BREXIT : a need for flexibility in an unknown environment

BREXIT : a need for flexibility in an unknown environment

Nick Lowe, Dachser UK Managing Director speaks to International Trade Magazine about the need for businesses to be adaptable, alert and agile in the modern climate.

The outcome of the referendum in June has set the UK on an unexpected and uncertain course towards a departure from EU membership. As momentum increases, with a clear indication from the Prime Minister of the intended time-frame for the triggering of Article 50 and a seemingly endless 24 / 7 dialogue about how hard or soft our Brexit will eventually be, there will inevitably be an increased feeling of nervousness and trepidation amongst those responsible for managing and optimising their companies’ European supply chains.

Whatever the outcome and whatever the shape of our future political, economic and trading relationship with the EU will be, one thing amidst all the uncertainty is truly certain: for logistics service providers, a flexible and customer–centric, service-driven approach and mind-set will be essential in order to deal successfully with the up-coming challenges and take full advantage of the opportunities which will also materialise.

Whether we stay in the Single Market or not, once we leave the EU itself, our involvement in the EU Customs Union will, as is quickly being realised now, surely be over. That means Customs clearance, for the first time since 1993, will be re-introduced for all imports coming into the UK from the EU. Not to forget export clearance procedures for our all-important export trade to the EU, and the need for our exporters’ EU customers to undertake import Customs clearance when buying products from the UK. Even taking into account the simplifications in Customs administration processes which have proliferated in recent years, and which no doubt still have further scope and potential for further simplification, they still represent a barrier to trade, making it more administratively difficult to do business compared with the border-free environment that supply chains have adapted to and which have vastly contributed to a seamless and integrated export and import environment. For the logistics industry, Customs accreditations, including Authorised Economic Operator status, will assume an ever greater importance and significance as the requirements for Customs clearance services grow accordingly.

Coping with the implications of the re-establishment of a UK Customs border with the EU will necessitate significant re-engineering of EU –UK supply chains in many cases, and decisions will need to be taken on a ‘risk-management’ basis well ahead of the time when there will be clarity about what the future landscape will look like, if supply chains are going to be able to adapt quickly and seamlessly when the change comes. UK contract logistics, warehousing and distribution services could be even more is demand as UK stockholdings within pan-European DC’s on the Continent are brought back to the local UK market in order to serve UK customers without fear of possible clearance and lead time delays.

Whilst Europe as whole, including the EU, will surely continue to be a highly important trading partner for the UK, as it is now, despite the re-shaping of supply chains, there will also be more and more focus on overseas markets. This will create more opportunities in air and sea freight forwarding for logistics services organisations as part of an overall provision of UK, European and global supply chain and logistics services. At the same time, specialist operators, if they market their services effectively, will also be able to thrive.

Logistics service providers and freight forwarders will need to be alert and agile, adapting their own networks, resources and skill-sets to be able to meet their customers’ changing needs.