Our 2018 BREXIT Update (Part 1)

In January 2017 Rudee Bertie shared his preliminary thoughts on BREXIT . A year later, how does he see the BREXIT landscape impacting CCL and its clients?

Being a business involved in customs clearance, servicing freight and courier movements into and out of the UK and Eurozone, you won’t be surprised to know that we’re keeping a close eye on the way BREXIT is developing. Recently the talk has been all about the customs union, or more accurately, a customs union. A couple of weeks ago, the Government ruled out membership of any kind of customs union (although by the time we publish, things might have changed). We’ve been taking a look at how this impacts CCL and our clients.

New challenges

Businesses everywhere will certainly face new challenges as a result of changes to the terms under which goods move in and out of the UK and EU. For a start, UK and EU-based businesses will no longer have the benefit of being able to move goods in free circulation. But we believe BREXIT gives the UK the opportunity to create a different kind of customs relationship for the UK, and potentially make the UK more attractive as a trade partner across the world.

For UK businesses, after BREXIT, everything outside the UK will be regarded as another territory, with borders and customs control potentially for every country. That means UK businesses will need to raise export documentation for sales into the EU as well as beyond. Of course, EU businesses will have to do the same if they are to sell into the UK.

Potentially this means that frontline UK businesses such as freight forwarders, customs brokers and couriers will get busier as they’ll have 27 more countries to manage for customs declarations. As a customs broker, we would expect to have our hands full, both on inbound and outbound. Today, for consignments coming from, say, France, Italy, Germany or The Netherlands, it’s open borders, so effectively rendering those shipments as domestic. Post-BREXIT, those consignments will need full customs documentation and clearance services.

Online shopping – an immutable ‘law of nature’

Before we get too concerned about what this might do to our businesses, we need to stop and consider the realities. Never mind being a nation of shopkeepers, as the old saying went. Today we’re a nation of shoppers. And British consumers will continue to shop and order goods online, every hour of every day! Shipments into the UK won’t simply stop arriving when the UK leaves the EU.

Statistics tell us that currently around 70% of all EU eCommerce traffic has a final delivery destination within the UK. That’s one of the reasons that the UK has for so long been the gateway of choice for eCommerce trade (as well as being very conveniently in the middle of global time zones, and offering regular scheduled flight connections right around the world). So we would expect more clearances. But as the cost of import/export administration rises, we would expect to see those additional costs passed on to the retailers and, in turn, consumers.

Gateway Amsterdam

To continue to serve the EU after BREXIT, CCL anticipates replicating in Amsterdam what we’re currently doing very successfully in London. We’re already establishing relationships with partners who will use CCL’s standard operational procedures, service level agreements, in-house developed software and our intellectual property, and embed these into the system in Amsterdam. We’ll make best use of localisations and local law to achieve the same performance as we currently achieve in London, all driven through our powerful IT systems and managed by CCL.

CCL is creating a formal partnership with a company in Amsterdam and will continue to deploy its expertise and intellectual capital to manage the overall process, in exactly the same was as it currently works in London. Our Amsterdam partner will in turn benefit from business which they wouldn’t otherwise have seen, as it would previously have entered the EU via London.

Where does that leave the UK?

The EU customs border has to exist somewhere and after BREXIT, it will be in the Netherlands. But whilst this shift will bring business to the Dutch, I fully expect that the amount of business coming into the UK will hardly change.

Think about it for a moment – we’ll take the USA as an example. At present, some 70% of all freight coming into the EU from the USA arrives through the current UK-based gateway and remains in the UK, with only 30% exiting the UK and being dispersed throughout mainland Europe. The difference is that there will, after BREXIT, need to be two shipments instead of one – one will arrive into the UK and the other into Amsterdam for the EU. CCL is already testing new processes around this dual shipment approach, with shipments arriving from China and the USA.

The important thing is that all goods can still all ship into the UK. The 70% which remain in the UK can be dispersed to the final addresses exactly as they are now. The remaining 30% bound for mainland Europe would be held in a Bonded facility to be onward shipped for clearance in Amsterdam and open distribution across the EU.