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By Tom Ashley, Client Services & IT Director
attended a seminar on Brexit, which helped to crystallise the main areas of
concern for UK businesses currently importing or exporting goods to Europe.
There were a number of points coming out of the seminar, which I would like to
The seminar was
hosted by ILG’s new owner, Yusen Logistics, with guest speakers James Hookham,
Deputy Chief Executive of the Freight Transport Association (FTA), and Peter
Ward, CEO of the UK Warehousing Association (UKWA).
With a deal
waiting to be voted on by
Parliament, there are five possible scenarios, four of which end
in no deal. While this may not necessarily mean there is an 80 per cent chance
of the UK leaving the EU with no deal, it does show that there is sufficient
risk of a ‘no deal’ outcome for us all to be planning for it.
Possible scenarios for the next phase of Brexit (click to enlarge)
Our thanks and acknowledgement go to the Institute for Government for the above diagram
Possible impacts of a ‘no deal’ Brexit
sector will find itself at the forefront of any waves coming from a ‘no deal’
departure from the EU. We’re advising our customers to pay careful
consideration to the following areas of potential impact:
Customs and administration
– HMRC currently handles around 90 million import/export declarations per year
relating to territories outside the EU. If EU shipments have to be included
after Brexit, that number would increase to 300 million. How will the system
cope with that rise in volume, and how will your business systems cope?
Port congestion – More
administration at customs will cause congestion at the ports. How will the
resultant delays affect the movement of your goods and what can you do to
mitigate against delays?
Transport and licensing –
changes in rules governing vehicles and driver approval could lead to a
transport shortage. If you have all your dispatch eggs in one basket, this
could pose a serious threat to delivery times.
Increased lead times – Delays
at the ports and a shortage of transport options will lead to increased lead
times, affecting the delivery terms you can offer your customers. How will this
affect your value proposition and what can you do about it? What discussions do
you need to have with your supply chain around lead times and stock building?
Warehouse space – With
increased lead times, the ‘just in time’ supply chain model may change, forcing
retailers to carry more stock. If you decide to stockpile, do you have access
to more warehouse space, are you geared up for the extra stock management, can
your suppliers meet your increased stock requirement and what will the effect
be on your P&L?
Recruitment and staff retention – If Brexit brings about a change in the rights of EU nationals to
work in the UK, how much of your workforce will be affected? And how will it
affect your ability to recruit in the future?
Rising costs – How exposed
are you financially to a fall in the value of the pound? New duties and taxes
could also come in, pushing up your costs and forcing a rethink of your pricing
model. You may find that the terms you currently offer on delivery and returns
become unsustainable and need to be revised. What effect will that have on your
How is ILG preparing for a ‘no deal’ Brexit?
looking closely at all these threats for some time now and have been putting
contingencies in place to help our customers ride out any impacts from a ‘no
deal’ Brexit with minimum disruption.
Warehousing – Our
warehouse capacity has expanded considerably in the last five years and now
that we are part of Yusen Logistics, our warehousing capability extends to offer
a Global capability. This allows us to support growth in stock holdings as well
as a allowing you to split your stock profile between the UK and Europe if
that’s your strategy.
Admin resources – Because
we already ship to the rest of the world, our experience of the customs
administration outside the EU enables us to assess the possible increase in
customs requirements in the case of no deal. We have made sure we have the
resources to handle them and can offer customers first-hand advice.
Human resources – There
are a number of initiatives taking place, aimed at protecting the rights of
non-UK nationals to work and live in the UK post-Brexit. We are keeping a close
eye on this situation and working with employees to offer them support and
Transport – We are
autonomous in our choice of transport and delivery providers and have good
relationships with a range of different carriers. If there are backlogs at the
ports, we can switch to airfreight to make sure our customers’ goods reach
their destination on time.
Lead times – We are
talking to our suppliers to get a clear picture of the likely outcome of a ‘no
deal’ scenario on lead times. Our use of different transport modes enables us
to mitigate against increased lead times, finding the fastest delivery solution
from a choice of options.
How can you prepare for a ‘no deal’ Brexit?
While we have
the resources in place to cope with the expected impacts of a ‘no deal’ Brexit,
and are working with the FTA and UKWA to lobby Government to secure the best
deal for our industry, we cannot do this alone. Knowledge is power and every UK
business that trades with the EU would be well advised to carry out its own
research and work together with any third parties to ensure there are no gaps
in their Brexit strategy.
the first priority. The more you know and understand the implications of Brexit,
the better you can prepare. The efficiency and accuracy of your admin is
important; for example, by making sure your commodity codes are kept up to
date, you will help to avoid inaccurate customs declarations, saving a lot of
time and money. Similarly, by keeping your logistics partner informed of any
planned increases in stock, you can avoid the risk of space being unavailable.
Below are some
useful links to more information on this subject. I strongly recommend that you
read them and talk to your logistics partner about any concerns you may have.
Together we can plan your path through Brexit so that ‘no deal’ doesn’t have to
mean ‘no business’.
Chambers of Commerce Guide
about Brexit? Talk to ILG today on 0844 264 8000.