With the United Kingdom getting all ready to say goodbye to the European Union without any deal, the logistics sectors need to brace themselves by taking certain steps to prevent an unfavourable outcome. For many forwarders, the upcoming changes in administration, economy and customs plus the additional duties being imposed on the cargoes are matters of considerable concern. In today’s post, we are going to discuss everything you need to know about the possible impact of Brexit on the logistics business.
Road freight is the preferred mode of transporting cargo within the UK and most of the items exported from and imported to the UK by roads are handled by the foreign hauliers from Ireland, Romania, and Poland. The carriers in the UK make up around 8% of the net haulage activities in Europe. A Brexit without a deal can spell out significant challenges for the British hauliers. For instance, the drivers from UK will now have to obtain an international driving permit. They will require ECMT (European Conference of Ministers of Transport) permits for moving through territories in the EU. Moreover, there is always the possibility of being held up in long waiting lines at borders which will add to their work hours.
The UK haulers operating cargo flights between any country in the EU and third countries are going to be capped at the flight frequency levels of 2018. This will put a restriction on the extent to which a company can switch to air cargo for preventing delays at the ports and the Channel Tunnel. Furthermore, the hauliers in the UK won’t be allowed to operate between two third countries and halt in the EU or between two member states of the EU.
Shippers in the UK who depend on the shipping routes between UK-EU are predicted to confront several obstacles in a no-deal Brexit scenario. UK operators will only be able to perform cabotage in countries extending that right to operators from third countries. Therefore, henceforth the shippers from the UK will only be able to perform cabotage in Ireland, Belgium, The Netherlands and Denmark. Shipping companies from the UK will now onward be required to submit pre-arrival information before entering any port within the EU.
Delays at the borders
The next 6 months will be a time of extreme confusion at the UK borders and there could be considerable delays because of the following reasons:
- Extra security checks at the borders
- The possibility of drivers not having the requisite permits
- Inexperienced merchants who don’t have the required paperwork
The mitigation measures announced by the UK authorities include TSP or Transitional Simplified Procedures that will facilitate the entry of freight in the UK.
Customs and compliance
Although many freight forwarders operating in the European Economic Area are experienced with the knowhow of borderless trading within the EU, there are some who don’t have much experience in global trade and the related compliance necessities. Having the correct documentation and complying with the necessary customs procedures are going to be vital for minimizing border delays. The forwarders will have to readily identify the cargoes in cases where certain shipments (like animal origin products) will have to go through border checking. In the case of a no-deal Brexit, WPM freight (wood packaging material) between the EU and the UK will be required to be ISPM15 compliant.
Receivers of cargoes shipped across a customs border might be required to make a payment of duty. A no-deal Brexit will result in a considerable hike in the value as well as the volume of such payments. This can be a significant hurdle for freight forwarding companies. They will now be required to explain to the recipient of the packages about the reasons for the duties and arrange for foolproof processes for handling the increased duties and taking care of the numerous liability risks while representing their clients during the customs declaration process.
What the freight forwarders can do to prepare themselves:
- The first thing the logistics companies can do is to make sure that their systems and procedures are in order so as to handle the higher volume of customs declarations. For this, the freight forwarders and their clients need to sit together and chalk out a clear Brexit strategy and comprehend all the possible impacts of Brexit on their functioning.
- Logistics companies need to make applications for the required permits and licenses.
- They need to be prepared for rapid measures for managing disruptions and review the contractual obligations and penalty clauses regarding the delivery deadlines.
- Now onward the forwarders will have to frequently get in touch with their staff in the EU for ensuring status certification within the shortest possible span of time.
- Freight forwarders will now have to remain updated at all times on the UK and EU governmental authorities, the European Commission and follow up with the upcoming announcements in relation to policy changes.
- The big players should now engage in talks with the authorities and create a business oriented strategy to shape future policies.
- Timely communication and proper management of all the key stakeholders are also extremely important for identifying commitments and expectations.