The Brexit process began when UK opted to leave European Union (EU) in January 2020 and subsequently the transition period ended on 31st December 2020 marking the country’s exit from EU Customs Union and Single Market. The transit of goods after the Brexit is subjected to export and import customs formalities that we currently witness right from the onset of January 1st 2021. Now, the process is more complex in terms of the additional customs data to be furnished while transporting to the UK from the EU and vice versa. Logistics sector in the EU and the UK has been worst hit post Brexit. The efficiency, output, delivery speed and last mile delivery costs reflect the growth and bottom line of the business and it got severely affected by the Brexit process.
Potential Impact of Brexit on Logistics Industry
More control at the border
Brexit has imposed stricter control on the border creating barriers at the border for the managing trade in both the EU and the UK. This certainly impacts efficiency as it influences inversely the speed of goods’ movement which in turn interrupts the delivery schedule and deadlines.
Some surprise introductions
Logistics businesses also face problems with the red tapism associated with the trade agreement came in to force on 30th December, 2020, just two days before the end of the transition period. Based on this newly signed agreement, it necessitates the need to send email with customs declarations for goods which takes in to account the ‘rules of origin’. Under this trade contract, goods crossing the border are not subjected to tariffs provided they have originated in the EU or the UK. In other words, it permits duty-free movement of EU and UK originating goods only. The standardisation tariffs by World Trade Organisation become operational for goods that don’t belong to this category.
How Logistics Service Providers tackle the present dilemma?
However, logistics companies don’t perceive it as a dead end but it’s a hiccup which can be dealt slowly but efficiently with the help of automating the manual tasks. While some have already reaping the benefits of an independent, self-driving supply chain without any human intervention, thanks to the introduction of AI, machine learning, IoT and so on. In fact, Brexit just pinpoints the need to automate functions. Also, by making sure that the parties involved should effectively coordinate the activities, particularly with regard to streamlining repeated processes in import and export through automation.
Also, service level obligations should be given utmost priority. As aforementioned, in the present scenario, the transit times are getting affected. As per the reports, logical companies pause EU-UK shipments due to post Brexit issues. The delays arising out of traffic congestions at border and customs clearance take a toll on the efficiency and speed at which shipments get transported and evidently affects the service level responsibilities.
On account of the recent changes in the EU and UK trade scenario, customers may not have clear knowledge about its impact on shipments. To make it more clear and remove the ambiguities resulting from this, improving shipment visibility and incorporating more transparency in the supply chain would certainly help to a great extent.
Last but not the least, optimising the supply chain for Brexit by considering the current constraints would also help plan and prevent further disruptions.