build, build, build and to build back better but we need the materials flowing through in order to be able to do that
“Any glitch in the system is always going to give us concerns in our ability to deliver the houses we so badly need.
“It’s obviously impacting on the supplier members at this point in time but eventually it will start to filter through to the builders’ merchants and then ultimately, of course, to the builders themselves.
“We’ve been hearing about this for the last three or four weeks but it definitely seems to have got worse in the last ten days where we’re just having more and more of our members raising delays with us.
“The other thing that we are concerned about is the increase in shipping costs. We’re seeing something like a 300% increase in the cost of containers. They’re going up from anything from $1200-1300 a container to $6000 a container.”
One of the BMF’s members is the family-run building materials supplier Timco who say its shipping costs have increased by more than 300%.
“The figures from Timco are quite scary. They’ve currently got 160 containers waiting to be shipped in the Far East and still sitting at the docks because there’s no shipping space.
“They would book containers onto a ship. Typically that would take about ten days. Now it’s taking 30 days.
“Unfortunately it’s a bit of a perfect storm of capacity issues along with availability and then leading to price increases. We’re not seeing those price increases yet filter through to the merchants and the builders but of course if the situation does continue we will definitely see that.”
The BMF has raised the issue with the government as the high level of demand has prevented the building trade from stockpiling in the run-up to Brexit.
“We’ve raised it with the government. People are aware of it . The press have picked it up and that’s always a good thing because the more people become aware that there’s a problem, they’re more they’re prepared for it.
“During the national shutdown, containers had been building up at the ports, stock not being able to get through to retailers.
“It’s not just a building issue. It’s affecting everything from toys to food to pharmaceuticals. I can only comment about building materials but it’s not unique to building materials. We’re caught up in the same problems as everyone else right now. It’s container backlog. It’s container shortages. It’s the stress on the port.
“Clearly we are concerned that what will happen on 1 January might cause additional pressures on a situation that is giving us grave concern. It depends on whether we’re going to get a deal or not.
“If there is no deal then we are likely to see price increases simply because as soon as tariffs are imposed on any product those tariffs will have to be passed through into price increases.
“We’re not seeing big price increases yet with the exception of timber but if we don’t get a deal we will start to see price increases from 1 January.”
Felixstowe, the Suffolk port which handles 40% of Britain’s container traffic,has been struggling due to the global disruption and also stockpiling as the fear of levies and other administrative disruption after December 31 are causing companies to stock-up.
The problems are also spilling over to affect smaller container ports such as Southampton, causing delays to critical goods trying to enter the country.
A government spokesperson said the delivery of IT systems necessary for the end of the transition period was on track: “We have been working with key delivery partners to support their preparations, and we will continue to work with them to support their preparations for the end of the Transition Period.”
However, Allie Renison, head of EU & trade policy at the Institute of Directors says the government should introduce a phased in approach to any new trade requirements so companies have a grace period of up to six months to adapt their systems, saying: “Basically we’re saying, you’re not willing to extend the transition so at least agree to phase in some of the most complicated changes you’re giving business so little time to adapt to.”