Brexit: A seismic shift for logistics

The British prime minister, Boris Johnson, has now cleared most of the hurdles so that the UK can leave the European Union (EU) on 31 January. As things currently stand, 1 February will mark the start of a transition period. This period is aimed at reaching a new trade deal and various other arrangements with the EU. Both sides will want to get the maximum out of these negotiations. They want to make sure that goods and services can continue to flow as freely as possible between the UK and the continent. But irrespective of the final outcome, Brexit represents a seismic shift for the logistics sector. As a result, it is important for many businesses to not only implement short-term measures, but also to make long-term strategic choices.

Multiple scenarios

At IDS, we have helped numerous companies with Brexit-related scenario planning over the past three years. We start by thoroughly reviewing the end-to-end supply chain and analysing the risks. We then model various ‘what if’ scenarios, to ensure their supply chains would continue to run as smoothly as possible even in the case of a ‘hard’ Brexit. In our transport management system (TMS), we can incorporate amendments to routes and lead times at the touch of a button. Our customers can then see the impact of those changes on their incoming deliveries or planned orders in the Control Tower. And if clients want, we can relieve the burden on them completely. We take care of ensuring they are properly prepared in terms of the changing requirements for export documents, audits, certificates, procedures or import duties and taxes.

As a precaution

Those companies now have a valuable head start as another factor is making the situation even more complex. The centre of gravity for the manufacturing and storage of products in Europe is set to shift in the long term. And so too will the way those products are transported throughout Europe. Many shippers are transferring their warehousing and distribution capacity from the UK to the European mainland, often to the Netherlands. Besides that, many American and Asian companies with a manufacturing facility in the UK have started to look for a base on the continent. Others are running two inventory locations, one on each side of the Channel. They want to minimize the risks in the case of border chaos. But the biggest change is that major companies are moving the bulk of their production activities to continental Europe as a precautionary measure. They want to avoid labour shortages, customs checks, and additional red tape and hence costs. This trend is likely to affect your supply chain too.

Anticipating shortages

The changes to regulations, paperwork and processes will inevitably cause some delays at the border. Industry experts predict that the delays will increase the demand for goods vehicles such as trucks and trailers. The same goes for warehousing and distribution capacity in Northwest Europe. Especially in the Netherlands and Belgium. But that capacity is limited. And so too is the availability of goods vehicles. That’s why our scenario planning includes consideration of transport options in times of shortage. We analyse your supply chain and help you to calculate whether it could be beneficial to consolidate your shipments, for example, both now and in the future.

Have you already thought about what will happen to your supply chain after Brexit? Do you know where the weak spots are? Or would you just like to exchange thoughts and ideas with one of our transport experts? Feel free to contact Arno Spoek: arno.spoek@idsnl.com.