A spokesperson for Logistics UK, one of Britain’s largest logistics associations, shared the organisation’s views on the Brexit agreement. According to them a deal is a welcomed outcome but companies are now faced with multiple barriers.
What is your overall evaluation of the deal? Who do you think gets the most out of it?
Having reached a deal is great news as it removes the risk of tariffs being placed on almost every item imported from the EU, which would have raised prices and slowed the rate of economic growth. The transport chapters of the deal preserve connectivity between the UK and the EU and will enable the transport industry to fulfil its function as an enabler of trade. However, the market access conditions are more restrictive than they used to be for UK hauliers and airlines.
Even with a free trade agreement in place, there are still many changes businesses need to adapt to as the deal does not remove the need for customs formalities and other border requirements.
What are the main changes in trade from the 1st January and how will logistics and supply chain be affected?
Since 1 January, businesses exporting goods between the UK and the EU must fulfil customs formalities for each consignment. This requires precise and accurate data, access to IT systems (both on the UK side and on the EU side) and coordination between the different entities involved in any supply chain. Completion of customs formalities must be evidenced by reference numbers or confirmation documents that need to be handed over in due time to the entity in charge of presenting the goods at the border, for instance the road transport company.
Safety and security declarations – a requirement that was introduced after 9/11 but doesn’t apply to intra-EU trade – are now required to move goods between the UK and the EU; for a single truck, hundreds – sometimes thousands – of such declarations must be submitted. In addition, many categories of goods will be facing product-specific requirements, such as sanitary and phytosanitary documentation and checks for a large number of agrifood products.
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This set of requirements fully applies from day 1 to outbound trade; UK import requirements on inbound trade into the country are being phased in in three stages – which doesn’t exempt traders from keeping accurate records to be able to complete full customs declarations within six months of the import.
GB companies that typically don’t consider themselves as exporters are also facing a brand new set of requirements (customs, safety and security, sanitary and phytosanitary requirements) to sell their goods in Northern Ireland.
The first week of January, ie. the first week under the new trading conditions with the EU, has seen particularly low volumes of trade and traffic, even more so than a regular year due to stockpiling measures before the end of the transition period. A proper assessment of the impact of the end of the transition will have to be conducted over a longer and more representative period of time.
Do you believe companies from both ends of the Channel had enough time to prepare and can we expect some delays over the coming months?
The general principles underpinning those processes that aren’t affected by the free trade agreement have been known for several months. Businesses could use them to design parts of their contingency plans.
However, these plans could only be completed and become fully actionable after detailed procedures, IT systems and official guidance were made available, which happened very late in the day (sometimes later than mid-December).
Besides, certain key elements of the new trading relationship with the EU are governed by the free trade agreement, which was published on 26 December, ie. three working days before its content became applicable.
The logistics industry is flexible and resilient and wants to meet the needs of its customers so it will adapt, but the timeline makes it an incredibly tall order for changes of this magnitude.
Several of the new IT systems and platforms have not been tested in real conditions so the first few weeks after the traffic and volume of trade go back to regular levels will constitute a live test period. ✷