In our previous blog post our internal Brexit expert, James Colson, highlighted the key potential scenarios for businesses’ supply chain management and how to start preparing for the day we leave the EU and beyond.
The latest blog post in our Brexit series explores how the impending leaving of the EU is already influencing the UK warehouse and transport industry.
There are many considerations facing businesses in the UK in light of the EU referendum outcome, and the Brexit effect on supply chain issues in particular is no small factor.
Currently goods flow relatively freely between the UK and neighbouring countries within the continent. However, this is all set to change once the UK officially leaves the EU.
Both warehousing and transport operations will be transformed, which will have a knock-on effect to all trade that involves importing and exporting.
Increase in demand for UK warehousing
While there are many concerns about the negative implications to the economy, the warehousing industry is expected to expand rather than reduce in the coming years.
According to the UK Warehousing Association (UKWA), a fifth of logistics firms are forecasting to increase their portfolio. A rapid growth in the omnichannel and online shopping arena, along with British businesses looking towards domestic operations due to Brexit, means competition for precious warehousing space on British soil is high.
Consultants KPMG commented that UK companies are preparing for Brexit by stockpiling goods in case of border delays, over-ordering by 15-20% and “gobbling up” warehouse space.
Driver shortages for freight forwarding and Brexit
The freight forwarding industry could be facing issues with the number of drivers on the road after Brexit. With the UK already struggling with driver shortages, the potential of losing 43,000 EU drivers after Brexit could be disastrous for the UK supply chain.
The Freight Transport Association (FTA) has urged the Government to ensure European HGV drivers will retain their permits and be allowed legally into the country after Brexit day, further stating that the alternative could bring the supply chain, and the economy, to a “crashing halt”.
As well as drivers, EU workers make up 26% of warehouse operatives in the UK, so their loss could prove a huge loss to the economy.
Applications for AEO
With the Chartered Institute of Logistics and Transport (CILT) encouraging all businesses involved in the supply chain to gain Authorised Economic Operator (AEO) status ahead of Brexit, customers are now demanding this of their freight and Brexit logistics partners.
The CILT said the accreditation – which is an internationally recognised quality mark – is necessary to ensure a smooth transition of borders to market when we leave the EU.
While businesses are becoming increasingly aware of the fact that AEO status is vital, applications have been slow on the uptake, with just 10 firms per month applying last year. It is expected that an influx of applications will happen once companies realise the importance of AEO, which could lead to a backlog for HMRC.
Yusen is providing an end-to-end supply chain for businesses concerned about Brexit and its implications. With many procedures already in place, alongside constant revision and understanding of Brexit progression, we are passing support and our relevant expertise in comprehensive logistics on to businesses who are considering outsourcing logistics planning and preparing for Brexit, from customs clearances and our long-established AEO status, to lead time management and cross-Europe freight forwarding and warehousing.