The final Brexit deadline is approaching fast, but for many businesses operating within the supply chain sector, preparations have been overruled with the unprecedented Coronavirus pandemic. Ecommerce and supermarket demand rocketed – keeping up with the demand has been a big enough challenge for most organisations, and for the less fortunate; merely coping and finding ways to survive the pandemic has taken huge amounts of effort.
Given the huge distraction that has faced everyone, it’s no surprise that many companies are reportedly still not ‘Brexit ready’, but Andrew Tavener, Head of Marketing at Descartes, explains that now is the time for supply chain businesses to prepare for the legal demands that will be soon required for those who depend on importing and exporting goods from across the borders. The risk of not preparing could cause supply chain disruption at a level far greater than that experienced during the onset of Covid-19.
Unprepared for Brexit
A recent Government letter addressed to the freight industry warns that Brexit border chaos could cause 7,000 truck-long queues and two day delays. This comes after the Government warning that only between 30 and 60% of laden HGVs will arrive at the border with the necessary formalities completed for the goods on board, meaning that those who don’t, will be turned back, potentially causing further delays. Ensuring compliance will be critical for business continuity.
And, further recent independent research commissioned by Descartes clearly indicates some cause for concern over a lack of preparedness for Brexit among supply chain managers: Two thirds acknowledge that their businesses have had their Brexit preparations disrupted by Covid-19, 67% of large firms are very or extremely concerned about longer delays in their supply chain impacting the business post-Brexit, 40% of supply chain managers are concerned about customs declarations impacting their business post-Brexit, and over one third are very or extremely concerned about the impact of security filings from January 2021.
The overall findings of the research indicate that those organisations and supply chain managers with existing experience of customs declarations and security filings are far more worried about the implications of Brexit on the business than those who have yet to discover the complexity of these processes. But with Covid-19 reshaping consumer behaviour making many firms switch to an ecommerce model and become reliant upon trade with the EU; a lack of experience could quite possibly be the difference between surviving or collapsing.
Getting to grips with Brexit requirements
Although it’s not yet clear whether the UK will strike a free trade agreement with the EU, or whether it will in fact be a no-deal Brexit, the one thing that is clear is that customs declarations will be required regardless. Even those hoping to defer import customs declarations for six months will still need to keep compliant records. It’s estimated that British companies trading with Europe will have to fill in an extra 215 million customs declarations a year post Brexit.
Added to the customs declarations process, are security filings. Despite being well-known in worldwide air and sea transport, many road transport companies who operate within EU borders are less familiar since it has not been a mandatory requirement. But post Brexit, security filings will become compulsory for all UK imports and exports, albeit for UK imports these will be deferred for 6 months. Filing submissions ahead of arriving at the border is absolutely crucial for transport operators, unlike customs declarations, which can be submitted post import or inland with the right authorisations, security filings are required to be submitted at least two hours before the goods are due to arrive in the UK when transported by truck. And if the goods are being transported through the Channel Tunnel by Eurotunnel, a declaration must be submitted at least one hour before check-in at Coquelles.
Finding a solution
Using an intermediary to manage the increase in required customs declarations may prove difficult, Government figures suggest that British companies trading with Europe will have to fill in an extra 215 million customs declarations a year post Brexit – with a potential cost to businesses of around £7bn a year. There are simply not enough third-party providers to support this huge increase in demand and this is causing much uncertainty amongst organisations as 72% of businesses have expressed concern around the customs brokerage market capacity after Brexit. Moving the customs declarations process in-house is most likely the preferred option, made even more attractive with the Government’s Custom Grant Scheme providing support for businesses who need to invest in both technology and training.
Combining a Software as a Service (SaaS) customs solution that ensures all regulatory changes are automatically updated and available, with staff training to achieve in-house expertise, provides a strong foundation not only for handling the complexities of post business activity but also future business development. Software can also support firms that decide to use customs authorisations, including Inward Processing, Customs Warehousing, Transit and Customs Freight Special Procedures; as well as providing the detailed record keeping required for companies that have deferred import customs declarations for up to six months.
Furthermore, it is also possible to add security filings to a business’ customs system. It helps carriers and logistics intermediaries overcome the complexity of Import Control System (ICS) compliance by providing a single point of access to manage ICS filings according to specific requirements. Moreover, a joined up e-solution also enables carriers to electronically connect with brokers, shippers and regulatory authorities around the world through a single portal, without having to worry about data formats or specific state requirements.
Deploying a customs solution, with security filing software, and a route optimisation solution will enable users to achieve even greater efficiency. Telematic solutions, for example, combined with intelligent algorithms enable operators to maximise route optimisation – essential to meet evolving customer pressures, particularly given the implications and potential supply chain delays as a result of both Brexit and Covid-19. Real-time vehicle visibility can deliver new levels of business agility, providing operators with the chance to reroute vehicles on the fly in response to a raft of issues such as unexpected delays or new deliveries or pick-ups.
Warnings from the Government around the potential implications to companies that are not prepared for Brexit are beginning to emerge. And as research shows; numbers of organisations are also beginning to recognise the repercussions of the Covid-19 pandemic, and combined with the impending Brexit deadline and consumer shift towards ecommerce, it’s imperative for organisations to take action now to navigate as efficiently and effectively as possible through the impending complex border requirements.
For further information see www.descartes.com/brexit