European shippers are woefully unprepared for the supply chain chaos anticipated if the U.K. exits the European Union (EU) at the end of next month, according to Godfried Smit, Secretary-General of the European Shippers’ Council (ESC), a leading representative of the logistics interests of manufacturers, retailers and wholesalers.
As previously reported in FreightWaves, just weeks from a potential October. 31 no-deal Brexit, the U.K.’s political system is close to breakdown with almost every conceivable outcome in terms of EU departure date and trade terms still on the table. Even the September 24 decision of the U.K.’s Supreme Court that the suspension of Parliament by the government of Boris Johnson was “unlawful, void and of no effect” has done little to clarify matters.
What is clear, Smit told FreightWaves, is that ports on the English Channel will be chaotic in the days and weeks after a no-deal Brexit and shippers urgently need to prepare for the worst.
“I think the impact will vary much from sector to sector,” he said. “And there is also separation between big companies and smaller companies [in terms of preparedness]. But we see still a lot of companies that are not fully prepared.
“If you ask companies in France, in Belgium, in the Netherlands, not many of them have looked at how they can continue trading with the U.K. in a no-deal scenario and have applied for the correct authorizations. Some of them are still hoping for the best.”
Even the current U.K. government admits a no-deal Brexit from the EU could see truck flows on English Channel tunnel and ferry routes cut to just 50 percent of current levels for three months, according to recently revealed secret U.K. government documents. Truck drivers could also face delays of up to 2.5 days before crossing into France.
This will leave some shippers reliant on premium air cargo options, with demand for charter capacity – and prices – expected to spike next month.
While just-in-time trucking and ferry roll-on/roll-off trades are forecast to be devastated, the paperwork involved for simple short-sea container shipper movements will also make load-on/load-off options significantly more complex.
The extent of this expected new logistical and bureaucratic workload was laid bare on September 23 when Ocean Network Express (ONE) issued a customer advisory explaining the extra security filing requirements even for short sea container shipping customers should the U.K. leave the EU without a deal on October. 31.
“The European Commission (EC) has confirmed that as from this date, the U.K. will be treated like any other non -EU country for security filing purposes,” noted the advisory. “EU export cargo that is currently loaded on a service not affected by the EU 24-hour rule, will become subject to ICS ([Import Control System)] filing, depending on the vessel rotation.”
In practice this means that cargo loaded at Southampton and prior EU ports on a vessel rotating Rotterdam – Hamburg – Southampton – Le Havre – Singapore, for example, will require an Entry Summary Declaration (ENS) to be filed in advance of the vessel’s arrival at Le Havre, even if the cargo remained on board during the U.K. port call.
“This is not limited to cargo discharged in an EU port later in the rotation, but also includes FROB cargo ([Foreign cargo Remaining On Board)] transiting the EU and destined for subsequent non -EU ports,” advised ONE.
For shippers, this means filing shipping instructions in advance. For container lines it will likely mean a restructure of service rotations to avoid extra paperwork and possible delays.
For late-movers looking to build up supply chain resilience in the event of a no-deal Brexit, warehousing capacity is also an issue. Many pharmaceutical suppliers and automotive firms reliant on just-in-time supply chains built up stocks ahead of the previous Brexit deadline in late March and have held on to that capacity, meaning availability is now short.
“In terms of preparation, many companies are already too late because to have your distribution organized in a proper way you have to have, perhaps, additional warehouse space in the U.K.,” said Smit. “That’s very difficult to acquire, and if you can acquire it, it’s very expensive.”
Smit continued, “And it’s the same situation if you want to do you own customs declarations. You would need to install your own automated system and there aren’t enough customs software developers and installers.”
He added, “If you don’t want to do it yourself, you need a customs agent, but there are only so many, and most are already working for their long-term customers.”
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