Brexit dominates SCALA debate

There was little else to talk about as attendees geared up for the Logistics Debate – organised by SCALA Consulting in the wonderful setting of Coombe Abbey in Warwickshire – and it mostly revolved around what could have and should have happened instead of what did.

But when proceedings got under way, Keith Newton, senior partner – SCALA Consulting urged attendees to swiftly adjust to the new reality. 

"We need to look at this as a reality that we have to manage the issues around. We need to move ahead of the politicians. I encourage you to think of risks and opportunities."

This blend of risk and opportunity came through strongly with one of the key speakers of the evening – a senior supply chain executive from China.

Yong Wang, CEO of Ocean Supply Chain Management said: "I'm aware many people in the UK are concerned about the future, so as a Chinese entrepreneur I'd like to share my personal views. Brexit may have some negative influence, the UK is regarded as a bridge from China to Europe. Chinese companies may seek to change strategy as a result."

However, Yong Wang said that without EU restrictions, the UK and China could have, in time, its own trade deal, which will see "Chinese products and services more easily enter the UK and vice versa".

Yong Wang added the FMCG and eCommerce markets were developing rapidly in China which brought many supply chain challenges, opening up an opportunity for UK supply chain companies to market their expertise in tackling these issues. There is no doubt that UK-based supply chain specialists are in demand across the globe. See our feature on Page 32, which mentions a rising star at Yodel bringing efficiencies to a transport operation in Brazil.

Yong Wang concluded: "The 2 economies complement each other in many areas. A better supply chain will help China open itself to the world market more effectively and boost trade." This is the core of the 'One Belt, One Road' strategy – seen as a modern day 'Silk Road' which allows, say, Chinese investment in UK infrastructure and UK firms to take on contracts in China.

One of the concerns raised on Brexit was unsurprisingly around tariffs that could be raised on the exchange of goods between the UK and EU.

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Ian Stansfield, consultant and former VP Logistics and Supply Chain at Asda said: "We have to look at the attempt Brexit may have on delivery into Europe. The UK eCommerce industry is worth some £65-70 billion and 16% of deliveries go to the EU. It attracts higher transport cost but not higher tariffs as it counts as domestic.

"Presumably this will switch to international post Brexit, adding cost. For retailers, through the UK to the EU, there will be country of origin issues. e.g. from importing from China through the UK to the EU, could attract duties and make us less competitive. It's a big deal."

Dave Howorth, supply chain director at General Mills added: "A lot our products are manufactured in Europe. Maybe it is a naive to think the Government will not introduce things that will make the supply chain more difficult and costly. But there will be a trade off – perhaps the EU won't want to let the UK off lightly. At the same time, I can't see anyone wanting to make supply chains more difficult.

"They key thing is that as an industry we should influence this – we must make sure people in Government understand the supply chain implications of the Brexit process."

Chris Sturman, CEO of the Food Storage & Distribution Federation added that it was already talking to Government about the importance of ensuring residence in the food supply chain.

Among ideas floated by attendees was a Buy British Campaign to bolster the UK economy and a suggestion that exemption from EU antitrust regulations could be used to encourage greater supply chain collaboration. 

Keith Newton replied: "The last Buy British Campaign was in the late 1960, 1970s, I believe. My instinct is that we are less about what we make now, and more about how we operate. We can improve manufacturing, but I see our key opportunity as exporting skills and abilities to the world, particularly as logistics and supply chain professionals."