As 29 March draws closer, carriers have been getting ready for the UK’s withdrawal from the EU. In the latest Precision Report we have a look at carriers’ Brexit preparations.
It is the end of February and we are no closer to knowing the terms under which the UK will withdraw from the European Union on 29 March.
The next meaningful vote on Prime Minister Theresa May’s Brexit plan will take place on 12 March. This Tuesday, the PM told Parliament that if they reject her deal, there will be a second vote on 13 March. This vote will allow members of parliament to decide if the UK can leave the EU without a deal. If Parliament rejects a no-deal withdrawal, Ms May has promised a further vote on 14 March. This vote will consider extending Article 50 and pushing back the 29 March withdrawal date.
There is a lack of clarity on what post-Brexit trading conditions will look like. Despite that, carriers have been planning in order to minimize disruptions.
Should the UK leave without a deal, the trade between the UK and the EU will become more complicated. Increased taxes and duties are likely, as are customs delays. Other regulatory issues include driver licenses. Carriers may need to do driver swaps at borders. This would negatively impact delivery times. In such a situation, it would take longer for carriers to process packages through their networks and on to the final recipient. As a result, carriers may need to revise on-time guarantees for some cross-border deliveries.
Deutsche Post DHL has hired hundreds of new staff to manage customs if no Brexit agreement is reached. In a recent interview with Reuters, John Pearson, chief executive of DHL Express, said that the carrier “began hiring in earnest about three months ago.” DHL has been adding about 50 new workers a week.
“These are people on the ground in the hubs. They are coming onto our payroll sitting in a hub facility probably processing customs paperwork to make sure that the goods are cleared quickly,” he said. “We are recognising that if, in a no-deal scenario customs will be the be all and end all, then we don’t want to be caught short.”
Furthermore, Frank Appel, CEO of Deutsche Post DHL told CNBC that the company has contingency plans in place whatever the Brexit outcome. He said that DHL is “very well prepared, even for the worst case” including a disorderly withdrawal.
Customs clearance is a concern for trade between the Republic of Ireland and the United Kingdom, including Northern Ireland. Approximately 15 percent of Irish exports go to the UK. This rises to 40 percent for the agri-food sector. What’s more, in 2016 around 3,400 Irish exporters traded exclusively with the UK.
Trade with Ireland is important to the UK too. In 2017, Ireland accounted for 5.5 percent of all UK exports. In addition, in 2017 Ireland was the UK’s 5th largest export market as well as the 9th largest source of imports.
In an interview with the Irish Times, Des Travers, chief executive of DPD Ireland, said that customs clearance will be the biggest hurdle for companies shipping between Ireland to the UK. Travers told the Irish Times that DPD Ireland had been establishing a customs-clearance team.
“We are working very closely with both Irish customs and HM Revenue and Customs to develop solutions to ensure that our customers’ parcel traffic can still move with relative ease between the two countries.”
“We are working with our European colleagues to develop new line-haul routes for our trucks to ensure that we can still provide a timely service to mainland Europe without having to deal with customs clearance via the UK,” he said.
DPD Ireland will also have a platform to collect of duty and taxes from consignees for shipments coming into Ireland from the UK.
“The business is hugely focused on ensuring that we have a robust mechanism in place for dealing with any Brexit outcome,” he added.
Global carriers UPS and FedEx are both planning for all potential Brexit outcomes.
Walter van der Meiren, Customs Brokerage Director, UPS Europe called Brexit a “absolute priority” for the carrier.
After the referendum, UPS assembled a cross functional group of subject matter experts. Their task has been to consider solutions for all conceivable post-Brexit trade relations.
“UPS is preparing for every possible scenario, including a no-deal,” he said. Van der Meiren, however, also noted that UPS does “not control all parameters.” To this end, UPS has made contingency plans to deal with whatever Brexit outcome occurs.
FedEx Express has also undertaken Brexit preparations. Like UPS, FedEx Express set up a dedicated cross functional Brexit working group. This group has been assessing potential impacts and planning to mitigate these.
FedEx Express has also made significant investment in the Paris Charles de Gaulle hub with new sorting facilities and expanded capacity. This is the largest FedEx facility outside of the US.
Bert Nappier, President of FedEx Express Europe, noted that Brexit uncertainties remain. But he believes that the company’s experience will allow them to meet customer expectations.
“Brexit, to take the elephant in the room, remains uncertain, but FedEx has a long history of experience in international, cross-border logistics, which gives us great strength here in Europe for supporting customers through whatever reality we face in the coming months and years,” Nappier said.
Companies shipping between the UK and the EU should consider leveraging multi carrier software solutions to provide consistent service to customers. Multiple carriers can give businesses an advantage, providing more shipping options as well as competitive rates. Using multi carrier shipping software, businesses can seamlessly switch between carriers while maintaining enterprise-wide shipping procedures. Furthermore, as carriers add new capabilities or new routes, you will be able to leverage these too.
Wherever — and whatever — you ship it is critical to ensure that your customers receive their goods in a timely manner. Multi carrier solutions make it easier for businesses to meet customer expectations while complying with the appropriate global trade and customs regulations.
QAD Precision (Precision Software), a division of QAD Inc., provides industry-leading global trade management, transportation execution and multi carrier shipping software solutions from a single, integrated platform. Preeminent industry leaders in every region of the world rely on QAD Precision’s global support centers to leverage thousands of carriers and manage millions of shipping transactions every day. Our open architecture easily integrates with Enterprise Resource Planning, Warehouse Management Systems and legacy solutions. An ISO-certified company, QAD Precision assists companies to minimize shipping costs, optimize first mile and last mile deliveries, automate free trade agreement compliance, avoid customs delays and mitigate the risks associated with dynamic trading environments to maximize their competitive advantage. QAD Precision’s customers span multiple industries including banking and finance, life sciences, high technology, retail, industrial, automotive, higher education and public sector as well as logistics providers. For more information about QAD Precision, visit www.precisionsoftware.com.
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