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Brexit - what do we know now?

11 October 2017

The vote to leave the EU has reportedly pushed various industry sectors into a state of flux. In a recent Freight Transport Association Logistics Report, members were found to feel ‘less than adequately informed’ about the potential impact of Brexit. Carousel and LSi Logistik - our sister company in Germany - are on hand to help you navigate these unchartered waters and ensure that your supply chain is protected wherever possible.

This blog aims to outline some of the key interesting events that have occurred since Brexit was announced in May 2016.

Whilst the full extent of Brexit is not yet fully known, its impact in the UK has the potential to be greater than anticipated. Whatever the outcome of the trade agreement negotiations with the EU, the UK may have to comply with extra import & export procedures and tackling these prospects is where Carousel and LSi Logistik can really add value to your supply chain.

So what’s on the table?

The UK Government intends to negotiate with the EU regarding the trading of goods and while the possibilities are still open, they could include:

  • Continuing to operate in the EU single market indefinitely or for a transition period
  • Agreeing a customs union with the EU
  • Negotiating a comprehensive Free Trade Agreement (FTA)
  • Operating under a World Trade Organisation (WTO) model

FTA agreements have historically taken some time to put together and that is the reason why many think it’s unlikely that a deal of this kind will be in place by the time the UK exits the EU. In which case, interim measures may need to be put in place.

What we do know is that whilst the situation for logistics rules are still unclear, we are confident that any existing rules in place today will remain where they are until at least March 2019. This allows Carousel and LSi Logistik time to consult with Clients, Suppliers & Partners to assess the developments required, and to ensure that Brexit is an opportunity for all supply chains to remain agile and responsive.

One possibility, if a new agreement cannot be sought, is that a World Trade Organisation (WTO) model may be adopted. Under WTO rules, the UK and EU would be obliged to apply to each other the tariffs and other trade restrictions that apply to the rest of the world. Whilst commercially, this may be the least favourable of all the options, many believe this is the one that will have the greatest impact and therefore the one that may need to be prepared for.

Alongside trying to agree a new arrangement with the EU, we also know the Government will be looking to ensure that the UK’s own customs/excise systems and processes continue to be effective and this is therefore something that needs to be analysed in more detail.

Undoubtedly, technology will play a key factor in how UK companies will look to deal with any impacts on Brexit; offering better visibility and efficiency across the supply chain. (Carousel’s recently launched a white paper on the subject of technology in logistics is available here for further reading on this subject).

The effect on supply chains – an overview

The introduction of a customs border between the UK and Europe will undoubtedly bring new costs to businesses; some of the initial implications could be:

  • Additional duty payments
  • Higher cost of import/export declarations
  • Increase in transactional costs

Brexit also has the potential to have a significant impact on the international freight market. These implications could include:

  • Increased inter-continental volumes
  • Decrease in inbound European volumes due to higher costs
  • Weaker sterling may boost export volumes
  • Increase in transit time for cross-border shipping
  • Added complexity in customs documentation and an increased demand for expert logistical services.

Looking more widely across the supply chain, other implications could include:

  • More manufacturing in the UK due to higher export charges
  • Increased local supply chains as EU imports become more expensive
  • Challenges hiring employees (particularly drivers) due to immigration rules
  • Migration of pan-European distribution centres to mainland Europe.

Businesses like yourselves will, understandably, be looking to explore the impact of Brexit as soon as possible, particularly looking both at what opportunities and challenges exist. And yet, with so much uncertainty about what the future holds, this is not a straightforward task.

We’re here to help!

With more than 45 years’ joint experience dealing with customs authorities, we are on-hand to help. The experts here at Carousel and at LSi Logistik are well-placed to help guide you through the Brexit maze, even at this very early stage.

Our well-trained staff exercise import and export customs clearance for hundreds of clients on a daily basis. We work closely with customs authorities and communicate with them daily via our direct contacts. To bring even greater advantage to our clients customers we have also installed bespoke agreements with customs authorities in non-EU countries such as Switzerland and Norway.

Additionally, trade bodies like the Freight Transport Industry provide a plethora of information and resources to support businesses, and also provide a central hub for all the latest updates so you can keep up to date.

What to do now? Get involved!

If you’ve got concerns about Brexit or want to know more about how other businesses are looking to prepare, then our forthcoming white paper which looks closely at the subject will be of interest to you.

The paper itself will include thoughts and insights from some of Europe’s biggest brands, and explore the anticipated impact exiting the EU will have from both a UK and German point of view.

If you’d like to be part of the research project, then please email us with your preferred contact details. Or, to just receive a copy of the paper when ready, register your interest by clicking the link below.

The findings of this research project will be launched at our next luncheon event in Mayfair, London. To register to attend please get in touch today. Spaces are limited so don’t delay!

Carousel and LSi Logistik will continue to keep you posted with all of the latest Brexit developments via our Insights Hub online. Should you have any queries or questions in the meantime please contact us on 01795 413 602 to have a chat with a member of the team.