As president of the Brexit working group at French transport and logistics trade body TLF, and also Customs and Tax director at French logistics company Gefco, Olivier Thouard has had first-hand experience of how the prolonged Brexit process has affected freight operators and shippers.
“More so than for the March deadline, there was a strong feeling that a no-deal Brexit was coming at the end of last month. Stockpiling on both sides of the Channel meant that capacity on the ferries and at Eurotunnel was stretched to the limit as the deadline approached.”
As for the level of Brexit preparedness, he estimates that probably 95% of major shippers are ready – “at least in compliance with what they understand will be required in terms of customs clearance”.
Thouard continued: “However, as for the preparedness of SMEs, there has been a real problem with regard to communication. The message was not getting through and it’s a major issue.
“A lot of SMEs do not have any experience of import-export declarations. Also, by and large, European SMEs don’t have a big percentage of their business with the UK, and for that reason a good number have adopted a ‘wait and see’ attitude with regard to Brexit.
“This has been a major worry for some of our big clients who work with SMEs, the fear being that they (the SMEs) would not be able to work when Brexit was introduced. A prime example is in the aerospace vertical where if some ‘minor’ components such as bolts, supplied by an SME, are missing the entire supply chain risks being compromised.”
According to Dominique Willems, senior manager at the Brussels-based European association for Freight Forwarding, Logistics and Customs Services (Clecat), the overall preparedness of its members for a no-deal Brexit has been good.
“For almost all freight forwarders and all customs brokers, dealing with the movement of goods over EU-external borders is already part of their core business. All of the members and companies I’ve spoken to on a daily basis over the past months have told me they are as prepared as they can be.
“However, there are still serious concerns, with several analyses showing that about 25% of trading companies who currently do not have to deal with border procedures have not prepared for Brexit. Moreover, of the ones who have prepared, not all were informed correctly or sufficiently and thus did not take the required measures. This will mean that regardless of the Brexit outcome, disruption and delays will also occur in other parts of the logistics chain.”
Willems went on to bemoan the continuing uncertainty and lack of visibility surrounding Brexit.
“A lot of companies have expressed relief that the threat of the UK crashing out of the EU without a deal has been avoided, at least temporarily. But at the same time there is also an overall ‘Brexit fatigue’ kicking in. Anything can still happen: a no-deal or maybe even no Brexit at all, or maybe something in between. In reality, we don’t know any more than we did three years ago and it’s this lack of certainty regarding the outcome which concerns our members most of all now.”
Willems said companies have had to make “difficult choices” in preparing for a no deal Brexit – “of hiring additional staff, with the risk they would not be necessary for the next few years or not recruiting more workers and running the risk of being understaffed.”
He continued: “We have seen companies big and small prepare in different ways. Some have invested in extra staff; others have preferred to wait until the outcome of the negotiations. Regardless of the choices made, the preparations have put a heavy burden on all companies concerned. The industry has received some compensation, but this only covers certain IT and training costs and costs for hiring staff.”
At the start of the year, Gefco unveiled plans to recruit “several dozens” of customs brokerage staff as well as increasing training provision, the cost of which Olivier Thouard estimates at more than €1 million.
“The plain fact is the more Brexit is delayed, the greater the cost to those firms who prepared early,” he noted. “There are direct costs from hiring additional staff and also the indirect costs in mobilising existing staff to prepare internal processes and reorganisation for Brexit in terms of transport plans, the storage of goods, and assigning staff to work exclusively on such preparations. As a result of these ‘secondments’, we’ve had to abandon or postpone projects. The costs, even for big groups, have been significant.”
On the recruitment issue, BIFA director general, Robert Keen, highlighted the case of one major forwarder who had been trying to line up additional staff on short-term contracts and shorter hours in anticipation of a no-deal Brexit and the re-introduction of customs controls.
“With the two postponements in the deadline, these plans have been pushed back. But arguably, the biggest problem forwarders in the UK face today, Brexit or not, is that if they do have to take on extra staff, the employment pool just isn’t there. There are not that many people out there who want to be freight forwarders. I suppose a (Brexit) transition period would at least give our members more time to recruit.
On the degree of ‘Brexit readiness’ on the part of UK forwarders, Keen commented: “Over the past few months, we’ve been telling our members to prepare for a no-deal Brexit. I’m sure there are firms out there who have chosen not to, preferring to wait and see, even though we have no real evidence of it. Most of our members seem to be taking note of the information we’re putting out and passing this on to their customers.”
He said the larger forwarders have pages dedicated to Brexit on their websites and cited the case of a very small firm which is going the extra mile in its preparations.
“One company based in Felixstowe, which probably employs 10 staff max, has set up a TV channel on YouTube where the owner is putting out videos advising customers how to prepare for Brexit.”
He played down the perception which had first emerged after the Brexit referendum that forwarders would be rubbing their hands from the reintroduction of customs clearance procedures.
“The truth is most of the firms we’ve spoken to would prefer the situation to stay as it is. Yes, there is the prospect they would get more work from customs clearance; but apart from the staffing issue, there would be extra costs and overheads from the expansion of this activity.”
The next stage in the Brexit ‘saga’ is the outcome of the UK general election on 12 December.
“We continue to plan for a no-deal Brexit from 31 January 2020, but with the probability that it won’t happen, said Gefco’s Thouard.
“All of the preparations that have been done within firms – processes, reorganisation, arrangements with sub-contractors, are maintained. There is a greater probability today that there will be a deal, incorporating a transition period which will likely run to 2022.”
Clecat’s Willems also noted that while there was still a chance of a no-deal, the likelihood of it has decreased significantly.
“We would certainly not call on our members to hire extra personnel at the moment in anticipation of a no-deal, but nonetheless, advise them to follow the latest developments closely and stay informed.”
Keen concluded that BIFA’s members “continue to be trapped in the Brexit quagmire, with the same problem we’ve had since the June 2016 referendum result: nobody knows what it’s going to look like and how it’s going to work.
“Feedback that some shippers – albeit not in great numbers – are changing their supply chains in moving production to continental Europe could, of course, end up being problematic. But the mood of our members with regard to Brexit appears to be pretty upbeat; and in the words of our friends at the FTA: they continue to ‘hope for the best, prepare for the worst’.”
Original article here. https://bit.ly/35yBY5g