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Nov 23, 2020 at 12:59 PMBlujay Solutions, the supply chain consultant, provides interesting insights into the upcoming Brexit. ‘Deal or No Deal’ or whether it will be a hard or soft Brexit with a trade agreement, logistics providers are preparing for all eventualities. Meanwhile, the number of customs declarations due is increasing by 8,000 percent. Customs formalities will arise again regardless of the outcome.
(Bad Homburg) Brexit is approaching – and with it profound changes in the economic relations between the EU and the UK. How these will be shaped depends crucially on the ongoing negotiations between both parties – but even now, future trends are emerging. BluJay Solutions, an expert in supply chain management, provides forecasts and recommendations for action regarding the development in logistics after December 31, 2020.
The Brexit negotiations are entering a critical phase: When the UK exits the single market and customs union at the turn of the year, customs declarations, export conditions, and tax regulations between the EU and the United Kingdom will change significantly – regardless of whether both sides reach a trade agreement by then or whether the minimum standards of the World Trade Organization (WTO) will automatically come into effect with a hard Brexit.
Massive upheaval
The massive scale of the impending upheaval is evident from a look at the statistics, as in international trade, the UK is not an island. Currently, around 70 percent of all goods sold in England, Scotland, Wales, and Northern Ireland are imported. Half of the imports came from the European Union in 2019 (value: 304 billion euros), while imports from non-EU countries amounted to 311.9 billion euros. During the same period, the United Kingdom exported goods worth approximately 193.7 billion euros within the EU single market and for 217.3 billion.
Whether hard or soft Brexit – automate customs formalities
In the case of a hard Brexit, customs formalities for trade with EU countries would drastically increase, explains Stefan Tärneberg, Director of Solutions Consulting at BluJay Solutions: “If the UK becomes a third country, the number of customs declarations will multiply. Last year, British companies had to fill out five million customs declarations; in the event of a hard Brexit, it would suddenly be 400 million – an unprecedented increase of 8,000 percent.”
The nature and extent of customs formalities depend on the establishment of a free trade agreement – and a Brexit without a trade agreement would be costly. Tärneberg adds: “In the best-case scenario, the UK will come away with a black eye. If an agreement is in place, customs formalities can be limited.” In a ‘No-Deal’ scenario, however, significant resources in companies would be tied up in filling out complex customs declarations. “Companies need to take matters into their own hands and automate customs declarations. Those who enter the new year unprepared will experience a massive shock on January 1.”
Goods flow: reroute instead of waiting in line
It is equally important to plan for the inevitable traffic jams between Calais and Dover starting January 1, 2021. Because no matter how the new customs regulations will look in detail – a bumpy start and long waiting times are to be expected. Whenever possible, especially in January and February, alternative destinations in the UK should be chosen to avoid the overloaded connection to Dover. Ports such as London Gateway, Tilbury, Harwich, or Newhaven are suitable alternatives.
Stefan Tärneberg summarizes: “Of course, this won’t work for every product. Fresh flowers from the Netherlands or fruits from the Mediterranean will not survive the long journey. It is also problematic when every additional kilometer counts for heavy transports. But for many companies, the crisis also presents an opportunity to make the supply chain more flexible and thus more resilient. Examples include the shared use of containers or an intensification of collaboration between shippers, logistics companies, freight forwarders, and customs agents in route planning. Ultimately, those who reach their goals despite the proverbially rough seas will benefit – even if it means deviating from the previously familiar course.”
BluJay Solutions GmbH
BluJay Solutions helps companies around the world achieve excellence in logistics and trade compliance – it is in our DNA. A synergy of data, networks, and applications provided through the BluJay approach. Our DNA platform supports the smooth supply chain of thousands of world-leading manufacturers, retailers, distributors, freight forwarders, customs agents, carriers, and logistics service providers.
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