Europe Roadblock

Teresa May has spoken. And appears to have done a good job by speaking with enough clarity to satisfy many commentators without voicing much honesty (in the ‘open-ness’ sense rather than the opposite of ‘dishonest’) that the process of exit will be one of trade-offs. ‘Trade offs’ are not something the popular press, which dictates the Brexit debate, understand or - if they do - worry themselves to articulate. To make matters worse, the question in June’s referendum was so simplistic to be – in the context of the inevitable trade-offs involved in negotiating an exit – virtually meaningless. No-one knows what Brexiters wanted in aggregate: some want free movement based on neo-liberal economic principle; these principles also dictate little regulation and EC laws. Others wanted less immigration but not to lose EC regional grants or the fast lane at airports customs.

What most of us want, though, is to just get on with it and through it so we can all run our businesses with less uncertainty. In the meantime, we try to consider what might happen to business, particularly those involved in logistics, warehousing storage and the movement of goods, from a myriad of possibilities.

So here’s our latest stab: in Part 1, Zupplychain will explore the practical implications for UK companies who currently export and import to and from Europe. In Part 2, we take a more general look at the near future for UK SMEs.

Whilst we are still part of the European Union, we enjoy free movement of goods and there are no tariffs or quotas on trade. Additionally, there are no customs formalities for businesses importing and exporting within the EU. Goods moved by road are moved under one single consignment note, the CMR. A copy of this document is given to the driver of the vehicle after goods are loaded and is proof of the parties involved in the carriage and the goods that are being transported.

Such an agreement means that transit times are extremely quick, with many companies offering daily departures to parts of Western Europe. This reduction in transit time has been mirrored by a reduction in warehouse stock holding for many companies. Free, quick and, perhaps most importantly of all, rock-bottom shipping prices have meant that most companies receive their pallets ‘just in time.’

This increased stock liquidity is not without challenges for European freight-forwarders, who must still overcome the unforeseen on a weekly basis - dense fog, road closures, Eurotunnel strikes etc. Delays that threaten to stop production can have the most unlikely consequences – such as no Valentine cards on one of the Balearic Islands in a recent year (a true story!).

Post Brexit, it is highly unlikely that the UK will continue to enjoy the free movement of goods across Europe; especially if some form of immigration controls is a ‘red-line’ for the UK, and in the context that the EU – conscious of populism in France, Germany, the Netherlands etc. – chooses to sacrifice economic gain for EU continuity. A ‘Hard Brexit’ and a poor negotiation by the UK Government could mean that the UK will be subject to the EU’s standard tariffs on imports. Furthermore, we could also witness the UK introducing a levy of similar tariffs on EU exports into the UK.

One of the major changes for importing and exporting in and out of Europe will be the requirement for additional documentation and more formal processing procedures. Again, we are unclear as what these requirements will be but potentially they could resemble the procedures that are currently in place when shipping to the rest of the world. So, post Brexit a UK manufacturer may have to consider the below when sending pallets to France:

  • Export documentation such as commercial invoices, packing lists, valuation statement, certificate of origin and conformity certification for each consignment;
  • Physical checks of cargo and the potential for cargo to be seized if the correct paperwork isn’t accompanying the goods;
  • If cargo is seized or delayed, then there may be the need for temporary storage in or around Calais;
  • Delays and missing delivery dates could result in fines for the shipper.

All the above have implications on the UK shipper and the fear is that these implications could possibly make buying from the UK costly, slow and unattractive. One way of potentially circumnavigating this is by the UK adopting the EU’s external tariff’s as it’s on with many EU tariffs being low or set to zero. However, we are just speculating at this stage but what is clear is that companies should anticipate and manage these changes and costs.

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Zupplychain is an on-demand warehousing solution for UK pallet storage – whether you have un-used warehouse space or an immediate need for temporary storage, make Zupplychain your first port of call.