What impact will BREXIT have on your logistics strategy?Ruchi Dogra
Brexit is a reality that businesses around the world have to face and prepare for. Here’s how they can do it.
The UK leaving the EU is not an uncertainty anymore. Come March 2019 and the impact of the unknown will be felt in the business world around the world.
Brexit is a reality that businesses around the world have to face and prepare for. Whether you are:
- Exporting to UK – direct or indirectly
- Doing multinational trade via the UK
- Into the UK – directly or indirectly
- Manufacturing and configuring for exports in the UK
In all the above cases, Brexit will affect your business operations –in terms of cost and in terms of timelines. But it can be an opportunity and threat, depending on how a business is prepared to handle it.
While specific mechanics of how the Brexit separation will work remain unclear, it’s certain that there will be:
- Impact on the movement of labour across EU and UK, affecting logistics workers
- Regulatory issues, which will bring in new standards/norms for production, packaging, distribution
- Potential trade tariffs that will impact the bottom line due to tax structures and duties
- Challenges to the free movement of goods along with demand and supply issues
Other potential areas where we will see an impact are:
- Tariffs: On finished, raw materials or intermediate goods, based on what is negotiated between the EU and UK.
- Forex currency: Any depreciation of the pound due to impact of Brexit will one hand create more opportunity for exports from the UK, and on the other hand, lead to a rise in import costs.
- Supply chain delays: The imposition of new customs requirements and additional documentation will likely cause delays in clearances, additional
- Taxation: The UK could reduce corporate taxation to maintain and grow its share in trading activity, leading to enhanced logistics needs.
If you think about it, Ireland has long used the UK as a land bridge in its logistics chain to continental Europe, but if tariffs are imposed there may be an opportunity for short sea operators to introduce more direct services between Ireland and Europe.
These are just a few of the many significant challenges that supply chain professionals with businesses need to appreciate and understand. They need to begin work through potential scenarios and plan how they will save their positions and make the most of the opportunities Brexit provides.
Even though answers to many of these questions are still unknown, it is important that businesses do not wait for concrete answers or policies, but begin to work through potential scenarios and plan their responses now.
What can businesses do?
It is critical to change business practices, review business operations, analyse suppliers, renegotiate contracts, and/or improve parts of supply chain activities. Business should:
- Revive their business supply chain and goals for the future.
- Get data on all aspects of logistics in a standardised manner.
- Assess and model scenarios on what are the likely impacts and how to manage them.
- Do risk and cost-benefit
- Run pilot projects and review results.
Can businesses find ways to balance the Brexit impact? Yes, it’s possible.
Faster digitisation: It’s time to implement internal, external and intracompany digitisation and standardisation of processes to bring in transparency, documentation handling, and price discovery.
Market platforms: Multimode capability for handling ecommerce platforms will be a norm in the future. This provides an opportunity to optimise costs and find models to benefit from the opportunities created by Brexit.
If planned for, businesses can find creative ways of reducing their liability and risks with a well-designed logistics strategy and reap the benefits of Brexit.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)