Monday, August 10, 2020

Doubt Over Brexit Details Concerns Freight Forwarders and Logistics Operators

Once Again Covid Also Muddies the Waters
Shipping News Feature

UK – In the final paragraph of the piece we wrote last week about the government's latest pronouncements on business after Brexit we commented there were still a lot of gaps to be filled in. It seems that was an opinion shared with others, including the British International Freight Association (BIFA).

Meanwhile, as the freight forwarding organisation called for more clarity on such as the new cross border trade systems, Logistics UK (formerly the Freight Transport Association) called for something similar in a report which also wished for more collaboration.

BIFA has always said that in the Brexit negotiations the devil would be in the detail and, as the clock runs down to the exit, the arguments get even more urgent. When the Border Operating Model was revealed, BIFA welcomed the fact that the information contained in the documentation suggested a more cohesive approach to managing the UK’s trade flows and regulatory procedures with the EU.

The announcement gave some clarity on the timing of increased controls; the overall processes that need to be followed; investment in infrastructure; as well as grants for training and new IT infrastructure. BIFA however does have significant concerns about the recent announcements concerning the Smart Freight System; Goods Vehicle Movement System, as well as in particular the Trader Support Service for Northern Ireland, which was announced last week.

Whilst the new systems have been announced, consultation with the trade has been minimal and some of the practicalities of implementing the new systems in regards to freight forwarding, and other supply chain responsibilities, as well as document flows, do not appear to have been taken into account. Robert Keen, the trade association’s Director General takes up the case thus:

“The sooner the government puts some meat on the bones of the various announcements, the better it will be for members of the British International Freight Association (BIFA), which manage a significant proportion of that visible trade. With less than 100 days to go before the end of the transition period, we share the concerns of our members whether there will be sufficient time to make the necessary preparations to facilitate and implement the revised arrangements.

“Set within the overall Border Operating Model, a pattern is emerging of announcements with attention-grabbing headlines, but minimal detail that doesn’t appear to have been thought through. Clearly, in regards to the Trader Support Service, if businesses wish to remain compliant they will have to implement new processes and train staff, which will mean investment at a time of huge uncertainty.

“We appreciate that Northern Ireland is a special case, but BIFA members are disappointed with certain elements of the announcement, including the fact that the Trader Support Service will include Rest of the World customs entries, which will actually lead to them losing business and revenue. The decision to include Rest of the World trade with Northern Ireland in the range of the Trader Support Service activities has come as a complete surprise and we have already had members advising that their customers will be cancelling the customs clearance services performed on their behalf.

“There are also significant gaps in detail regarding key customs responsibilities, such as direct and indirect trader status, which can carry significant liabilities. BIFA members on both sides of the Irish Sea that have been encouraged to invest in employees, new IT systems; sign contracts and make other financial investments could find themselves out of pocket with the introduction of the Trader Support Service.

“BIFA remains concerned that many of the details concerning the new systems still appear to be at the conceptual stage. We urge the government to provide urgent clarification as many questions remain unanswered for businesses in the UK, and in particular in Northern Ireland, where both the EU and UK customs rules will be applied, depending on the final destination of the goods.

“Even with the further financial commitment that was announced alongside the news of the Trader Support Service last Friday, the time frames for consultation; procurement, and then devising the appropriate IT and other operating systems seems extremely challenging.”

The worrying tones of the BIFA boss were echoed by Logistics UK, particularly with regard to consultation between industry and politicians. The organisation says a ‘shared long-term vision’ is required to both navigate the ongoing uncertainty surrounding Brexit and recover from the effects of the Covid-19 pandemic.

Logistics UK surveyed more than 550 members of the industry in January 2020 for its annual Logistics Report, which provides a baseline against which to assess the impact of the pandemic on logistics businesses and the industry as a whole. When surveyed in January 2020, just under 50% of logistics businesses expected the economy this year to remain at the same level of activity as the previous year; two fifths expected it to be better. One doubts if such optimism would be found today. David Wells, CEO of Logistics UK said:

“Britain is emerging from the Covid-19 outbreak into a different political, social and economic climate; now, more than ever, we need to ensure that government acts to unleash the potential of the logistics sector. As an enabler of economic and social activity, logistics has been critical to the functioning our country during the crisis and will be vital to its recovery, and eventual long-term growth. To guide government decision making and efficient public and private investment, we believe a shared long-term vision between industry and government is necessary.

“While indicators for road connectivity and liner shipping have improved in recent years, the markers for quality of roads, efficiency of air transport, train and seaport services have decreased noticeably, making it clear that government must increase its investment into infrastructure to boost the international competitiveness of the UK.

”Ongoing uncertainty surrounding the UK and EU’s future trading relationship had left those working within international supply chains unsure what of to expect and acted as a brake on the economy before the Covid-19 outbreak, however, general indications were for continued growth, albeit at a modest rate.

”There were other positive indicators too, with road freight activity continuing its year on year growth: registrations for HGVs rose by 10.4% and van registrations by 2.4% compared to 2018. And in the rail freight sector, domestic and international bulk and semi-bulk rail freight grew beyond expectations in 2019, possibly influenced by growth in the construction sector.”

To access the Logistics UK report click HERE.

Photo: Belfast Harbour a likely scene of controversy post Brexit.