Businesses looking beyond sterling at supply chains

Supply chains are not the sexiest subject. We tend to consider companies exporting to an overseas market or importing for Irish consumers. But modern business is more complicated. Often companies import inputs and export finished product, for example, or deliver product to one market by moving it through a third country.

This is one of the reasons why Brexit is potentially so horrendously complicated for Irish business. John Mullins, chairman of the Port Of Cork, touched on some of the key points at the Irish Times Brexit Summit on Monday.

One crunch issue, for example, is the use of the “landbridge” through Britain for many Irish exports going to European markets. Timely movement is particularly vital here for free food producers, seeking to get product the next morning to Paris, Berlin or whatever. But what if Brexit means lengthy customs delays entering and leaving the UK? Would exporters then be forced to ship directly to the Continent? Or perhaps such hold-ups can be avoided?

Bureaucracy

There is no quick answer to this, but if Britain does leave the EU single market and the customs union these so-called “no-tariff barriers” – customs, rules and regulations on standards and other bureaucracy – become important issues.

So, of course, may be tariffs themselves for those selling goods into the UK market, particularly heavier goods such as food items which tend to attract higher tariffs. This could make imported goods more costly in the UK market and make goods coming in from Britain more expensive here.

We have spent a lot of time since the Brexit vote monitoring one key issue – the value of sterling. And this is – and will remain – important. But attention is now starting to turn to the longer term. The ESRI/Department of Finance study was the first real look at the impact over the next five to 10 years. And businesses are starting to look beyond sterling and to other strategic issues about what this will mean for them. Chief among these for many medium and larger businesses – and also smaller exporters to the UK – is the really tricky supply chain conundrum.