There’s been endless buzz about the impact that Brexit is having on economic and diplomatic relations throughout the rest of the world and there is genuine worry in the logistics industry. It’s no surprise given the immense power that the UK holds as an importer and exporter, and the numerous treaties it has in place with countries around the world. If your company is based in America and exports from the UK, or frequently has shipments grouped with UK imports and exports, you could be impacted.
What Brexit Means for Trade Agreements
The UK has been an integral part of a huge trading bloc that negotiated very favorable trade treaties and import duty rates for several countries for decades. Because it’s no longer part of the European Union, these agreements are now nullified. New treaties will have to be signed with the numerous countries that the UK trades with. Because it no longer has the bargaining power of the entire EU behind it, importers face a very real possibility of a no-win situation because of higher duty rates and increased costs for shippers. American shipping companies looking to gain a bigger foothold in the UK may find themselves out of luck as goods move more slowly and shippers look for more local logistics solutions.
The automotive sector is expected to be hit the hardest since Germany alone accounts for $40 billion of trade, with the US and China trailing not that far behind.
Brexit’s Imminent Impact on Supply Chain Management
Ideally, supply chain management in intermodal transportation has an efficient international logistics network that processes shipments quickly and with minimal delays. However, now that the UK will set its own protocols for containers that appear at ferry terminals even if they’re not being unloaded, shipments that pass through will definitely face bottlenecks and more complexities. The main issues with container shipments that come in and out of the UK are border controls, maritime law that most vessels passing through the Atlantic Ocean are subject to, visas and work permits, tonnage tax and other tariffs, and the UK’s collaboration with European navies. With the EU no longer presiding over these dealings, it can spell additional headaches for shippers and supply chain managers.
Shippers could opt to forego the process altogether with more local sourcing or less frequent wholesale orders.
Shipping accounts for 95% of the UK’s international trade so it will be a very slow change. Since the UK is an island nation with a diverse population, shipping is not likely to disappear from the country’s international trade any time soon. However, logistics managers, freight forwarders, and freight brokers should take note of these impacts and how they will affect the course of business. The British International Freight Association plans to lobby and make efforts to defray overly complex importing and exporting procedures, but rate increases and delays with processing container and intermodal shipments are no less evident.