News / Surge in refugees is adding billions of increased costs to Europe's supply chains

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The surge in refugees coming into Europe fleeing wars in the Middle East and Afghanistan has prompted “an unprecedented disruption”  to supply chains.

The latest Supply Chain Security Risk Index from the British Standards Institution (BSI) Supply China Solutions division shows that in September Europe saw the highest number of border closures since the Schengen Agreement was signed in 1995, with previously open borders across Europe – from Scandinavia to the Balkans – closed to try and stem migrant flows.

“With the number of families and individuals displaced by war across Africa and the Middle East growing 50% year on year, BSI warns that costs to international shippers will continue to rise,” the company said.

It noted that the most serious interruptions had been seen around Calais, where a combination of strikes and migrant activity near the port and Channel Tunnel entrance cost the UK economy an estimated $1bn – with delays and stoppages costing UK shippers around $1.2m and Dutch shippers around $545,000 each day.

And that was just in delays to shipments at Calais. There has also been considerable damage to cargo from refugees breaking into trucks, and BSI said that losses due to contamination of cargo shipments were particularly serious for the pharmaceutical and food industries – BSI recorded one lost shipment of pharmaceuticals that was valued at $3.9m.

But with huge numbers of migrants trying to get into the EU, and a host of countries closing their borders in response, the problem has spread far beyond the Channel. Document and other inspections have resumed at Germany’s borders with Austria and the Czech Republic, Slovakia’s border with Hungary, Austria’s border with Hungary, and Norway’s border with Sweden.

“All these checks have slowed trade in Europe, leading to mounting costs for shippers,” said BSI. “In particular, the checks along Germany’s southern border have hurt trade with Italy, as Italian exports to Germany have been delayed.”

Jim Yarbrough, BSI Supply Chain Solution’s global intelligence programme manager, added: “More so than any other economic bloc, Europe relies upon free trade. Every shipment delayed, contaminated or destroyed, raises the cost to the end-consumer.

“For exports, it hurts competitiveness, undermines productivity and risks jobs; for imports, it raises the cost of living for each and every citizen.”