Could Brexit ignite real perishable supply chain innovation?

A recent survey of the UK retail scene by Barclays bank finds that “the origin of the products on British shelves could change as retailers adjust their supply chains following the UK’s vote to leave the EU.” More domestically sourced goods and more imports from India, China and Africa are predicted, along with a heightened focus on supply chain efficiencies.

Critically, 81 per cent of respondents to the Barclays survey believe that the post-Brexit weakness of the pound will have an important impact on future sourcing strategies. “Getting … supply chain strategy right can be the key to success for retailers, [who are] thinking carefully about what they need to do now, in particular with regards to which regions they source from and their foreign exchange strategy,” said Ian Gilmartin, Barclay’s Head of Retail & Wholesale, commenting on the report.

What will this all mean for global sourcing of perishable products such as bananas, citrus, beef and seafood, just to mention the leading food commodities imported into this part of Europe? According to the Fresh Produce Consortium, 40 per cent of fresh fruit and vegetables sold in the UK are already imported. As a result, it is more than likely that some sort of “provenance substitution” is already underway.

We believe that Brexit is likely to exert considerable changes on traditional supply chains for fresh produce such as citrus, stone fruit and grapes from Spain and Italy. Prices will come under pressure in all traditional commodities, indirectly aided by the recent interest rate cut by the Bank of England. All foreign products are likely to bear the brunt, at least in the short term, while only marginally helping to boost ‘home grown’ produce.

Cool Logistics Resources also has some anecdotal evidence supporting the suggestion that food prices for products from non-EU countries will be negatively affected by Brexit. Countries traditionally exporting both fresh produce and protein to the EU and the UK — such as South Africa, Argentina, Chile, Ecuador and Brazil — are all likely to feel the heat from the shifts in sourcing and supply chain operations.

As other EU countries seek to shore up their likely revenue losses in the UK, and attempt to distribute any additional volumes elsewhere — perhaps to Russia for those counties exempt from the import ban — food prices all over Europe will come under pressure due to weakening purchasing power. Nevertheless, the storm clouds amassing over food imports in Europe in general may also have a silver lining. There is real hope that the global food logistics sector will finally awaken from its beauty sleep and embrace real change.

“The storm clouds amassing over food imports in Europe in general may also have a silver lining. There is real hope that the global food logistics sector will finally awaken from its beauty sleep and embrace real change.”

Direct sourcing models between continents may suddenly come into their own. This may even put the traditional retail sector itself under renewed pressure to source products alongside competitors from the dedicated e-commerce sector. The UK fresh produce market has traditionally been a very lucrative market for third country suppliers, as food exporters from countries such as Peru revealed at a recent London Produce Show seminar held just a few weeks before the Brexit vote.

This would indicate that at least some of the ‘well-oiled’ import communities may be scratching their heads for how they can protect their profits. UK customers are likely to become even more demanding in the future, led by the “free from” wave seemingly engulfing consumer markets and the constant stream of new e-commerce and mobile apps.

The continued rise of online shopping and the associated challenges of meeting consumer expectations for faster delivery times and multiple delivery options were cited as key supply chain issues by 78% of respondents in the Barclays survey. The recent arrival of Amazon Fresh and PrimeNow, offering 2-hour order-to-delivery for a range of fresh produce, is adding further to the pressure on ‘classic’ retailers to up their home delivery game.

All these factors indicate that far from being under threat — as some critics suggest — of being ‘washed away from the main’, we could actually see a renewed appetite to re-invent traditional food supply chains in this still seemingly rich part of Europe. Perhaps the UK is indeed about to head a food supply chain revolution that may eventually even spill over into other parts of Europe.

An early indicator of the likely ‘temperature changes’ that may sweep across the global food supply chain will be provided at Cool Logistics Asia in Hong Kong and Cool Logistics Global in Bremen next month. Old and new supply chain concepts will be tested in core perishable markets. Those weighed and found to be wanting may have to rethink their strategies for 2017!

How do you think Brexit will impact perishable sourcing, logistics and supply chain dynamics? Share your views and join the live debate at a Cool Logistics event this Autumn.

Cool Logistics Asia

Cool Logistics Global: Brexit booking bonus — click here to register and use code BREXIT by 31 August for a 10% discount!

About Cool Logistics Resources

Cool Logistics Resources Ltd. provides top-quality business intelligence and networking for supply chain, logistics and transport professionals in the international perishables markets. The annual Cool LogisticsTM Global Conference in Europe connects perishable cargo owners with cold chain logistics and transport professionals from around the world. CLR has also teamed up with Global Produce Events to run Cool Logistics Asia, a one-day high-level educational forum addressing perishable logistics and temperature-controlled transport, handling and distribution services across Asia, taking place alongside Asia Fruit Logistica. www.coollogisticsresources.com

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