Logistics companies in the U.K. will have almost two months to prepare for Brexit, after EU leaders recently extended the deadline for Brexit from March 30 to May 22.
However, several challenges caused them to be uncertain about how to move forward with import and export trading activity. A shortage of truckers in the country further complicates supply chain matters, despite having almost two months to prepare for the political exit. Fewer drivers will mean delays in shipments especially in between borders, where customs clearance will become more tedious.
How Freight Shippers Can Mitigate Risks
The International Road Transport Union expects higher transportation costs and reduced efficiency after the U.K. leaves the EU bloc. If recruitment remains a problem, freight movers should focus on improving the existing operational workflow. For instance, making sure that an automatic truck-loading machine for containers functions properly would somehow ease the burden of a dwindling workforce.
This helps the supply chain through relieving congestion especially at the Port of Dover, where almost 3 million shipments passed through in 2017. Once Brexit becomes formal, you should expect the busiest terminal in the country to have more traffic. Another probably yet long-term solution for a declining number of truck drivers involves the use of automated vehicle technology. By long-term, the technology will still have to clear several regulatory hurdles before it can be used in the logistics industry.
What To Expect In The Coming Months
If you haven’t done it yet, freight shippers with business in the EU should already have a U.K. Economic Operator Registration Identification (EORI) number. This allows you to move export and import products with EU countries. While it’s still uncertain if EU officials extend the deadline again, it’s possible that you would have to revamp bookkeeping for a new value-added tax on shipments.
Those who import shipments from the EU must now prepare for the added complications of cross-border policies. Aside from potentially longer customs clearances, companies should establish an EU arm. This entity will act as a third-party service to handle imports before they reach the U.K.
Other Contingency Measures
A hard Brexit remains possible amid the turbulent progress of negotiations among EU leaders. But as early as now, some trucking companies have made contingency plans to avoid the Port of Dover when that happens in the future.
Their solutions include switching to ocean-bound containers due to a potential truck congestion at the port, which could stretch as far as 30 miles of stationary trucks. This is just a conservative estimate after a hard Brexit. Since trucks will be held longer at customs borders, the tailback could even be farther during the holiday season. The switch to ocean shipping, however, could be a band-aid solution since the Dover port still accounts for 35 per cent of the roll-on, roll-off market in the U.K.
While UK officials are working to prevent a hard Brexit, logistics companies should anticipate major changes whether or not a no-deal Brexit takes place. How have you been preparing to reduce the disruptive impact of the referendum?