No-deal Brexit is a big deal for logistics

Brexit continues to be a cause for concern, both in the United Kingdom and in mainland Europe. Although the negotiations are still in full swing, The People’s Choice organization is pushing for a new referendum. In the meantime Liam Fox, the UK’s Secretary of State for International Trade, has stated that there is a 60% chance that Brexit will occur without the UK having reached a trade agreement with the EU. The growing chaos is bringing the ultimate worst-case scenario – a no-deal Brexit – ever closer, with huge potential consequences for the transport and logistics sector.

Shock waves

Without a trade deal, no air traffic will be possible between the UK and the EU – and that’s just for starters. As of 30 March 2019, movement through ports will grind to a halt because all shipments will have to be checked at customs. Import and export duties and VAT will have to be paid on all cargo. Fuel prices in the UK will go through the roof due to lack of supplies. Sterling will lose much of its value, with severe knock-on effects for businesses. The Independent predicts that supermarkets will be hit by shortages and empty shelves within 24 hours as food supplies become disrupted. In other words, a no-deal Brexit will send shock waves through the transport world.

Scenario analysis

The Freight Transport Association of Ireland is warning its members to make the necessary preparations to stay a step ahead of the chaos. To help you avoid nasty surprises, we at IDS have put together a number of tips for you:

  1. Prepare a detailed overview of your current import and export activities:
    • Where, when and to what extent are you doing business with the United Kingdom?
    • Can alternative suppliers or sales markets help you spread the risk?
  2. Review all your contracts in terms of product specifications, delivery guarantees and just-in-time delivery.
  3. Talk to your customers, partners and stakeholders about the possible implications. What do they expect, and where are the potential problems?
  4. Take steps to offset exchange-rate fluctuations.
  5. Invest in your employees’ knowledge and skills to improve their problem-solving abilities.
  6. And last but not least, conduct scenario analysis, even for the most unlikely scenarios you can imagine. That’s the only way to really understand the potential consequences of a no-deal Brexit and to put measures in place to minimize the impact.

At IDS we’re happy to help our customers gain insight into all their freight flows in order to evaluate the potential Brexit-related risks. If the worst-case scenario should become reality, it’s good to know where you stand.

To find out more about how we can help you, contact Arno Spoek at IDS on arno.spoek@idsnl.com or +31 (0) 88 437 4370.