Logistics News

Understand the implications of Brexit as negotiations come to an end

The deadline for Brexit negotiations is rapidly approaching. The last weeks have seen crucial talks resume between the UK government and the European Union (EU) as they try and reach a deal before Britain leaves the EU on January 1st. So, what does it mean to you and your business if a Brexit deal will not take place? We give you the latest news as well as an expert opinion on the current situation.

14 December 2020

14th December 2020 

The UK’s exit from the European Union, known as Brexit, will inevitably cause disruption and change to the status quo – whether it’s logistics, travel or commerce. The current negotiations might cause problems and disruptions for your logistics – especially if you do not have the necessary guidance around customs services and rules around tariffs. If you are transporting goods in and out of the UK, the current negotiations can have a big impact for the trade of your products.

In the last few weeks, a lot of negotiations have taken place - and it seems like the negotiations are coming to an end. Boris Johnson, Prime Minister of the UK, and Ursula von der Leyen, European Commission President, laid out on Sunday, 13th December, both parties are willing “to go the extra mile” at this point (1). However, there are still topics unresolved and implications for businesses are unclear.

So, what happens next?

The transition period will end on December 31st, and the UK will then leave the EU's Single Market and Customs Union. Trading for businesses will change, but to what extent, we don't know yet. If there is a deal, the only change would be if tariffs and customs duties will be applicable or not. There would be a customs border from this date, deal or no deal, and all border procedures and formalities (including the need for customs declarations) would be obligatory.

In a no-deal scenario, the customs duties become an extra cost in addition to the border formalities and non-tariff barriers that will be demanded from January 1st. These border formalities include customs declarations, safety and security declarations and a range of other documentation, often referred to as 'paperwork'. The latter will be introduced regardless of a deal or no deal.

Tips to ensure a smooth custom clearance

We talked to our Brexit expert, Lars Karlsson, Managing Director and Senior Advisor at KGH Global Consulting, A Maersk Company, on what a no-deal scenario would mean for your business. Together with him we have developed this simple checklist to help you to manage the potential challenges ahead:

  1. Thoroughly map and audit your supply chains – specifically lead times.

  2. Audit international contracts – specifically agency and distribution agreements and liability for damages and penalties.

  3. Review internal skills and understanding for dealing with documentation relating to import and export.

  4. Review and update International Certifications, if needed.

  5. Make sure your carriers are Brexit ready – discuss with them their Brexit understanding and plans.

  6. Identify and prioritise key business interruption risks.

  7. Develop a 'live' contingency plan and regular update programme.

Also, as a business, you need to ensure you are providing all this information as of January 1st when trading with the UK:

  • Commercial invoice

  • Economic Operator Registration and Identification (EORI) number

  • Product Description

  • Commodity Codes

  • Country of Origen

  • Consignment Value

  • Reason for Export/Import

Flexibility in logistics options is crucial to managing the flow of goods

Uncertainty makes demand volatile and supply chains more complex. We are already experiencing long queues of trucks to cross the border between the UK and France, as some companies are rushing to stock up goods before the new regulations enter into force. A no-deal before the end of the transition period means that there will be tariffs on both sides. From the 1st of January, mandatory border controls, additional security checks and extra paperwork will likely result in more border delays and continental trucking congestion. A high level of flexibility in logistics options is therefore crucial to manage the flow of materials and goods to minimise risks for business interruptions along supply chains.

We have, as customs and border experts, helped many companies to get ready for Brexit. Any advice for all companies is not only to plan for day one – but also prepare a backup-plan on how to get extra capacity and expert advice if needed. The customs expert and intermediary industry are close to reaching its full capacity for day one, and when as much as 70% all companies involved still have not prepared at all, it is essential to secure your need as soon as possible. Make a plan for all of 2021, secure support and help for Q2-4 already now. Companies also need to look at the entire supply chain and value chain, making sure that your service providers, partners and clients have done their preparations.

Lars Karlsson, Managing Director and Senior Advisor at KGH Global Consulting

This is how Twill and its partners help to keep your supply chain stable during Brexit

Being supercharged by industry leader, Maersk, we aren't just moving your sea freight; we can also connect you with experts to discuss any of the queries you might have related to Brexit to help you minimise any potential friction and disruption in your supply chain. This goes from a range of Brexit related services from Brexit Go|NoGO Analysis-Support, to customs operational set-ups, duty optimisation, customs compliance models, IT systems support and tools, customs education/training. Additonally, we have also set up a special guide for your small or medium-sized business. 

Sources:

  1. BBC: https://www.bbc.com/news/uk-politics-55292890

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