At present, there have been few updates from U.K. or E.U. officials regarding their progress on trade negotiations, leaving the logistics community to wonder what would happen to industry players in air, ground and sea operations in the case of a “no-deal” or “hard” Brexit.
Air Cargo World spoke to three industry leaders to gauge their predictions on how the supply chain would react to a no-deal Brexit, as well as their own accounts of how the Western European supply chain is already being affected by the U.K.’s secession prior to the March 29 deadline.
International forwarder and 3PL C.H. Robinson’s regional director of Europe surface transportation, Chris Mills, said that, while the outcome is still uncertain, shippers should prepare for increased logistics costs, reduced capacity and more-complex customs procedures.
“If Brexit negotiations result in Britain not being part of the single market,” i.e., the free-flow of goods through the Eurozone, “tariffs could be applied to goods entering the U.K. from E.U. countries, forcing those goods to become more expensive,” Mills said. “If there is an increase in cost, haulers and logistics firms may need to pass this on to their customers.”
Mills also highlighted that both the U.K. and E.U. countries rely heavily on the import of natural resources, and said that the existing imbalance could be accentuated by Brexit-related strains.
“Over time, Brexit could create barriers at borders for the administration of trade in both directions,” he said. “If this happens, it could impact efficiency, because goods would move slower.”
Van der Stichele compared the potential of a no-deal Brexit to infamous supply chain bottleneck incidents like the U.S. port strikes in 2015, which essentially shut down Pacific ports along the West Coast, stalling delivery times and costing stakeholders millions of dollars.
“A couple years ago, it created a whole blockade of traffic,” van der Stichele said. “There were a lot of charters that operated from China and Far East to the U.S. simply because the ports were on strike,” he added, suggesting that pattern could begin to emerge in Western European supply chains this spring.
“We have two clients that have booked standby aircraft,” an An-12 and an ATR 72, both turboprop freighters, he said. “A lot of people are starting to question, ‘What could we do?’ And we’re starting to see more calls come in – emails from specific freight forwarders [asking], ‘What would it cost for an airplane of this size?’”
Crane Worldwide Logistics
Crane Worldwide Logistics is taking the potential for a no-deal Brexit seriously. Its customs and compliance manager for the U.K. and Ireland Peter Rodwell spoke to Air Cargo World about its predictions as to how supply chain members will be affected, and its contingency plan to mitigate disruptions for its cross-border U.K.-E.U. operations.
“Everybody will be affected; however, it is our opinion that certain exporters will take most of the impact,” Rodwell said. “At the point that the U.K. departs without a deal, all current trade deals will cease to apply to the U.K. Goods exporting into Europe would be subject to duties and taxes, and export or import controls and health and safety certification may apply.”
Rodwell said that the impact to Crane will be manageable, but that its method of working with some E.U. locations will change. Its current plan for customs produces will include increased temporary storage, customs bonded warehousing and transit services for the movement of goods into its premises at effected borders.
“The longer-term impact will be the length of time it will take for the U.K. to agree its own trade deals, re-alignment of supply chains and the knock-on effects to other E.U. countries that have a close relationship with the U.K., such as Ireland,” Rodwell said.