Friday, January 18, 2019

Brexit - the Reactions of the Road Haulage, Freight Transport and Warehousing Community

After Theresa May's Plan is Kicked Into Touch What Do the Major Logistics Sector Players Think?
Shipping News Feature
UK – EUROPE – Now the dust has settled somewhat on the scuttling of the Prime Minister's plans to exit the European Union, and subsequent efforts to remove her from office, it is time to hear exactly how the major players in the warehousing, freight and road haulage sectors see the future. The analysis of potential logistics scenario's is a game fraught with danger and, for the most part, those commenting have reinforced the almost universal industry view that a 'no-deal' result would be damaging, but not insurmountable, for shippers.

The British International Freight Association (BIFA) has, probably wisely, always declined to speculate too much on Brexit, but at the organisation’s annual awards ceremony in London yesterday it was made clear that the country’s freight forwarding community is confident that, whatever the outcome, the industry will cope as it always does, reiterating comments by BIFA Director General Robert Keen, who said after the vote:

“The decision taken by Parliament is historic and needs to be acknowledged. With just a couple of months to go before the exit date, the rejection of the deal leads BIFA to recommend that our members, which are the companies that handle the processing of most of the UK’s visible trade, to prepare on the basis that there will be a hard Brexit.

“Speculating about any other outcome is inadvisable until UK Government provides us with clear guidelines. A hard deal may well be very disruptive and damaging for the UK economy as a whole, but freight forwarders, many of whom are Authorised Economic Operator (AEO) accredited, will play a key role in tidying up the mess left by the politicians by ensuring UK importers and exporters can continue trading without undue disruption with the rest of Europe after March 29.

“BIFA has always stated its belief that a disorderly Brexit would be the worse outcome, as it is likely to increase trade barriers and impose significant restrictions on the exchange of goods between the EU and the UK. Whilst BIFA’s executive management has engaged with various government departments over the last two years in regards to issues that affect the movement of visible trade post March 29th, our members have also been discussing the possible impacts with their clients.

“Large and small, BIFA members have taken actions to review all options to overcome the disorder that a no-deal Brexit could bring to international trade in order to define sustainable solutions as the set of Brexit conditions becomes clearer. BIFA will be renewing our appeals to the responsible bodies in London and Brussels to do the utmost to prevent this scenario. As far as we are concerned, our members are focused on ensuring the ongoing efficient flow of freight for our customers.

“One thing is certain, our members are ready, willing and able, to clear up the mess that has been left by politicians.”

The United Kingdom Warehousing Association (UKWA) whose members operate around 100 million square feet of warehousing and distribution centre space from some 2000 locations around Britain, expressed disappointment after the Commons decision. For the past 18 months UKWA has been advising its members to prepare for an upsurge in demand for warehousing, whatever the final outcome of Brexit, also pointing out that Brexit has exposed a number of challenges facing the logistics sector, including shortage of capacity after a long period during which little speculative development of storage buildings took place, a looming labour and skills shortage, and a land use planning policy in need of review.

Again however there was a note of resigned optimism in the statement from UKWA CEO Peter Ward, who observed:

“Frustratingly, as imperfect and unpopular as Mrs May’s deal proved to be, it was the only evident mechanism to provide the business community with a level of clarity and certainty and, had it been passed, a road map around which to plan. I am in no doubt that our resilient and creative logistics industry will, as always, find solutions to whatever problems are thrown up by the UK’s exit from the EU. However, it would help to know what form those challenges are likely to take, but, as things stand, the outlook is confused and we urge businesses to prepare for the worst, which is a ‘no deal’ Brexit.

“As the leading trade association for the logistics sector we are there to help businesses to prepare and ensure that the nation’s post-Brexit supply chains do not break down. Simultaneously, along with most business leaders, we urge MPs to put aside dogmatic and entrenched positions, abandon political jockeying, and put the future of our economy, and our country, first.”

As for the road freight community the Road Haulage Association (RHA), which says it has never taken a political view on Brexit, remains adamant that a deal and a transition period is essential to avoid crippling the supply chain. RHA chief executive, Richard Burnett said:

“It is imperative that any withdrawal deal includes a transition period to establish new and efficient border technology, and systems across industry needed to be put in place to avoid disastrous queues at ports and also a hard border between Northern Ireland and the Irish Republic. In addition, a deal would avoid reliance on an acute shortage of permits and measures for customs that are unworkable and impractical.”

Meanwhile Eurotunnel, now trading under the GetLink banner, has called on political leaders to clarify the nature of the border relationship and controls that will exist between the United Kingdom and the European Union, as soon as possible, saying only the establishment of clear rules will allow businesses to continue to invest, to create jobs and to preserve the vital human, social and cultural exchanges that benefit both the UK and the EU.

The company points out that 26% of trade between the UK and the EU passes through the Channel Tunnel, supporting hundreds of thousands of jobs and over the past two years. Eurotunnel, which celebrates its 25th anniversary this year, says it has been preparing for all outcomes, with the full support of its 2,500 employees, and these efforts are to ensure new post-Brexit border controls will have no significant impact on Tunnel traffic whilst offering some evidence that it has this capability.

The tunnel management points out that when the Tunnel was opened in 1994, lorries passed through only three types of check, compared to eight separate controls today. This increase in the level of controls over time has not prevented truck traffic from increasing fourfold over the same period between 1994 and 2018.

The Eurotunnel comments mirror those heard from the ports of Dunkirk and Calais recently when both said they had no fears for the future of cross Channel trade. Those interested in the innovations that Eurotunnel are introducing as they prepare for the future can access the company campaign online at #BrexitAndBeyond.

The view from those most intricately involved in actually moving the goods is probably most clearly expressed by Swiss based freight forwarding agent Kuehne + Nagel International AG which says it has been part of the UK Government Cross Border Steering Group and will use this opportunity to define sustainable solutions as the set of Brexit conditions becomes clearer.

K+N has commenced recruitment of additional customs clerks and says it has engaged customers and its own industry experts over the past years to assess all possible impacts. In order to cope with the effects of a disorderly Brexit Kuehne + Nagel has additionally taken steps to review all options to secure capacity on trade routes with Europe outside of the Kent corridor both by sea and air. After the vote Dr. Detlef Trefzger, CEO, said:

“The House of Commons has made a historic decision which we need to respect. Kuehne + Nagel is committed to global free trade in principle which ensures prosperity for everyone. So from our perspective, ‘No Brexit’ would be the preferred solution, since any form of Brexit is bound to increase trade barriers. A disorderly Brexit is the worst solution. It will impose massive restrictions on the exchange of goods between the European Union and the United Kingdom. We appeal to the responsible bodies in London and Brussels to do the utmost to prevent this scenario. As far as we are concerned, we are focused on ensuring the constant flow of goods for our customers.”

Like the other trade bodies mentioned The Freight Transport Association (FTA) has also been speaking to government as 29 March approaches and James Hookham, Deputy CEO was unequivocal in his desire for a settlement saying logistics must not and will not be held up as the ‘whipping boy’ for politicians who have failed to take into account the complexity of the supply chain over the past two years. He continued:

“A No Deal Brexit would be highly damaging for trade, for business and for Britain. With no clear solution for what happens next, the risk of a No Deal has risen significantly, and the problems which this would cause of businesses, which now have virtually no time to prepare, would be catastrophic for the UK’s supply chain, on which we all rely. Mrs May’s Lancaster House speech two years ago promised that frictionless trade would be protected, whatever the outcome of negotiations with the EU, this promise has not materialised.

”A No Deal would increase delays at the country’s borders, increase red tape and costs for logistics businesses already operating on narrow margins, restrict access for transport to the EU and reduce the available skilled workforce for logistics operators, all problematic on their own, but when viewed together, a perfect storm which could cause untold damage to businesses and individuals right across the country, not just those trading directly with the EU.”

To reinforce its position the FTA is holding a webinar for anyone interested which will take place at 10am on the 25 January 2019 at which attendees will have a chance to ask their most pressing questions to FTA’s Brexit team. The cost is £100 for FTA members or £150 for non-FTA members.