November 27, 2019 | Logistics
As the UK approaches its latest deadline to leave EU on Jan. 31, 2020, cross-border shipping companies are bracing for the prospect of long queues at ports and potential losses due to late deliveries. The situation regarding customs procedures is still unclear and in the event of a total Brexit in January, buyers may see a huge effect on their trade because of sluggish movement of cargo on the borders. The changing geopolitical landscape requires traders to quickly and efficiently reorganize themselves for new cross-border procedures.
Whether the UK and EU draft a trade agreement ahead of the deadline of if the UK leaves the EU without a deal — in which case World Trade Organization (WTO) rules will immediately apply on cross-border trade — custom brokerage firms must be ready to deal with the emergence of a new paradigm. Shippers will have to dispatch cargo according to lead times decided on by custom brokers, forcing buyers to plan their actions accordingly. For example, nearly a third of the UK’s food produce comes from Europe. Thus, buyers in UK are now in a rush to fill their refrigerators with fruits and vegetables, as a no-deal Brexit could lead to border delays and higher tariffs. A no-deal Brexit can be costly for buyers in more ways than one as the scenario will not only result in higher prices for fruits and vegetables, but medicines too.
Custom Brokerages Brace for Brexit
Deal or no deal, Brexit will change trade rules and regulations between the UK and EU. Custom brokerage firms are going to need some time to identify new procedures and make their arrangements accordingly, which will add a lead time. Shipping companies will have to check the lead times with their respective custom brokers and plan accordingly so that cargo reaches buyers on time, which can complicate matters and increase cost. Furthermore, despite the addition of a lead time, sudden regulatory changes can still delay goods because of uncalculated consequences of Brexit. These additional costs, preventative or unforeseen, can lead to shipping companies suffering losses. Custom brokerage firms have anticipated the consequences of Brexit and are preparing to handle the situation. They have advised shippers to arm themselves with an EORI number, Export License, Certificates of Origin and a Deferment Account, in addition to other bureaucratic documents. These brokers usually also provide services to help shipping companies get all these documents. Suppliers are meanwhile advised to agree Incoterms with customers to avoid any confusion.
Custom brokerage firms who are well-equipped with automated solutions like ETD (Electronic Trade Documents) can also be of service to suppliers. Using ETD, suppliers can submit commercial invoices electronically at the point of preparing shipments. Custom brokerage firms like George Baker Shipping, UKCS and Langdon Systems all possess this capability. Additionally, firms such as Shapiro provide solutions like custom invoice development, customs brokerage application development and custom clearance platform development, while MultiFreight offers a business intelligence reporting tool that gives the user total visibility of their business data. Meanwhile, custom brokerage firms who still rely on the traditional way of manually moving files will only make the process more difficult for themselves and their clients. Automation is clearly the way forward in a post Brexit world.
As the potentially final deadline of Brexit approaches, buyers are beginning to stock up on goods so that they are not short on supplies in the difficult times ahead. Buyers are highly advised to set Incoterms to avoid confusion. Delays are to be expected post-Brexit, so buyers must keep track of lead times and plan accordingly. Custom brokerages with automated systems would be invaluable to buyers in such a situation and one can expect many will look towards brokers to smoothen the transition and deal with the shocks. Custom brokerage firms can save businesses in the UK from problems by filling the gaps created in the market because of Brexit’s lack of clarity in changed laws. In the end, Brexit is expected to increase the business value proposition of custom brokerages substantially and should emerge as a profit-making scenario for the industry.