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How Have Brexit and Covid Affected the Semi Conductor Industry?

How Have Brexit and Covid Affected the Semi-Conductor Industry?

The COVID-19 pandemic and Brexit presented major challenges for semiconductor companies and the logistics industry that supported them. These two events created disruptions to the supply chain, leading to increased costs, delays, and uncertainty for semiconductor companies. In this article, we will discuss some of the main problems faced by electronics companies in the logistics sector due to these two events.

Limited Freight Capacity Causing Disruptions to the Global Supply Chain

Freight-Capacity-IssuesOne of the biggest challenges posed by the COVID-19 pandemic was the reduction in the availability of freight capacity. With lockdowns and border closures, many countries reduced the number of flights and ships available for transporting goods. According to The United States International Trade Commission, the slowdown of manufacturing in China due to Covid led container shipping firms to cancel scheduled sailings. This led to a shortage of containers and a significant increase in prices, causing disruptions to the global supply chain, particularly for electronics companies that relied on incredibly tight lead times. You can find out more about how we price our projects and keep our integrity in Charlotte’s latest blog on pricing.

Increased Demand Causes Interruptions to Supply Chain

Another issue caused by the pandemic was the increased demand for other certain goods, particularly personal protective equipment (PPE) and medical supplies. This led to a surge in demand for air freight capacity, which was difficult to meet given the reduced number of available flights. As a result, prices for air freight increased dramatically, making it more expensive to transport essential goods and components, leading to supply chain interruptions for semiconductor companies such as Force Technologies.

How has Brexit Affected Electronic Companies

Brexit also brought its own set of challenges for electronics companies. The new customs requirements and tariffs introduced additional paperwork and administrative processes, leading to significant delays at borders. This resulted in increased wait times for goods and increased costs for businesses. With the nature of our shipments being low volume but also that of high value goods, this was especially challenging for our company at the time. Many of our European customers were unaware of quite how much trouble this was about to cause them. The new requirements created confusion and uncertainty, making it difficult for companies to plan and predict their supply chain needs. Goods were now being taxed upon entry to these European companies at a percentage of the value of the parts, which was often a substantial amount of money due to very high value orders.

What does the future look like for the Electronics Industry?

In conclusion, the COVID-19 pandemic and Brexit presented major challenges for semiconductor companies and the logistics networks they relied on to deliver to their customers on time. These events resulted in reduced freight capacity, increased demand for certain goods, additional customs requirements and tariffs, and increased costs overall. Thankfully, we are mostly out of the woods with logistics running smoothly once again within the company.

Let us know how the COVID-19 pandemic and Brexit affected the flow of your business’ logistics and whether you are still experiencing knock-on effects from the events.