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Brexit & logistics: how to minimize the disruption

Brexit - Minimize disruption

We’re less than 6 months away from the official Brexit date (29 March 2019). Yet nobody knows for sure what the outcome will be. Therefore most discussions revolve around endless arguments about what scenario might apply, anywhere from the softest to the hardest Brexit imaginable. Such discussions leave people and companies confused and powerless.

Being prepared no matter the scenario

Consequently, most companies have adopted a ‘wait-and-see’ strategy, which effectively means doing nothing and hoping for the best. This is a serious matter that has the potential to impact the wealth of hundreds of companies and their employees. Therefore, it should be handled responsibly. No one can tell the future but any responsible company can take practical measures to get ready for Brexit, no matter the scenario.

What solutions to implement

What can you do? Companies trading with the UK can already take simple steps to be as ready as possible and to minimize the disruption from Britain exiting the European common market. How is the business currently happening between the EU and the UK? Trading in free-trade Europe has become almost too easy. We have developped many bad habits as basic trade documents have become non-essential within the common market. Things like a proper and compliant CMR, commercial invoice, HS code, origin or incoterms…

Consider it as a foreign destination from now on!

Given that Britain might become as much of a foreign country as the USA or Switzerland, it would make sense to treat every shipment as an international procedure. In this case, the next steps are quite obvious for anyone familiar with international logistics. First, it is essential to go through the documentation of every UK shipment with a fine-tooth comb:

Invoices – do they indicate shipper and consignee details including VAT / EORI numbers, commercial value, and currency?

CMR – does it carry details of the goods, exact quantities, packaging, country of origin and destination? Commodities – does the paperwork specify the goods classification as per TARIC nomenclature, does it indicate the HS codes?

Classification is essential and will give you a head start for proceeding with customs authorities. It will allow you to adapt much quicker to new legislation and tariffs, if customs and duties become payable after Brexit. Furthermore, this early preparation can lead to future savings in the form of any tax relief that may be negotiated between the EU and the UK for critical industries such as automotive, aerospace or pharmaceutical. Partial or full tax exemption can interest suppliers and customers. To benefit from these exemptions, however, imported / exported commodities will need to be properly classified and identified in the customs nomenclature – see EU classification.

Incoterms will become a primary concern the minute taxes and duties start to apply. Pre-empting contractual terms between suppliers and clients will avoid costly surprises later on. Therefore, it is more crucial than ever to think twice about what you sign from now on.

Brexit and logistics: the need to involve suppliers

Preparation should go beyond to the company walls. Strategic suppliers and customers should be involved as early as possible to adopt the same essential procedures. We can imagine that contractual clauses, compulsory deadlines, and even penalties might be imposed on strategic suppliers. Anticipation could be vital to secure the supply chain and avoid major bottlenecks with customs post Brexit.

You could also create a special Brexit project team, with enough authority and skills to quickly adapt internal processes in line with any changes. Finally, businesses dealing with the UK should approach and sign service contracts with AEO brokers (Authorised Economic Operator) on both sides of the Channel, to avail their expertise and assistance when Brexit becomes a reality. Such skilled advisors will be hard to come by after Brexit, with hundreds of companies rushing to find a solution.