With Britain’s exit from the EU single market and customs union a matter of days away and no trade agreement still in place, there are a number of steps that logistics companies should be taking to prepare.
Brexit is set to make a high impact on the sector, due to the amount of cross-border travel involved. The most troublesome Brexit issues relevant to the industry are delays at ports, mandatory border checks and ability to process the required paperwork. These issues are being tackled alongside increased costs to keep up with technical innovation and increased customer satisfaction demands. The only way for logistics companies to stay ahead are to prepare for changes and the ability to adapt quickly to changing legislation.
What Does Brexit mean for Business?
As the 31st December approaches, UK businesses are increasingly anxious about their prospects with many losing faith about their future. Many businesses have taken to stock piling essential goods to ensure they are not reliant on orders arriving within a certain time period. In light of this, freight forwarders are bracing themselves for a negative impact on trade between the UK and the EU that will undoubtedly affect them from a customs, bureaucratic and economic standpoint, providing the UK goes ahead with a no-deal withdrawal. Without a deal, Brexit will severely impact the movement of freight in and out of the UK whether it be via road, sea, air or rail. Here’s how it is likely to impact each mode of transport:
Once the UK exits from the freedom of movement agreement with the EU; UK registered vehicles will be required to apply for international driving permits. The European Conference of Ministers for Transport (ECMT) permits are required for laden and unladen journeys through EU and EEA countries. If the UK cannot negotiate a deal with the EU, an ECMT permit will be required for every journey made. These permits are issued on a limited basis which will severely impact the frequency that UK hauliers are able to cross the border. EU drivers will continue to be allowed to drive in the UK on their licences; however, this is only for a temporary period.
UK carriers will see their cargo services between EU and third countries capped at 2018 flight frequency levels which will restrict a company’s ability to opt for air travel to transport their shipments to avoid delays at sea ports. As well as this, UK carriers will also be unable to transport goods between two third countries and stop in an EU country or fly between two EU states severely restricting routes and the efficiency of their operation.
UK companies that are dependent on shipping routes between the UK and EU are likely to face issues with cabotage if no deal is struck between the two unions. For the UK to transport goods to a port within the EU, that individual state will need to extend their cabotage rights to the UK. So far, this is possible in Ireland, Belgium, The Netherlands and Denmark. Without a deal an individual agreement with each EU member state will need to be struck before routes can be resumed causing significant restrictions for UK sea freight companies and imposing on their efficiency.
Shipping companies carrying passengers and trucks, from the UK to the EU will be required to submit additional security information to the port before entering. This additional information will likely be required to be submitted before travel and by the people using the services so that the shipping company are able to comply with procedures. This requirement can be waived between EU countries but not for non-EU countries attempting to enter an EU country. Ensuring that shipping companies adhere to this new procedure will require extra training and a requirement to notify their clients that additional information will be required. All of this will require time and money at the shipping company’s expense and could potentially lead to reduced loads.
Delays at the Border
The UK government have estimated a 6-month disruption period at the UK border, with the worse period being the first 3 months. This has been put down to: additional time needed to conduct extra checks and not having the required space at present to do this, the prediction that drivers will not have the required licences and permits and the assumption that inexperienced traders will not have the correct paperwork. The government have announced a transitional period where the new procedures will be simplified to mitigate delays; however, this has not been reciprocated by the EU and drivers could face delays when entering an EU member state.
In order to minimise their delay at the UK, it is being recommended that logistics companies familiarise themselves with the documents that they will be required to complete and the paperwork that will need to accompany the shipment. Recipients of goods shipped across a border should expect a duty payment to be made. Failure to do this before the shipment crosses the border could incur fines and the goods being seized until the necessary fees are paid. Customs fees and paperwork should be prepared in advance will save businesses extra money and time; both of which will be critical moving forward.