Supply chain problems are multiplying rapidly as a result of Brexit. Early preparation is key to ensuring that your business is ready to deal with any issues before the product is shipped. The problems were masked in January as many companies had stockpiled goods before Christmas to give themselves a chance to assess the situation.
The main early problem is that companies are making mistakes with all the paperwork they now have to complete. Some are simply not submitting the right paperwork as they don’t realise that the UK is no longer part of the EU Single Market and Customs Union. The key issue is that goods now have to go through much stricter border controls, as the UK has become a “3rd country”. On some days, up to 20% of all movements are being rejected. Customs officials are there to stop things happening, and they will not simply let the goods through based on a promise to “do better next time”.
Hauliers are in the middle of all the problems, and EU hauliers are increasingly refusing to take loads to Britain, as the increased border controls caused by Brexit and coronavirus checks make those journeys less profitable. The rejection rate for loads destined for Great Britain from France in January was more than twice the average for the third quarter of 2020.
Some time-limited waivers were initially granted to allow business to adapt. But these waivers have already started to expire. And the situation is likely to become more complex as the UK government starts to impose its own Border controls.
We expect the main problems to impact (a) exporters to the EU, including export markets covered by preferential EU trade deals and (b) exporters to and importers into the GB market. We have a separate Directory entry for N Ireland, due to the complexity of its new position.
We have developed this simple checklist to help you to manage the potential challenges ahead:
- Thoroughly map and audit supply chains – specifically lead times
- Audit international contracts – specifically agency and distribution agreements and liability for damages and penalties
- Review internal skills and understanding for dealing with documentation relating to import and export – International Cooperation (INCO) terms, Certificate of Origin, Bill of Lading, etc.
- Review and update International Certifications, including driving licences, environmental, health and safety, Registration Evaluation Authorisation and Restriction of Chemicals (REACh).
- Audit third-party providers – freight forwarders, road/rail/sea transporters – for their Brexit understanding and plans
- Identify and prioritise key business interruption risks
- Develop a ‘live’ contingency plan and regular update programme
This government research briefing, originally produced in mid-2017, summarises the key issues that need to be considered for the main forms of transport, namely: aviation, rail, road and sea.
This report from the UK Parliament’s Public Accounts Committee highlights some of the practical concerns around UK borders post-Brexit. One key issue is the need to invest in additional infrastructure to accommodate the strains at UK borders post-Brexit. It expects a five-fold increase in customs declarations at UK borders – from 50 million today to 400 million. Importers and exporters, therefore, need to understand how this may impact their supply chain. As expected, it is already causing major delays at UK borders.
This UK government analysis of UK port movements highlights the areas that are most vulnerable to significant delays. Businesses must prepare for delays if more Customs checks and declarations are required. You might want to consider alternative routes as part of your scenario planning to avoid the most congested ports.
Also see our separate Directory entry for N Ireland, which is proving to be one of the early problem areas. This is because under the N Ireland Protocol, N Ireland remains in the EU Single Market for goods and applies EU Customs rules at its border.