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2020 COVID and BREXIT challenges for DAABON in the UK and European markets

2020 COVID and BREXIT challenges for DAABON in the UK and European markets

13/04/2021

By Astrid Duque (Managing Director, DAABON UK) and Sven-Dai Landshöft (Supply Chain Manager, DAABON Europe)

The year 2020, and at least part of 2021, will be remembered across the globe for one thing in particular; COVID-19. The virus has had a devastating impact on so many people and caused such distress to global economics, such that it will be long remembered as one of the worst global crises most of us will ever experience.

The impact of the ongoing pandemic has been huge in Europe, and we have also been dealing with another game- changing event; Brexit. This has been on the agenda for some time and the uncertainty surrounding the terms under which UK would leave the European Union (EU) made matters worse. So, the deal struck between the EU and UK in late  December came as a relief. However, we are still far away from a full understanding of what it means for us all. There is hope that the logistical and administrative teething problems being experienced at the  moment  will  be  followed  by a cordial and straightforward future relationship between the newly separated partners.

Until COVID-19 reared its ugly head Brexit was the major concern for any import-export  business  in   Europe, as well as multinational companies like us, who export into both regions and have a physical presence in the EU. It was seen as an unknown and potentially disruptive force, but little did we know that something would come along and push it firmly into second place. In the UK and EU, governments imposed strict lockdown measures as COVID-19 began to overwhelm hospital beds in March last year. Employees were told to work from home unless they were considered to be key workers, providing an essential service that they could not provide from home. Later in the year restrictions were eased and during periods where lockdowns were fully lifted; facemasks, hand sanitisers and other methods were used to augment the scientifically backed requirement to social distance and limit the number of people in social and work gatherings.

Government measures, such as working from home, the furlough scheme*, business grants/loans and rate reductions, were put in place in the UK and across the EU. Authorities attempted to mitigate some of the financial impact that lockdowns and, later, tier systems would have on both employers and employees. Hundreds of billions of British Pounds and Euros were invested to provide a certain level of economic protection for citizens during this unprecedented period, while providing economic stimulus wherever possible.

In a time when nothing is normal, both offices (DAABON UK (DUK) and DAABON Europe (DEU)) have attempted to keep everything as close as possible to ‘business as usual’. We’ve worked harder than ever and found resourceful and creative virtual ways to ensure that DAABON has remained visible  and   reliable   throughout. Our business units in the UK and Europe have continued to function throughout this time, although we have been working remotely. We did not have to furlough anyone; everyone has worked from home and we have at least identified some benefits from that. Many of our staff have children and as schools were closed for long periods it was important that they were able to look after them  and home school them, while continuing to work. Communication  has  not been difficult as we, like everyone else, have got used to virtual, rather than face-to-face, contact. Importantly, all audits for the different certificates we have, organic and RSPO, for instance, have been done remotely, so we remain completely up to date with the key certification schemes for the European industry.

We’ve seen a very dynamic approach from our customers, particularly the manufacturers who are supplying the retailers. Somehow, most of them have kept their retail orders at the same level, or even increased them. The organic category has found some good  momentum  because   people are looking  to  eat  more  healthily. On the other hand, there has been a significant reduction in trade across the  foodservice   industry   because the sector has been effectively shut down for long periods. Many of the largest  foodservice   businesses   in the hospitality, pub and restaurant sectors are not able to operate, so of course demand for cooking oil has plummeted.

The global shipping trade has been severely affected by COVID and as new waves of the pandemic further disrupt supply chains and economies, there is still concern that there could be a steeper decline in the months ahead. At the peak of the crisis, when the contraction of cargo volumes brought an additional challenge to structural market imbalance, the container shipping industry adapted and emphasised its focus on maintaining profitability rather than market share. As a result, freight rates remained at stable levels despite the depressed demand. From the perspective of shippers, these strategies  meant severe space limitations to transport goods and delays in delivery dates. Predicting the pandemic’s longer-term impact as well as the timing and scale of the industry’s recovery is fraught with uncertainty.

Because of the changing nature of the virus, the business climate is evolving every day, sometimes so dramatically it is impossible to predict what will happen even in the short term. The retail sector continues to operate as it is an essential service. However, apart from those operators who are able to offer takeaway or delivery services, the foodservice industry is on hold at the moment. We would expect momentum to build quite quickly when it is able to resume and as vaccines are rolled out. There is hope that the latest lockdown measures are estimated to be removed in Summer 2021. If that does happen, the recovery should begin sometime in the last quarter of 2021.

To quote Manuel Davila, CEO of DAABON Group, “We are delighted to reassure our customer base, that the DAABON team in the UK and Europe remains 100% committed in assisting the supply chain as it endeavours to overcome these difficult times. We have all had to draw upon levels of resilience that perhaps we didn’t know we had. We’ll continue to find innovative ways to move the business forward¨.

* The furlough scheme: If a company were unable to operate or they had no work for staff to do during the pandemic, workers could be put “on furlough”, which means they are kept on the payroll and not made redundant. Employers facing difficulties were able to access support through the UK Coronavirus Job Retention Scheme to continue paying 80 per cent of staff wages.

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