In response to the evolving global landscape, the UK government introduced the Critical Imports and Supply Chains Strategy in January 2024.
This initiative aims to keep the nation’s supply chains resilient and secure, particularly for essential goods.
If your business engages in global trade, understanding how this strategy might impact you is crucial.
In this article, we explore the key aspects of the UK Critical Imports and Supply Chains Strategy and how you can manage currency risk as an essential aspect of your supply chain.
What is the UK Critical Imports and Supply Chains Strategy?
The UK Critical Imports and Supply Chains Strategy is a government initiative designed to safeguard the supply of essential goods, including food, medicine, and raw materials. This strategy aims to:
- Identify critical imports and their supply chains.
- Assess vulnerabilities and risks within these supply chains.
- Develop contingency plans to mitigate potential disruptions.
- Promote domestic production and diversification of supply sources.
Why is it important?
The strategy is vital in ensuring that the UK can withstand global supply chain disruptions caused by geopolitical tensions, natural disasters, or pandemics.
By securing critical imports, the government aims to protect public health, maintain economic stability, and support national security.
Katrina Ross, Policy Director, Commercial and Governance at the UK Chamber of Shipping praised the introduction of the Critical Imports and Supply Chains Strategy to support the shipping sector:
“We welcome the UK Government’s focus on critical imports and supply chains through the publishing of this strategy.”
“95% of UK imports and exports are moved by sea, and our sector’s challenges should be considered as part of the move to build supply chain resilience and to help deliver the UK and global net-zero ambitions.”
Read: Importing from China: the essential guide for wholesalers in 2024.
Key components of the Critical Imports and Supply Chains Strategy to be aware of
The UK government’s strategy sets out to support British businesses operating internationally. Its approach can be broken down in the following ways:
Risk assessment and management
The strategy involves a comprehensive assessment of risks associated with critical imports. This includes identifying key suppliers, understanding dependencies, and evaluating the potential impact of supply chain disruptions.
Diversification of supply sources
To reduce reliance on single sources of supply, the strategy encourages businesses to diversify their supply chains. This can involve sourcing from multiple suppliers, both domestically and internationally.
Promotion of domestic production
By boosting domestic production of essential goods, the strategy aims to enhance self-sufficiency and reduce vulnerability to global supply chain disruptions.
Enhanced collaboration
The strategy promotes collaboration between the government, businesses, and other stakeholders to share information, resources, and best practices for managing supply chain risks.
Read: What are tariffs and restrictions in global trade?
Managing currency risk to maintain a resilient supply chain
If your business engages in global trade, currency risk will play a critical role in maintaining a resilient global supply chain.
By partnering with a foreign exchange (FX) and international payments specialist you can manage currency risk easily to protect your business’ bottom line from currency volatility.
Here’s how Privalgo can help:
Currency risk management solutions
Our risk management solutions help you capitalise on currency market opportunities and bring certainty to the cost of your imports.
To help you manage risk, we use advanced FX tools as part of our tailored hedging strategies like forward contracts and market orders.
Forward contracts help you set your budget with confidence by locking in a desired rate of exchange. Let’s say today’s exchange rate suits your budget, but your current cash flow position means you’re not able to make a transaction until later.
With our forward contracts, you can lock in today’s favourable exchange rate and make a transaction at a date that suits you. This way, you know you’ll be able to pay your beneficiaries in future without the volatile currency markets interfering with your import payments.
Market orders enable you to set a target exchange rate for automatic transaction. If your target rate is met, we’ll convert your currencies instantly. Through market orders, you can take advantage of favourable moments in the currency markets and get maximum value out of your currency exchange.
Competitive exchange rates
We provide highly competitive, transparent exchange rates, allowing you to get the best value for your money when making international payments. This can significantly reduce your costs and improve your bottom line, especially when dealing with critical imports.
Streamlined international payments
We’ve invested heavily in our proprietary technology since our inception in 2018, allowing us to deliver seamless, secure payment solutions for your business.
By ensuring accurate, timely payments, we help you maintain strong relationships with your suppliers and avoid disruptions in your supply chain.
Read: Shipping container industry: Top 4 risk management practices.
Summarising the Critical Imports and Supply Chains Strategy
The UK Critical Imports and Supply Chains Strategy is a pivotal initiative aimed at securing the nation’s supply chains and ensuring the steady flow of essential goods.
For businesses engaged in global trade, understanding and adapting to this strategy is crucial. At Privalgo, we can support your business with our comprehensive foreign exchange and international payment solutions.
Contact us by filling in the form below and learn more about how our risk management and currency solutions can help you control your import costs and promote sustainable business growth.
Read: CBAM regulation: the guide for UK importers.
