France roads

UK’s Road Transporters Should Be Ready for Vehicle Safety Changes in France

UK Logistics businesses are being warned to comply with new French safety regulations introduced on the 1st January or risk facing fines.

The legislation states that all vehicles weighing in excess of 3.5 tonnes driving in France must display stickers indicating driver blind spots. This extends to passenger transport and commercial vehicles. Additionally, all vehicles should be fitted with at least one indirect vision safety system, such as mirrors with a field of view that allows for no blind spots that are likely to obscure a vehicle about to overtake it. It also states that control devices must be in reach of the driver to use when the vehicle is moving.

This comes as welcome news to road safety campaigners and experts but have also issued the warning that mirrors are not sufficient to eliminate blind spots.

Emily Hardy from market leading provider Brigade Electronics UK, commented: “This legislation is a welcome change; however, it is important for operators to understand that mirrors alone do not eliminate blind spots. Therefore, they could still be fined according to the legislation’s requirements. We recommend fitting a range of vehicle safety technology such as Brigade’s DVS Safe System kits, to ensure operators comply with legislation across Europe and that drivers have full visibility of their vehicle’s surroundings.”

These kits are available in two different types; for rigid and articulated vehicles and include side cameras, ultrasonic sensors for the nearside of the vehicle and an alarm that activates when the vehicle is turning. Both kits are compliant with London’s Direct Vision Standard as well as EU law which gives drivers peace of mind when crossing the border.

Lafarge is one of the many companies to have benefitted from installing the kits to its fleet of concrete mixing trucks. With road safety being a concern for all of the construction industry, the company took progressive action to ensure the safety of their vehicles.

As well as the kits, Lafarge also installed Brigade’s bb-tek White Sound reversing alarm and Brigades Backeye 360, a camera designed to provide drivers with a 360-degree view of the vehicle.

President of Trans Route Béton, Othmane Jennane said: “With just one look, drivers have a complete surround view of the vehicle without any blind spots and the added peace of mind that pedestrians will also be warned by the white sound alarm. It provides absolute safety.”

This could potentially spell out further bad news for UK Logistics companies and driving within Europe as many changes to Customs regulations are being made as a result of Brexit.

Another challenge that firms have desperately tried to mitigate before 31st December was the sourcing of a sufficient number of customs clerks to be trained up and ready before the implementation of the new trading regime. Speaking last Autumn, Barney Weston, managing director of Oceanic Resources International warned that serious shortage was unavoidable.

On the current situation, he said: “I think most (firms) managed to get the bulk of their teams in place before the end of the year, but training and ‘filling the gaps’ continues. In most cases a Customs and Compliance Manager/ Brexit Head is in place (in firms) giving the strategic lead on how to handle the UK’s new trading relationship.”

He went on to say: “I know that in many cases training and upskilling is on-going, and there is still high demand for people to fill customs clerk positions, but it’s hard to accurately quantify this in numbers. Certainly, anyone who has ever sniffed a customs clearance in their career history is still worth their weight in gold!”

“I think the whole industry will have a clearer picture on the situation by the end of the month; so much was unknown heading into Brexit. I think that shortly people will know if they can handle demand with the current staff levels or if more will be needed.”

Air Cargo

Global Air Cargo Volumes Recover to Pre-COVID levels inside 10 Months

The global air cargo market has virtually recovered from the losses that the COVID-19 pandemic caused according to performance data for February 2021 from industry analysts CLIVE Data services and TAC index.

Chargeable weight for the last 4 weeks of the month, stood at 1% compared to February 2019 and 2% ahead of last year’s number. Niall van de Wouw, Managing Director of CLIVE data services commented the following that passenger airlines will be, “dreaming of such a recovery in passenger demand.”

CLIVE data will continue to compare first to market data to pre-pandemic numbers of 2019, to give a meaningful perspective of the industry’s performance. This is planned to occur until at least Q3 of this year. This will be produced alongside the 2020 comparison.

Capacity levels in February 2021 were -8% and -5% of 2019 and 2020 respectively. CLIVE’s load factor calculated both the volume and weight perspectives of cargo flown and capacity available was up 5% pts on February 2019 and 9% pts on February 2020. The overall dynamic load factor was the same as last months while the monthly volumes climbed 7% despite the short month of February as capacity rose 5% over January.

Van de Wouw added: “These are tricky months to compare due to the Chinese New Year and Leap Year variances, so we have to be careful in how we read the market. To give a meaningful view, it makes sense to keep an eye out to 2019 before the pandemic took hold and, on that basis, air cargo demand is now nearly at par with pre-COVID volumes despite much less capacity in the market. If we normalise for last year’s Leap Year, we can see a 2% growth in global volumes compared to February 2020 but that does not tell the tale by any measure – the apparently modest global growth number is masking what lies underneath. Volumes from China to Europe, for example, were nearly 5 times higher in the four weeks of February 2021 than in the similar weeks of 2020. This was caused by the dramatic drop in volumes because of the of the factory closures a year ago in response to the COVID outbreak. Volumes from Europe were down by -11% for the same period.”

“Demand is increasing and there are a lot of passenger planes sitting around that could start flying cargo, but I don’t think that will happen proactively. Given the high financial risks, when it comes to adding capacity, airlines are more likely to follow the market as opposed to trying to stimulate it. But if it makes sense, they will surely fly those aircraft. Air cargo has been resilient and, bit-by-bit, has clawed back the losses we saw only a few months ago. In April 2020, volumes were down -39% but are now back to the pre-COVID level. Who would have that possible inside 10 months? It’s a recovery airline passenger departments will be dreaming of.”

According to TAC index, volume, capacity and load factors continue to reflect the high price of transporting shipments via air cargo at the moment.

Robert Frei, Business Development Director at the company commented: “Volatility remains high (also intra month) and, given the much higher pricing levels than a year ago, is having a major impact. Looking at PVG-EUR, for example, if you are 10% off with your procurement today (which would be RMB 3.20) compared to 2020 levels, it would have meant a deviation of 18%. This presents a very risky environment for freight forwarders and potentially an immediate loss of their gross margins of 8-10%. So up-to-date pricing information on a weekly basis is an absolute necessity to manage these volatile periods. We also assume the spread of spot rates is likely to remain high.”

The latest data from TAC Index shows that despite the ‘mundane’ monthly pricing average there is still quite a lot of volatility in the weekly rate levels.

Data shows that the Baltic Exchange Index was +2% over January which also took Chinese New Year into account which is normally considered peak season but looking more closely at the impact on the PVG – EUR compared to previous years, TAX index observed the following:

• 2019 – overall period +8%
• 2020 – overall period -4%
• 2021 – overall period -13%

February 2021 saw the highest drop in yield compared to that of the previous years during the period around Chinese New Year. In absolute terms this compares as shown below:

• 2019 – average RMB 20 /kg
• 2020 – average RMB 17.5 /kg = – 11% to previous year
• 2021 – average RMB 31 /kg = +79% to previous year or +63% higher than 2019

TAC Index added that interesting observations have made when comparing other international routes such as HKG – EUR which stayed relatively flat in terms of pricing levels whereas the PVG counterpart increased by +7%. Meanwhile, HKG – USA went up 2%, whilst PVG – EUR went down by -1%.

air freight

The Impact of COVID-19 on the Air Freight Industry

Due to the COVID-19 pandemic, air freight has been one of the hardest hit industries in logistics.

Lockdown restrictions and travel bans have caused chaos internationally with many flights being grounded. On a normal day, air freight is responsible for the transit of trillions of dollars’ worth of shipments every year. Flying is one of the fastest methods of transport and is considered ideal for low volume, high-value items. With the industry currently at its knees, it has heavily disrupted global supply chains and production cycles for multiple countries. Other sectors of aviation including commercial and private air travel have also taken major setbacks with many airlines having to resort to mass redundancies of their employees.

 

The Pre-Pandemic Air Freight Industry

Before COVID-19, much of the worlds air cargo was carried via passenger aircraft. This was transported in the aircraft hold and made up 40% of annual global cargo. New generation, wide bodied aircraft are equipped with a generous belly hold capacity and are ideal to carry large quantities of cargo. A Boeing 777 passenger aircraft is able to carry as much as 20 tonnes and was frequently used to transport many shipments. Unfortunately, with only 20% of the world’s air traffic in operation at the moment, this has been significantly impacted.

Although freighter aircraft continue to operate by cargo operators and freight forwarders, many of these aircraft are hub focused and are not able to access the same extensive route network as commercial aircraft which is proving restrictive and taking away much of the convenience air freight has always promised.

 

Making Up the Shortfall

To ensure essential cargo continues to be transported, airlines have been utilising their main passenger cabins. The load sheet must be worked out precisely to ensure the weight and balance of the aircraft is not affected and is secured into passenger chairs with netting. It was widely publicised that emergency PPE for frontline healthcare workers was transported from China in this way.

At least 20 airlines have offered their aircraft for global cargo missions including British Airways, Delta and Cathay Pacific. The aircraft are chartered by freight forwarders and operated by the airline’s crew.

 

Low Fuel Prices Making up for Low Occupancy

Low fuel prices have eased the expense of low occupancy flights. This has been a saving grace to many airlines which has enabled them to continue flying to destinations they would otherwise have had to cancel. Aircraft manufacturers, Boeing and Airbus have also offered their freighter aircraft to transport critical supplies including 1.5 million facemasks.

Despite these creative solutions and work arounds, the industry is experiencing a major shortfall in the capacity it is able to transport and is majorly disrupting the transportation of essential goods such as medical supplies to virus epicentres.

Coordinating cargo supplies to demand is a time-consuming business that requires intense labour and negotiation from a lot of people. During the pandemic, this has been covered by governmental departments and national carriers and have usually been organised on an ad-hoc basis

 

Operational Obstacles

Before a shipment reaches its final destination, operators have to address certain challenges including airport curfews, border restrictions and flight time limitations. If the aircraft is permitted to land in a certain country, the crew can be subject to gruelling quarantine and testing regulations. This could see them spending up to two weeks in a hotel room upon arrival causing severe disruption to the operator. Without their crew they are without an aircraft prohibiting them from making other vital cargo journeys.

These issues are likely to cause pandemonium for the future of passenger air travel when lockdown restrictions lift. It is likely that these issues will still be in affect and will continue to prohibit many people getting to where they need to go.

 

Preventative Measures for the Industry

Aviation is an industry that relies on governments to work collectively and cohesively. When it comes to air freight, there needs to be more of a concerted effort made to remain consistent from one country to the other. The COVID-19 pandemic has taught us that new procedures are required to prepare ourselves for future crises. A framework must be developed for all countries to work from and ensure that the transportation of vital supplies is not severely disrupted regardless of the critical threat level of the world.

The development of this framework will involve analysis, risk assessments, training sessions and the re-writing of standard operating procedure.  For aviation in particular, more consideration needs to be given to air cargo and how we can keep operations going in the face of a crisis.  The air cargo industry has proved invaluable during the COVID-19 pandemic; however, more support needs to be given to be able to provide that invaluable service in the future.

Brexit-uk-ireland

Trade with the UK and Ireland takes a tumble as Brexit Bites Back

In a statement from the Irish government, it was reported that goods shipments in Ireland have halved in number with the UK and doubled with France in the first month of Brexit.

This shift in numbers highlights just one of the new issues that have arose from the new trade deal particularly with Britain’s so-called ‘land bridge.’ Hauliers now carrying EU shipments on British motorways are now facing lengthy delays due to the new bureaucracy imposed at the borders which is making the option of transporting via sea freight much more desirable despite the lengthy wait for the shipment to arrive.

 

Bureaucracy at the Border

According to the Irish Prime Minister, Micheál Martin, just 17,500 trucks (an average of 45 per ferry) arrived into Irish ports in January from Britain which is half of the figure that arrived in the previous year and just a fraction of the capacity of the Irish sea ferries which have the ability to carry at least 200 heavy goods vehicles.

Despite the exceptionally low flow of goods from Britain, hauliers were required to provide 760,000 import declarations, which averaged at around 43 per truck, to successfully gain entry into Ireland. The Prime Minister confirmed that these low volumes were as a result of, “Brexit stockpiling, COVID-19 restrictions, newly introduced checks and controls and the emergence of new direct services with additional capacity on European routes.”

Sea routes that bypass Britain have doubled in the last few weeks, particular the Ireland to France route which has seen triple the number of options available to hauliers. Drivers have been purchasing standby tickets in the hope they may find a last-minute space on these commonly full sailings.

 

COVID Testing Chaos

France is now requiring that drivers arriving on Irish ferries as well as from England should have a negative COVID test taken within the last 72 hours. In response to this, Ireland last week set up test centres enabling drivers to receive free antigen testing before boarding ferries. The two test centres were set up in Dublin and Rosslare and are already able to test up to 1500 drivers weekly.

 

Customs Clearance Catastrophe

As many as one in five lorries arriving into Ireland from Britain do not possess the required paperwork for customs, animal health, food safety or security. This is causing hours and even days of delays to vehicles before they are permitted to proceed into the country.

“The challenge the new checks due to Brexit create for traders is fully acknowledged,” the office said.

The same issue is arising for Irish drivers trying to access Europe via Britain. A protest was held at Dublin Port last week appealing to European Commission President, Ursula Von Leyen to appoint an EU trade trouble shooter at the major trade hub.

At present, Britain’s new customs regulations have been relaxed to ease companies into the processes. With issues already causing hassle, it is set to get worse when the new regulations come into full force in July.

“Exporters are being urged to prepare for these changes now,” said the Prime Minister’s office, noting that some Irish firms faced, “severe difficulty adapting to the new systems of control.”

The office recognised that companies were often let down by their clients or even customs agents but emphasised that, “It is absolutely necessary that everyone in the supply chain knows and understands their roles and responsibilities….. It is the responsibility of the importer or exporter or their agent to ensure the required information and channels of support are available to hauliers when goods are stopped.”

To mitigate delays, firms transporting goods from Ireland to Europe are now being advised to use direct sea links and cut out transportation through UK suppliers and distribution centres where possible. As a result of this, the number of crossings for direct EU routes had more than doubled to 62 weekly sailings including 36 with France.

These routes have gained in popularity for the sheer number of heavy goods vehicles it can carry (up to 10,000) with the added option of drivers being able to drop their shipments off on the ferry and have them picked up by another driver in Europe avoiding the need to complete the sea voyage or source a coronavirus test.

post-brexit-red-tape-for3e-trade

Post-Brexit Red Tape for EU Trade

Despite the lack of lorries at borders since the UK left the EU Single Market and Customs Union, various sources have highlighted significant disruption to goods being transported citing post-Brexit red tape as the cause. This is having a significant impact on the trading of goods with plant or animal origins.

The Scottish fishing industry have been struggling with confusion and uncertainty following the implementation of the deal agreed on Christmas Eve between the UK and EU governments. Some firms have seen major delays with some of their shipments being halted until 18th January due to issues with health checks, computer systems and customs paperwork which is leading to a big backlog as reported by the Guardian. As a result of this, many seafood shipments heading to France and Spain have been rejected because of the delay.

Due to backlog, the DFDS, the UK seafood industry’s largest logistics provider has suspended its groupage export service which allows exporters to group their shipments together in one consignment. This was decided only a week after the new trade deal was implemented. DFDS are expecting to resume deliveries next Monday but are warning that the service would be expected to take a lot longer than what it would before Brexit and is highlighting the importance of correct and accurate paperwork.

Other companies such as Danish ro-ro shipping and logistics operator have said that they endeavour to fix IT issues and provide more training to their staff to help customers complete the required customs paperwork and achieve a smoother process.

DB Schenker Faces Challenges

DB Schenker has highlighted the significant challenges it has faced relating to the introduction of the new customs formalities that now apply to shipments as a result of Brexit. Following the suit of many other providers, they have also placed a hold on all shipments being sent to the UK.

The provider has found that only 10% of customs documents submitted with shipments have been complete and free of errors. To try and manage this situation effectively the company have redeployed staff from their Brexit Task Force that was established over a year ago.

In a statement, they said: “DB Schenker expects shipping volumes to increase further in January. Logistics service providers can only process consignments quickly if the share of correct and complete customs documents also increases significantly. Both shipper and consignees need to ensure that compliant documents are provided.”

Cross border e-commerce trade expert, Hurricane Commerce warned that the struggles faced by UK businesses in the first few weeks of the new regulations being implemented are the “tip of the iceberg” and that severe challenges should be anticipated.

This comes as parcel carrier, DPD, was also forced to pause its road service from the UK to Ireland and Europe until the end of last week due to customs clearance issues with post-Brexit parcels.

Customs Clearance Staff Shortages

Another challenge that firms have desperately tried to mitigate before 31st December was the sourcing of a sufficient number of customs clerks to be trained up and ready before the implementation of the new trading regime. Speaking last Autumn, Barney Weston, managing director of Oceanic Resources International warned that serious shortage was unavoidable.

On the current situation, he said: “I think most (firms) managed to get the bulk of their teams in place before the end of the year, but training and ‘filling the gaps’ continues. In most cases a Customs and Compliance Manager/ Brexit Head is in place (in firms) giving the strategic lead on how to handle the UK’s new trading relationship.”

He went on to say: “I know that in many cases training and upskilling is on-going, and there is still high demand for people to fill customs clerk positions, but it’s hard to accurately quantify this in numbers. Certainly, anyone who has ever sniffed a customs clearance in their career history is still worth their weight in gold!”

“I think the whole industry will have a clearer picture on the situation by the end of the month; so much was unknown heading into Brexit. I think that shortly people will know if they can handle demand with the current staff levels or if more will be needed.”

“One positive; I spoke with a top 5 UK supermarket earlier this week who we have been assisting in building their customs teams, and so far, everything is working.”

 

British International Freight Association have confirmed that its freight forwarder members appear to be managing the challenges with a spokesperson for the association saying, “(Members) are learning the new systems as they go – (there were) hard lessons learnt but they are getting to grips with the situation in exceptionally difficult circumstances. BIFA has always said that the preparing and lodging of customs declarations was the relatively easy part of the new procedures, and the bigger issues would be with non-tariff matters such as safety and security entries and SPS controls. That has already been seen.”

BIFA director general, Robert Keen commented, “We receive calls asking technical questions on procedures but so far as we can gauge the members are very busy but coping.”

Another source close to BIFA said, “(Evidence) suggests that cross border trade last week was very quiet; probably because of pre 1st January stockpiling and companies waiting to see how things pan out. The people I have spoken to expect increased volumes this week, but nowhere near normal. So, we probably won’t get to see the true picture for some time. And who knows what the new normal will be?”

 

Hauliers wanted

Hauliers Warned of Tougher French Customs Controls

Since the UK’s departure from the Single Market and Custom’s Union, the predicted delays on Kent motorways have thankfully been avoided.

Unfortunately, this is set to change with haulage companies being advised to brace for tighter controls at French border control which could potentially see the first significant post-Brexit border disruption. The warnings were shared during two conference calls between British Industry bodies and UK government agencies on the 7th January.

Shane Brennan, CEO of logistics body The Cold Chain Foundation told the BBC that it could take months for the new trade agreements to settle in: “Trade levels are very low. It’s growing from 10% on the 1st January to not yet 50% of the traffic flows that we would normally expect and even at those levels we are experiencing high levels of confusion, delays, businesses….. not being turned back, but being told if they come back with the same level of preparedness next time they will be turned away. So the feeling is that we are building to quite a significant potential disruption.”

Reports suggest that cross-Channel HGV traffic through the Port of Dover and Eurotunnel have been significantly low over the past week and is most likely a result of supply chains stock piling items. Despite low traffic passing through, the Department of Transport advised that only 1% of lorries arrived with the correct paperwork with a further 3% being sent to Manston for testing as drivers arrived without having the necessary negative COVID test result. The Road Haulage Association advised that one in five lorries were being turned away citing both reasons with only 2000 lorries currently crossing the border compared with normal numbers of 5000-6000. Based on these reports, it is clear that the border has not been used at its normal capacity and will be scrutinised in the preceding months as to how it copes.

Failing to Prepare

Chief Economist for the Chartered Institute of Personnel and Supply, John Glen, told BBC news that he was hearing from customs clearance agents in Dover that there was a distinct lack of preparation from businesses and their custom brokers. Whilst he expects this to change over time, he is aware that the people involved are “worried that demand will increase faster than capacity does.”

Elsewhere, the BBC have been reporting disruption at the Irish border with Andrew Kinsella, managing director of Gwynned Shipping, advising them of a backlog of 60 lorries waiting to be shipped to Dublin. He explained that many hauliers are discovering that their customers are not able to generate the special declarations that are required for their goods to cross the border.

“Whilst you don’t see queues at ports and terminals the reality is that these queues are developing elsewhere in our depot at Holyhead, in our depot at Deeside and in our depot at Newport in South Wales and lots of hauliers have depots in the proximity of ports.”

“There are a lot of issues about demarcation about who is going to arrange the export declaration with the UK revenue authorities, who’s going to arrange the import declaration, the hauliers then trying to arrange the import safety and security declaration to create an ENS number which helps you generate a PBN number so there has been a lot of everyone finding their feet.”

Trade Barriers

UK retailers expressed concerns that the new UK-EU trade deal has created trade barriers that are believed to have had a direct impact on cross-Channel and FMCG logistics. Traders now believe that they will be required to pay tax on imports and exports of specific goods including food and clothing that are not completely made in Britain. With so much confusion over paperwork regarding this, some parcel companies have made the decision to suspend their road deliveries to Europe.

The UK-EU trade deal was billed as preserving its zero tariff and zero quota access to the bloc’s single market; however, some major retailers using the UK as a distribution hub for European businesses could face possible tariffs if they re-export to the EU. This could see businesses concentrating on time-consuming workarounds or relocating hubs to the EU.

The British Retail Consortium is seeking short term resolutions for the challenge’s businesses face and is seeking dialogue from the government and the EU to mitigate the long-term challenges new tariffs will pose.

A Perfect Storm of Brexit Disruption

Scottish seafood exporters have described their situation as a, “perfect storm” of Brexit disruption with their industry on the brink of sinking. Donna Fordyce, chief executive of Seafood Scotland speaks on the subject:

“These businesses are not transporting toilet rolls or widgets. They are exporting the highest quality, perishable seafood which has a finite window to get to markets in peak condition. If the window closes these consignments go to landfill.”

According to Fordyce, the sector had already experienced difficulties as a result of COVID-19 and the French border closing at Christmas as well as “layer upon layer” of problems associated with Brexit. Without exports it is feared that fishing fleets will have little reason to go out.

“In a very short time we could see the destruction of a centuries-old market which contributes significantly to the Scottish economy,” adds Ms Fordyce.

Parcel Traffic Affected

Elsewhere DPD, the parcel delivery service has told the BBC that it has suspended its European Road Service due to the “increased burden” of customs paperwork required to be completed on shipments for the EU including the Republic of Ireland. Increased paperwork has seen 20% of parcels identified as “incorrect or incomplete data attached” causing them to be returned.

In a communication with their customers, the business has spoken of a “challenging few days” for the international operation and is planning on restarting the service pending a review on 13th January.

Brexit logistics

How will Brexit Impact Logistics Companies?

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:

 

Road

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.

 

Air

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.

 

Sea

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.

low tariffs after brexit

Brexit and the Logistics Industry: Infiniti Research Outlines Key Challenges

Well known market intelligence company, Infiniti Research have announced completion of an article on their website outlining what they expect the key challenges of Brexit will be on the logistics industry.

The deadline for the UK and the EU to negotiate a trade agreement is set to end on the 31st December.  With the deadline a matter of weeks away, no deal has been struck and it is looking likely that the UK will no longer have access to the single market and customs union. Due to the high amount of cross-border movement within the sector, this will undoubtedly impact the logistics industry in a significant way.  According to Infiniti, Brexit is likely to have severe consequences to even the big logistics companies. One significant example of how troublesome Brexit is set to be is through the importation of Britain’s petroleum. At present, over 25% of this commodity passes through the EU before arriving in Britain. With no access to the single market and customs union, a tariff will be applied on this product as it leaves the EU and enters the UK. The extra expense will have consequences on Britain and the EU as those extra costs trickle through the markets.

 

Brexit and the Top Challenges

Infiniti’s article outlines the following as the logistics sector’s top challenges as the UK leave the single market:

Reduced Trade

In 2019, 43% of the UK’s exports went to the EU which equated to £294 billion whilst 53% of the UK’s imports were from the EU. With the UK set to not have access to the single market, a rise in tariffs will discourage trade between the EU and these numbers will inevitably decrease. With EU trade, making up such a large percentage of the UK’s total imports and exports, this will undoubtedly make a huge dent in the country’s GDP.

Border Control

As free movement between the UK and the EU ends, tighter border controls are set to be put into place creating barriers for trade on either side. The UK government has warned of a 6-month disruption period with the worst of it being during the first 3 months. This will mostly be down to additional checks being introduced and the expectation that at the beginning drivers will not have the correct licences and shipments will not be accompanied with the correct paperwork. In an attempt to mitigate these delays as best they can, HMRC have announced there will be a period of leniency for the first 6 months where the new procedures will be simplified. The disruption to the border is already having a knock-on effect on the logistics industry. With businesses predicting delays in supply chains, they have taken to stock piling essential goods. For UK logistic companies, delays in the border will mean a decline in efficiency and potential problems with administration if the correct paperwork and customs fees are not paid.

Migration Control

Another potential problem that Infiniti has outlined will be stricter controls on migration with particular emphasis on EU workers. With freedom of movement coming to an end, citizens of EU states will no longer have the right to work in the UK and will need to apply for the necessary work visas.  This will translate to less EU workers working for UK companies. Road haulage is set to be majorly impacted by this, as the sector relies on drivers belonging to other EU countries. Additionally, drivers with UK licences will be required to apply for an international driving permit to transport goods within EU states. These permits will need to be issued for every journey that is made and they are capped in amount. This alone will significantly import the number of times UK drivers will be able to transport goods. Drivers with EU licences will be able to continue to use their licences in the UK but only for a temporary period.

Increase in Operating Costs

With no trade agreement in place with the EU, the cost to import fuel into the UK will rise which will impact on the price consumers pay at petrol stations. This along with added tariffs and duty payments that will need to be handled, managing shipments is going to become considerably more expensive than it was whilst the UK was in the single market.

 

Prepare for the Worst

Due to lack of direction from the government and the ongoing issue of the COVID-19 pandemic, logistics companies have been slow to prepare for the looming deadline of 31st December.  Businesses are being urged by experts to not, “sit on their hands and hope for the best,” and to instead do the research themselves to ensure that they know what is expected of them. Holding out for a trade deal at this late stage is wishful thinking and will be detrimental to businesses going forward. The UK government are urging companies and their affiliates to start preparing for the new legislation, understand what is required of them and to ensure that their associates are updated.

warehouse

Post Pandemic Warehouse Automation Market poised for Long Term Gains

An updated report by international market research provider, Interact Analysis, suggests that the warehouse automation market is set to make long term gains into 2023. 

Despite many industrial sectors suffering major losses as a result of the pandemic, COVID-19 has driven more people to turn to online shopping giving the sector a boost which is set to last well after the end of the pandemic.  This is causing warehouse managers to increasingly resort to automation solutions to provide a more efficient, productive and socially distanced working environment on the shop floor.

 

A Closer Look at the Numbers

Due to COVID-19, revenue for 2020 will continue to depress as completion dates for projects are pushed back to next year; however, the sudden surge in online shopping has caused a significant increase in order intake.  The second quarter order intake for Dematic has doubled compared to the same quarter in 2019, with the company planning to hire 1000 new staff by the end of the year.  In addition to this, the market size of the automation sector is set to be 6% larger in 2023 than pre-pandemic forecasts.  Although a lot of sectors such as manufacturing and apparel are predicted to see a drop in their market share – a combined decrease of $600m – the general merchandise and groceries are expected to make up for this fall, driving a significant overall net increase in the warehouse automation market.  Data from the report puts that increase at a combined market value of $3.5bn higher than pre-pandemic forecasts.  As a result of this, supermarket chains are now investing in their own warehouse automation.  With contracts to manufacture 38 automated warehouses by the end of 2025, Ocado are set to become one of the leading warehouse automation providers.

 

Software Revenues Under Threat

Another important finding from the report is that warehouse automation software revenue seems to be under threat.  An explanation for this is the growing trend among online retailers to bring warehouse execution and management software in-house.  Companies like Amazon, Alibaba and JD.com have been leading the way in this trend and other retailers are starting to follow suit.  As a result of this, we could see the market price of automation software commoditised forcing multiple systems integrators to tender bids for solution designs.  Research is suggesting that more innovation is required to suit specific sectors which off the shelf software is not providing.

Interact Analysis’ lead analyst for warehouse automation, Rueben Scriven says:

“The warehouse automation world is on the move. COVID-19 has devastated high streets and shopping malls, but there are already signs that eCommerce retailers are preparing to step in, with grocery retailers taking advantage of disused sites to augment micro fulfilment centres onto existing stores, bringing the fulfilment process closer to the customer, and attracting customers and jobs back in to the high street.  When it comes to the issue of automation software development moving in-house, we found that only the grocery sector will likely continue to heavily rely on existing integrator software solutions.  The way forward for warehouse automation vendors supplying online retailers is to increase their ability to tailor their software offering to individual customers.”

 

logistics-city

“Don’t Expand Congestion Charge,” Logistics UK plea as Government threaten to recoup TFL Losses

Logistics UK, a business group representing the logistics sector, made a plea to Rt Hon Grant Shapps MP, the Secretary of State for Transport, to outline the serious concerns they had regarding the then-proposed plans to expand the congestion charge. 

This plea came off the back of the Mayor of London, Sadiq Khan coming under pressure from Boris Johnson and other ministers telling him to make an expansion of the £15 a day congestion charge to the North and South circular roads, scrapping free travel for older and younger Londoners, and increasing TFL fares by more than previously agreed in return for a bailout package for Transport for London.

 

David Wells, Chief Executive of Logistics UK had this to say on the matter,

“Logistics UK is urging the government to refrain from including an expansion of the London Congestion Charge as a condition of Transport for London’s financial bailout package; logistics businesses continue to struggle financially and operationally as a result of the Covid-19 crisis and this additional burden would be a significant blow to the recovering logistics sector.  With little alternative to using lorries and vans to keep the capital’s businesses, schools, shops and homes stocked with the goods and services they need, these changes amount to a tax on deliveries and would therefore have little effect on commercial vehicle movements.  Instead, it would simply increase operating costs for those charged with delivering to meet the capital’s needs, including supporting the vulnerable and those self-isolating with home deliveries during this difficult time.”

 

Fortunately, Sadiq Khan has managed to secure a deal in the eleventh hour that sees the proposed expansion of the congestion charge scrapped and has secured an agreement with the government on a £1.8bn funding deal to keep TFL services such as busses and tubes running until March 2021.  Khan has been seeking a £4.9bn settlement for the next 18 months to keep public transport in London moving after the revenue collapse that Covid-19 brought with it.  Last month, Boris Johnson said that TFL were, “effectively bankrupt,” before the global pandemic began and blamed the London Mayor for the transport systems financial situation.  TFL defended Khan, saying that he had inherited a £1.5bn deficit from when Johnson, himself was Mayor.

Khan explained that although the agreed £1.8bn deal was, “not ideal,” he did add that, “We fought hard against this government which is so determined to punish our city for doing the right thing to tackle Covid-19.  The only reason TFL needs government support is because its fares incomes have almost dried up since March.”

Khan initially rejected the proposal from the government saying that it would have affected more than 4 million more Londoners.  He successfully defeated this proposal and all other proposals made against TFL in exchange for the bailout; however, the prices on fares will increase by RPI+1% in January as previously agreed.  Despite the Mayor’s success in defeating these proposals made by the government, another financial agreement will need to be negotiated prior to next year’s mayoral election.

Sadiq Khan also said that, “These negotiations with government have been an appalling and totally unnecessary distraction at a time when every ounce of attention should have been focused on trying to slow the spread of Covid-19 and protecting jobs.

The pandemic has had the same impact on the finances of the privatised rail companies as it has on TFL and the government immediately bailed them out for 18 months with no strings attached.  There is simply no reason why the same easy solution could not have been applied to London, which would have allowed us all to focus on the issues that matter most to Londoners, which are tackling the virus and protecting jobs.

I am pleased that we have succeeded in killing off the very worst government proposals.  These proposals from the government would have hammered Londoners by massively expanding the congestion charge zone, scrapping free travel for younger and older Londoners and increasing TFL fares by more than RPI+1.  I am determined that none of this will now happen.”