Thursday, November 12, 2020

Brexit Situation Attract Yet More Comment from Logistics and Warehousing Interests

Freight Trade Associations Speak Out Frankly to Government
Shipping News Feature

UK – As Brexit vies for the headlines with the pandemic latest, so come more comments from leading logistics group lobbyists which represent a substantial proportion of British companies involved directly with the transport and storage of goods traded with Europe.

Firstly the United Kingdom Warehousing Association (UKWA) CEO Peter Ward has commented on the response from his members to the recent National Audit Office (NAO) report on the country’s preparedness for leaving the EU. The storage community apparently agree with the survey results with 88% of respondents stating that they do not believe their customers are prepared for the impact of UK’s transition from the EU on January 1st 2021.

The UKWA view chimes with those we reported earlier this week by the British International Freight Association (BIFA) and Logistics UK. The UKWA survey confirmed that 25% of UKWA members consider Brexit (the end of transition period) the biggest risk going into 2021, with concern for customers’ survival beyond the twin threats of Covid and Brexit cited by 34%.

While 78% of UKWA members said that they were aware of the Border Operating Model, only 40% felt that they were prepared, prompting Ward to comment:

“The intermediaries, namely those operating in the logistics industry, have been kept well informed and in many cases have helped shape the Border Operating Model via their Trade Associations. However, traders themselves have not received clear or detailed communication from the government on what to prepare for or how to prepare for it.

“A degree of apathy has settled in after three Brexit ‘deadlines’ have come and gone, with companies stockpiling each time in preparation for supply chain interruption at some considerable cost. There is also a widespread sense, fed by the national media, that all will be ‘alright on the night’ if we can just secure a Free Trade Agreement.

”Our message is, and has been for some time, that deal or no deal, traders in the UK will be in a new operating environment from January 1st regardless. We will be out of the Customs Union and therefore the government’s agreed future Brexit Border Operating Model will be in place, along with new procedures and new IT systems, many of which remain untested. What it will not be, even if we secure a Free Trade Agreement, is ‘business as usual’.”

The other key finding of UKWA’s member survey is there is less than 3% available warehouse capacity nationwide. This equates to approximately 360,000 pallets, which is insufficient as this aggregate is composed of small ‘lot’ sizes of 100-200 across some 3000 locations nationwide.

With flows continuing into UK from the Far East and elsewhere, whilst non-essential retail outlets are closed again under the new Covid restrictions, the UKWA believes the situation will quickly become critical, with Ward continuing:

“UKWA warned of an impending crisis of warehousing shortages earlier in the year, but this was mitigated as the economy opened up again. However, now we are into peak season and the pressures on space have increased. As far as Brexit is concerned, we anticipate a small increase in availability of around 1% post peak, with a paltry 120,000 becoming pallets available going into January.

“UKWA, along with our peer Trade Associations, have continued to engage with the government, providing feedback from the ‘coal face’ and disseminating vital information to members. We have also been vocal in warning of the unpreparedness of businesses for the transition from the EU. Whilst we welcome the recognition of these challenges, as outlined in the National Audit Office report, awareness of the threat of unpreparedness has come somewhat late in the day.”

One of those ‘peer trade associations, Logistics UK, saw Elizabeth de Jong, the organisation’s policy director, speaking in front of the House of Commons Select Committee on the Future Relationship with the European Union yesterday (November 11). She said there are no illusions about the scale of the task ahead if the UK’s economy is to be protected after the country’s departure from the EU at the end of the year, commenting:

“We have been pressing government for clarity on business and government readiness for the UK’s departure from the EU from 1 January 2021, but not enough has been forthcoming. For example, there are significant delays in delivery of the Haulier Handbook, which is intended to give clear, vital guidance to drivers of all relevant nationalities and hence minimise the length of queues at ports.

”The launch date for this has been put back to 18 November for a semi-complete version, and 7 December for a complete version, less than four weeks before the UK leaves the EU. This product must then be translated and circulated to thousands of hauliers across Europe so they can read and understand it, and prepare for 1 January 2021.

“Of particular concern are operational barriers and the lack of clarity over trading arrangements between GB and Northern Ireland (NI). The Customs Declaration Service is untested and construction of Border Inspection Posts for SPS checks has not yet started and will take up to six months to complete.

“New Trusted Trader schemes such as a Retail Movement System are required to allow safe, secure businesses to have streamlined border processes for GB to Northern Irish (NI) trade. Simplified processes are vital if NI’s businesses and consumers are to be protected. NI is dependent on the reliable supply of goods from GB across a host of industries, including food and medicines. Our sector needs comprehensive written guidance on how trade between GB and NI will operate so that importers, exporters and logistics businesses can prepare.”

With 50 days left to the end of the Transition Period, the industry’s concerns have also been raised in a letter to Michael Gove MP, in which Logistics UK highlighted these issues and urged action from government, as Ms de Jong explains:

“With the economy still reeling from handling the impact of Covid-19, the last thing UK PLC needs is another major shock of our own making. The logistics industry is committed to making Brexit work for the good of the nation but at this late stage, we need government’s help now to ensure our industry can continue to support UK business, prevent lorry queues at Dover and empty shelves in Northern Ireland and make a success of the UK’s departure from the Single Market.”