Companies are facing a lot of uncertainty as they wait to see how the U.K.'s vote to exit the European Union will affect trade agreements. Scenario planning, however, can help them better prepare for all possibilities.
Glenn Steinberg (glenn.steinberg@ey.com) is a principal in the Advisory Services practice of Ernst & Young LLP, where he serves as the EY Americas Supply Chain & Operations Co-leader.
The United Kingdom's (U.K.'s) vote to exit the European Union (EU), popularly known as "Brexit," will have wide-ranging political and business implications. If and when Article 50 of the Lisbon Treaty (which sets the process for exiting the EU) is triggered, many companies will need to re-examine their operating models and how they do business in a post-Brexit world.
Accomplishing this, however, will not be easy, as no one is certain what the U.K.'s trade and mobility policies will look like in the future. Following a U.K. exit from the EU, trading terms for imports and exports may need to be revised. These changes could come in many forms, including: a value-added tax (VAT), trade tariffs, customs processes, and more. Products that used to be simply loaded on a truck and transported throughout the EU could be subject to filing declarations at each border, increasing compliance costs and delaying shipments.
With so many moving parts, supply chain executives are faced with a range of questions:
Where is the best place to locate a central logistics hub?
What are the costs, risks, and implications related to the location of supply chain assets?
How will customs and compliance costs be affected?
What is the potential impact on warehouse locations and investments?
What could be the effect on workers and their human resources strategy?
How would new regulations affect products and services?
While there are no definitive answers at this stage, forward-thinking organizations are already taking steps to prepare for some of the short- and longer-term impacts and opportunities that Brexit might create. This includes looking at their exposure to currency fluctuations, what their organizational structures should be, and where they should locate their people.
As companies work on their strategic plans for the year ahead, they must undertake scenario planning for the impact Brexit will have on their supply chains, regulations of goods and services, financial exposure, and more. Scenario planning on the impact of Brexit can be complicated, as many supply chains are designed with tax efficiencies in mind. With potential changes to trade agreements, companies may have to re-examine where they are placing their assets and performing certain operations in order to minimize their tax exposure. A data-analytics modeling platform should be developed that processes available duty and trade data on the current cross-border movement of goods into and out of the U.K. The platform should then apply this data to a number of likely post-Brexit trading models to demonstrate the trade outcomes and impacts of the various models. For example, Norway and Switzerland are prosperous countries with thriving trade agreements that could provide a model for the U.K. Another option is Singapore's free-trade policy, which some believe the U.K. should follow while also using the World Trade Organization's agreements for guidance.
The modelling platform should display the potential trade agreement scenarios within one centralized dashboard, incorporating trade flows; trade partner countries; and import, export, duty, and compliance changes. This would deliver a clear, visual output that reveals where any potential risks are and highlights where to focus priorities.
By using such an analysis, companies can develop a plan to improve their supply chains. They will be able to determine how the operational impact of Brexit could lead to alternative business models around sourcing, as well as identify which trading countries could be more strategic than others.
While there are many uncertainties, one thing is clear: Disruption in the supply chain is here to stay, and Brexit is only its latest form. To get ahead of potential challenges, multinational companies have to come to terms with the laws and regulations in each country. The winners will be those that plan ahead and have a firm grasp of each element of their supply chain. Is your company ready?
Author's note: The views expressed are those of the author and do not necessarily represent the views of EY.
In a statement, DCA airport officials said they would open the facility again today for flights after planes were grounded for more than 12 hours. “Reagan National airport will resume flight operations at 11:00am. All airport roads and terminals are open. Some flights have been delayed or cancelled, so passengers are encouraged to check with their airline for specific flight information,” the facility said in a social media post.
An investigation into the cause of the crash is now underway, being led by the National Transportation Safety Board (NTSB) and assisted by the Federal Aviation Administration (FAA). Neither agency had released additional information yet today.
First responders say nearly 70 people may have died in the crash, including all 60 passengers and four crew on the American Airlines flight and three soldiers in the military helicopter after both aircraft appeared to explode upon impact and fall into the Potomac River.
Editor's note:This article was revised on February 3.
Artificial intelligence (AI) and the economy were hot topics on the opening day of SMC3 Jump Start 25, a less-than-truckload (LTL)-focused supply chain event taking place in Atlanta this week. The three-day event kicked off Monday morning to record attendance, with more than 700 people registered, according to conference planners.
The event opened with a keynote presentation from AI futurist Zack Kass, former head of go to market for OpenAI. He talked about the evolution of AI as well as real-world applications of the technology, furthering his mission to demystify AI and make it accessible and understandable to people everywhere. Kass is a speaker and consultant who works with businesses and governments around the world.
The opening day also featured a slate of economic presentations, including a global economic outlook from Dr. Jeff Rosensweig, director of the John Robson Program for Business, Public Policy, and Government at Emory University, and a “State of LTL” report from economist Keith Prather, managing director of Armada Corporate Intelligence. Both speakers pointed to a strong economy as 2025 gets underway, emphasizing overall economic optimism and strong momentum in LTL markets.
Other highlights included interviews with industry leaders Chris Jamroz and Rick DiMaio. Jamroz is executive chairman of the board and CEO of Roadrunner Transportation Systems, and DiMaio is executive vice president of supply chain for Ace Hardware.
Jump Start 25 runs through Wednesday, January 29, at the Renaissance Atlanta Waverly Hotel & Convention Center.
Overall disruptions to global supply chains in 2024 increased 38% from the previous year, thanks largely to the top five drivers of supply chain disruptions for the year: factory fires, labor disruption, business sale, leadership transition, and mergers & acquisitions, according to a study from Resilinc.
Factory fires maintained their position as the number one disruption for the sixth consecutive year, with 2,299 disruption alerts issued. Fortunately, this number is down 20% from the previous year and has declined 36% from the record high in 2022, according to California-based Resilinc, a provider of supply chain resiliency solutions.
Labor disruptions made it into the top five list for the second year in a row, jumping up to the second spot with a 47% year-over-year increase following a number of company and site-level strikes, national strikes, labor protests, and layoffs. From the ILA U.S. port strike, impacting over 47,000 workers, and the Canadian rail strike to major layoffs at tech giants Intel, Dell, and Amazon, labor disruptions continued its streak as a key risk area for 2024.
And financial risk areas, including business sales, leadership transitions, and mergers and acquisitions, rounded out the top five disruptions for 2024. While business sales climbed a steady 17% YoY, leadership transitions surged 95% last year. Several notable transitions included leadership changes at Boeing, Nestlé, Pfizer Limited, and Intel. While mergers and acquisitions saw a slight decline of 5%, they remained a top disruption for 2024.
Other noteworthy trends highlighted in the data include a 146% rise in labor violations such as forced labor, poor working conditions, and health and safety violations, among others. Geopolitical risk alerts climbed 123% after a brief dip in 2023, and protests/riots saw an astounding 285% YoY increase, marking the largest growth increase of all risk events tracked by Resilinc. Regulatory change alerts, which include tariffs, changes in laws, environmental regulations, and bans, continued their upward trend with a 128% YoY increase.
The five most disrupted industries included: life sciences, healthcare, general manufacturing, high tech, and automotive, marking the fourth year in a row that those particular industries have been the most impacted.
Resilinc gathers its data through its 24/7 global event monitoring Artificial Intelligence, EventWatch AI, which collects information and monitors news on 400 different types of disruptions across 104 million sources including traditional news sources, social media platforms, wire services, videos, and government reports. Annually, the AI contextualizes and analyzes nearly 5 billion data feeds across 100 languages in 200 countries.
Cargo theft activity across the United States and Canada reached unprecedented levels in 2024, with 3,625 reported incidents representing a stark 27% increase from 2023, according to an annual analysis from CargoNet.
The estimated average value per theft also rose, reaching $202,364, up from $187,895 in 2023. And the increase was persistent, as each quarter of 2024 surpassed previous records set in 2023.
According to Cargonet, the data suggests an evolving and increasingly sophisticated threat landscape in cargo theft, with criminal enterprises demonstrating tactical adaptability in both their methods and target selection.
For example, notable shifts occurred in targeted commodities during 2024. While 2023 saw frequent theft of engine oils, fluids, solar energy products, and energy drinks, 2024 marked a strategic pivot by criminal enterprises. New targets included raw and finished copper products, consumer electronics (particularly audio equipment and high-end servers), and cryptocurrency mining hardware. The analysis also revealed increased targeting of specific consumable goods, including produce like avocados and nuts, along with personal care products ranging from cosmetics to vitamins and supplements, especially protein powder.
Geographic trends show California and Texas experiencing the most significant increases in theft activity. California reported a 33% rise in incidents, while Texas saw an even more dramatic 39% surge. The five most impacted counties all reported substantial increases, led by Dallas County, Texas, with a 78% spike in reported incidents. Los Angeles County, California, traditionally a high-activity area, saw a 50% increase while neighboring San Bernardino County experienced a 47% rise.
Manufacturing and logistics workers are raising a red flag over workplace quality issues according to industry research released this week.
A comparative study of more than 4,000 workers from the United States, the United Kingdom, and Australia found that manufacturing and logistics workers say they have seen colleagues reduce the quality of their work and not follow processes in the workplace over the past year, with rates exceeding the overall average by 11% and 8%, respectively.
The study—the Resilience Nation report—was commissioned by UK-based regulatory and compliance software company Ideagen, and it polled workers in industries such as energy, aviation, healthcare, and financial services. The results “explore the major threats and macroeconomic factors affecting people today, providing perspectives on resilience across global landscapes,” according to the authors.
According to the study, 41% of manufacturing and logistics workers said they’d witnessed their peers hiding mistakes, and 45% said they’ve observed coworkers cutting corners due to apathy—9% above the average. The results also showed that workers are seeing colleagues take safety risks: More than a third of respondents said they’ve seen people putting themselves in physical danger at work.
The authors said growing pressure inside and outside of the workplace are to blame for the lack of diligence and resiliency on the job. Internally, workers say they are under pressure to deliver more despite reduced capacity. Among the external pressures, respondents cited the rising cost of living as the biggest problem (39%), closely followed by inflation rates, supply chain challenges, and energy prices.
“People are being asked to deliver more at work when their resilience is being challenged by economic and political headwinds,” Ideagen’s CEO Ben Dorks said in a statement announcing the findings. “Ultimately, this is having a determinantal impact on business productivity, workplace health and safety, and the quality of work produced, as well as further reducing the resilience of the nation at large.”
Respondents said they believe technology will eventually alleviate some of the stress occurring in manufacturing and logistics, however.
“People are optimistic that emerging tech and AI will ultimately lighten the load, but they’re not yet feeling the benefits,” Dorks added. “It’s a gap that now, more than ever, business leaders must look to close and support their workforce to ensure their staff remain safe and compliance needs are met across the business.”