BREXIT – Impact on your logistics strategy

Ruchi Dogra (CoFounder and Director, FreightCrate Technologies)

Is Brexit is one of many trends, from e-commerce to electric vehicles that could impact the logistics industry?

The UK leaving the EU is not an uncertainty anymore. Come March 2019 and the impact of the unknown will be on the business world around the world.

Brexit, unlike fads, is a reality that the businesses around the world have to face and prepare for. Whether you are

• Exporting to UK – direct or indirectly
• Doing multinational trade via the UK
• Importing into the UK – directly or indirectly
• Manufacturing & configuring for exports in the UK

In all the above cases, Brexit will impact your business operations – impacting both in terms of cost and in terms of timelines. Both of which can be an opportunity and threat depending on how a business is prepared to handle it.

While specific mechanics of how Brexit separation will work remain unclear – what certain is that there will be

• Impact on the movement of labour across EU & UK impacting logistics workers
• Regulatory issues will bring in new standards/norms – for both production, packaging, distribution
• Potential trade tariffs that will impact the bottom line due to tax structures and duties
• Challenges to the free movement of goods – along with demand and supply issues

Further, potential areas where we will see an impact are

• Tariffs: on finished, raw materials or intermediate goods, based on what is negotiated between the EU and UK
• Forex currency – any depreciation of pound due impact of Brexit will while on one hand create more opportunity for exports from the UK, on the other hand, import costs will go up
• Supply chain delays – due to the imposition of new customs requirements and additional documentation will likely cause delays in clearances, additional labelling
• Taxation – the UK could reduce corporate taxation to maintain and grow its share in trading activity; leading to enhanced logistics needs

Think about it, Ireland has long used the UK as a land bridge in its logistics chain to continental Europe, but if tariffs are imposed there may be an opportunity for short sea operators to introduce more direct services between Ireland and Europe.

These are just a few of the many significant challenges that supply chain professionals with businesses need to appreciate and understand. They need to begin work through potential scenarios and plan how they will save their positions and make most of the opportunities that the Brexit provides.

Even though answers to many of these questions are still unknown, it is important that businesses do not wait for concrete answers or policies, but begin to work through potential scenarios and plan their responses now.

What to do - change business practices, review business operations, analyses suppliers, renegotiate contracts or improve parts of supply chain activities. Business should

1. Do a revive of their business supply chain and goals of future
2. Get data – on all aspects of logistics in a standardized manner
3. Assess and model scenarios – what are the likely impacts and how to manage them
4. Cost-benefit assessment – do a risk assessment
5. Run pilot projects and review the results

So, what are some further big ideas to balance the Brexit impact?

• Faster Digitization – it’s time to implement internal, external and intracompany digitization and standardization of processes to bring in transparency, documentation handling, and price discovery.
• Market platforms – multimode capability handling e-commerce platforms are the norm of the future. They provide an opportunity to both optimize on cost and find models for benefitting from the opportunities created by Brexit.

Talk to your new age logistics platform suppliers. Their consultants can help re-engineer your businesses supply chain networks to evaluate the effects of potential strategies during and post-Brexit. Businesses can find creative ways of reducing their liability and risks with a well-designed logistics strategy and reap the benefits of Brexit