PREPARING FOR BREXIT 2020: THREE LESSONS LEARNED

By John Lucy, Manager of International Transport & Trade Procedures at FTA       

For the third time this year, the date the UK was due to leave the EU has come and gone. And it is fair to say the complexity, vulnerability, value and importance of a secure, robust international logistics network has never been higher in the minds of businesses and governments, both in the UK and across the EU. In this article, John Lucy, the Manager of International Transport & Trade Procedures at FTA, the voice of the UK logistics industry, will provide an update on the latest Brexit developments and share three key lessons learned ahead of the UK’s newly scheduled departure date from the EU: 31 January 2020.

 

Crucially for business, the government’s decision to postpone the UK’s Brexit date does not rule out a no-deal outcome; this still remains possible at two points next year. Firstly, if the withdrawal agreement has not been ratified by the EU and the UK by 31 January 2020 and an extension is not requested, granted and accepted or article 50 is withdrawn, and secondly, if the withdrawal agreement is ratified by both sides, but the transition period terminates on 31 December 2020 without a free trade agreement in place.

 

Currently, the withdrawal agreement ratification process has been paused in the UK. Parliament is now dissolved in preparation for the general election scheduled to take place on 12 December 2019. This means that the ratification process will not restart until at least 13 December 2019. For exporters and the providers of international logistics services, the Brexit preparation dilemma continues into a third year with a very short window after the election in which to prepare for leaving the EU, if the 31 January 2020 date is adhered to.

 

FTA has been at the forefront of knowledge transfer to its 18,000 members throughout the Brexit process. Through our workshops, seminars, webinars and daily conversations with members, we have shared details of the new border procedures and documentation which will be required in the event of a No Deal Brexit with industry. And through these conversations, we have seen the growing frustration and confusion for all stakeholders in international supply chains, as they attempt to mitigate risk for their businesses during this unstable period.

 

As 2019 draws to a close, it may help exporters with their future Brexit preparations to reflect on what we have learnt from this year’s events. We need to separate Brexit fact from fiction and plan for 2020 with this information.

Firstly, we should remove some Brexit myths from future decision making. The fact is that any type of Brexit arrangement which involves leaving the EU customs union and / or single market will result in trade friction i.e. new procedures as freight crosses customs territories. Consider that Turkey is in a customs union with the EU, but trucks crossing into the EU can take a day or more to proceed, or that Norway is in the single market and has the “smartest” border within the EU, but trucks will take one to three hours to be processed on average.  Delays to transport are likely after Brexit and should be planned for.

Secondly, there is no immediately available “technological” solution providing infrastructure-free UK / EU borders. All customs authorities need to know when freight is leaving or arriving on its territory; this will require pre-entered import or export information on respective customs platforms for processing. For driver-accompanied freight – which is by far the biggest modal carrier of UK exports into the EU – this will mean drivers having to stop at designated offices of departure. They will then have their simple or transit customs documents either scanned or wet stamped when they leave the UK and enter the EU with exports or vice versa for imports. International customs documentation in general tends to be paper based in general and the digitalisation of such documents is still in trial stages. In any case, a move to digital documentation would require the legal adoption by all trading nations to be viable; this will not take place overnight to suit the UK’s immediate needs.

Thirdly, we can dispel the myth that there will be no checks on freight as its crosses into the EU. While the UK’s position has been to prioritise Roll On, Roll Off (Ro-Ro) port traffic flow over fiscal controls for a period of time post-Brexit for UK imports, this is certainly not the case for the EU. All UK exports must be accompanied by the relevant customs, safety and security declarations, plus any licences or certificates relevant to specific cargoes. Additionally, animal or plant-based products will need to be presented for inspection to a relevant EU border inspection post. EU code requires 100% documentary checks and 20-50% physical checks on certain products – meat, chicken and even honey!

The most important lesson exporters can learn from this year is that they now have far more clarity on their international supply chain risk areas than before. Essentially, they can better estimate the new areas of costs associated with Brexit stockpiling, rerouting, modal changes, customs declarations, special licences or permits, changes in tariffs on goods and longer transit times. These will all have an impact on how businesses will continue to trade post-Brexit.

Efficient logistics is vital to keep Britain trading, directly having an impact on more than seven million people employed in the making, selling and moving of goods.  With Brexit, new technology and other disruptive forces driving change in the way goods move across borders and through the supply chain, logistics has never been more important to UK plc.  A champion and challenger, FTA speaks to Government with one voice on behalf of the whole sector, with members from the road, rail, sea and air industries, as well as the buyers of freight services such as retailers and manufacturers.