Sweden’s truck making firm AB Volvo is creating safety stock” with its British dealers and is contemplating alternatives to ship its vehicles to the UK to that there is minimum disruption for its products to reach the market as the company gets ready to deploy its strategy in case of no deal Brexit.
A spokesperson for Volvo said that even though the company has created five different plans for different post Brexit scenarios, it was in fact getting for a hard Brexit. On Tuesday, the British government said that it would implement plans for a no-deal Brexit in full.
The government said that it would ask businesses to get ready for the UK exiting the European Union (EU) without a deal which could create problems in some UK ports for up to six months after Brexit. There is less than four months left with the UK to get through a trade deal with the EU before setting in of Brexit.
According to the Volvo spokesman, the company would conduct an “end-to-end evaluation and adjustment of its processes, systems and flows” because the lead time and costs of shipments in both ways directions could be impacted by Brexit. The company also believes that data transfers and processing activities would also be affected.
Transportation delays due to new customs clearance regimes which would in turn impact the delivery time of competed products was the greatest potential risk, the company spokesman told the media. Preparations to handle such a situation have been initiated by the company.
There is no hold up for truck travelling within the EU at country borders. However, if there is no deal in Brexit, there would be long queues at ports and on feeder roads both sides of the English Channel for even a few minutes of additional hold up for vehicles at the UK borders.
“In some areas we have developed safety stock at the dealers in the UK, and for others we have worked to ensure that orders due prior to March 29, 2019, are filled as early as possible,” he said.
The company spokesperson however declined to provide any detail to the media about the number of weeks of inventory that Volvo was storing up.
The company was also taking up measure to make sure that it is able to provide customer support irrespective of a deal being struck for Brexit or not.
Considering the eventuality of a loss of frictionless movement of goods to and from the main European continent, there are many companies in multiple sectors that have begun purchasing warehousing space and stockpiling to make sure that they are able to cater to demands and ensure a smooth manufacturing process.
Brexit contingency plans have already been laid out by many players in the automotive industry which includes firms like Ford, McLaren Automotive, Bentley, Aston Martin and Volvo rival Scania.
There are some suppliers of Volvo’s trucks business in the UK in addition to it owning and running a British construction equipment factory in Motherwell.
And in order to ensure that the disruption because of Brexit is kept at a minimal, Volvo is considering “all possible alternatives” which includes avoiding congested ports and seeking alternative routes, the Volvo spokesman said.
(Adapted from WallStreetReporter.com)