What a no-deal Brexit and trading on WTO terms really means
The UK and the EU are entering into a key phase of negotiations in terms ...
Brexit has been something of a rollercoaster ride: from prime minister David Cameron initiating the process and throwing in the towel when it didn’t go according to plan, to Teresa May elongating it with futile negotiations to no avail, through to Boris Johnson trying to push through a withdrawal settlement in a matter of months.
The pandemic may have temporarily dampened Brexit’s potency, but the clock continues to tick.
So how will the post-Brexit era affect the logistics industry? The Loadstar asked Grant Liddell, business development director at Metro Shipping, an independent UK logistics provider.
Mr Liddell has worked in logistics for more than 30 years, ranging from deepsea and overland to general freight management.
“Trade won’t stop. It’s what we do. We’re a trading nation and we have been for the last 400 years”. Grant Liddell
What is your stance on the Brexit situation?
“The UK now needs to ensure that a trade deal, alliances and networks are agreed with each individual country. A daunting task, but one where the logistics and freight industry is central in ensuring Britain continues to function as a prominent global player.
“You must note that Brexit isn’t just about leaving the EU, it’s about losing 41 trade deals covering 72 countries. Is it likely there will be a trade deal with Donald Trump in 2020? I doubt it.”
So how will this affect trade with nations outside the EU?
“Without a EUR1 – something many people are forgetting – which allowed us to trade with these countries without imposing tariffs, there will be full duty rates with these nations too.”
Can technology anticipate and overcome the logistical challenges of a ‘hard’ Brexit?
“Technology will be key in the success of businesses operating in the post-Brexit world. Whether traders, importers, exporters, freight providers, customs authorities or other related businesses, data will be required and usually delivered ahead of the actual delivery of goods to their final destination.”
Is technology of more benefit in the case of a no-deal Brexit?
“The digital movement of data with customs at borders will be key to either outcome. You must realise that the physical movement of goods and cargo does not change. If this fails, either scenario will fail, certainly in the short term.
“HMRC and the government are developing Goods Vehicle Movement Services (GVMS), while transit accompanying documents (TADs) will become prevalent, a Customs Comprehensive Guarantee (CCG) will become a necessary evil and a New Computerised Transit System (NCTS) is needed to potentially close off the processes.
“The movement of goods will not be an obstacle – the movement of data related to these goods will.”
How are you planning on using these technologies?
“I can’t give too much away. However, Metro has been, and will continue to be, at the forefront of digital solutions, integration with participants in the supply chain, artificial intelligence and a global consistent standard to work with. Get this right – which we will – then we will continue to be at the forefront of the industry and delivering both reliable services and customers’ expectations.”
Will the potential complexity of the supply chain impact the logistics industry post-Brexit?
“Generally, from a freight provider’s perspective, the more complexities and milestones that enter global trade, the better. The more complex and irritating the supply chain and European and global trade becomes, then there are additional revenue streams created, as we offer solutions and add further value services to the supply chain.”
How much in the way of revenues do you think the UK freight and logistics industry stands to make from additional paperwork?
“Based on a need for a reported half a million additional customs entries per day, at an average cost of £35 per transaction, equates to £6.5bn in addition revenue for the industry. Obviously, there are related costs to consider. “
And who is paying?
“Ultimately, the traders and importers will be paying for these additional costs. However, it will undoubtably have to be passed on to the likes of you and me – the end consumer.”
Are EU logistics businesses also hoping to profit and develop technological solutions in the same way as UK companies?
“Good question, with a simple answer: yes. They will have to, from day one of the UK’s departure. In fact, the EU has stated full customs submissions will be required from 1 January 2021, with no leniency on implementation for goods entering or leaving the EU to the UK. With the value-added service delivered by freight providers, costs will be attached.”
Do you think Brexit will leave enduring problems for supply chain performance?
“As the UK, European and global situation unwinds and, hopefully, progresses towards a better place, then the world of trade, transport and logistics will adjust to accommodate. It’s a dynamic and flexible industry that drives the global village and is key to underlying events, supply chains and the movement of goods. Whether it’s a vaccine from North America to go around the globe, or hi-tech devices from Asia, goods will continue to move. And so will European trade, facilitated by the freight and logistics sector.”
Do you believe the disruption and delay to be a long-term problem?
“In my opinion, the delays, issues and focus Brexit has had will be short-lived after Q1 21. 2020 has been the most unusual year for generations – 2021 I suspect will be a much more pleasant time to exist in and thrive, whether in the UK, Europe, or the rest of the world. There probably will be a month of pain, but that will soon be dealt with and another ‘new normal’ will be set in place and evolve to its surroundings. Well, let’s hope so anyway, for my children’s sake…”
Would you suggest that the logistical challenges from 1 January have been overstated by the media?
“The media continues to instil hysteria and will in the coming months. It is widely reported that there will be delays; with carnage at ports, shortages of food, chaos at borders, long queues of lorries parked on our motorways, Kent ceasing to function and a general shortage of essential products. Will this happen? I doubt it, as it can’t occur. Current circumstances with Covid-19 and what may come relating to this crisis, will not allow it. There are more important things at play.”
In what ways will the UK’s logistics providers landscape change?
“The final impact will depend on whether the EU and UK agree on a deal. Either way, a customs submission will be required for all movements, but the outcome could vary on a ‘no deal’ or ‘deal’. If trade volumes are affected and less cargo moves across our borders, there will be a negative scenario for the whole logistics industry. From my experience, with disruption and volatility comes opportunity. I would be hopeful that increased global trade post-Brexit, and the post-Covid-19 crisis for that matter, and will cause the industry to flourish.
“Logistics providers are agile and adaptable, and will facilitate the UK trading with Europe and the rest of the world. It is over to the government, the EU Commission, and negotiations to dictate the outcome driven by the consequences of their decisions. I am and will always be an optimist – so short-term pain will lead to long-term gain.”