BREXIT & its impact on your logistics strategy
Brexit will soon be a reality and there’s no escaping its impact. Logistics companies, however, can prepare in advance and reduce the ill-effects. Ruchi Dogra, Co-founder and Director, FreightCrate Technologies, explains.
The UK leaving the European Union (EU) is not an uncertainty anymore. Come March 2019 and the impact of the unknown will be felt on the business world across the globe. Brexit, unlike fads, is a reality that business around the world will have to face and prepare for whether you are: Exporting to the UK, directly or indirectly Doing multinational trade via the UK Importing into the UK, directly or indirectly Manufacturing and configuring for exports in the UK In all the above cases, Brexit will impact your business operations, both in terms of cost and timelines, and can be an opportunity or threat depending on how a business is prepared to handle it. While specific mechanics of how Brexit separation will work remain unclear, what is certain is that there will be: Impact on the movement of labour across EU and the UK, impacting logistics workers Regulatory issues will bring in new standards/norms for production, packaging, and distribution Potential trade tariffs that will impact the bottom line due to taxes and duties Challenges to the free movement of goods, along with demand and supply issues Furthermore, 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 the UK
Forex currency – any depreciation of the Pound will, on the one hand, create more opportunity for exports from the UK and on the other, increase import costs Supply chain delays – due to the imposition of new customs requirements and additional documentation, which may cause delays in clearances Taxation – the UK could reduce corporate taxation to maintain and grow its share in trading activity, leading to enhanced logistics needs These are just a few of the many significant challenges that supply chain professionals need to understand. They need to begin working through potential scenarios and plan how they will save their positions and make most of the opportunities that Brexit provides. What to do? The answer is, change business practices, review business operations, analyse suppliers, renegotiate contracts or improve parts of supply chain activities, etc. A business should: Revive their business supply chain and future goals Get data on all aspects in a standardised manner Assess and model scenarios and how to manage them Carry out a risk assessment Run pilot projects and review the results So, what are some of the big ideas to mitigate the impact?
Faster digitisation: It’s time to implement internal, external, and intra-company digitisation and standardisation of processes to bring in transparency, documentation handling, and price discovery.
Market platform: Multimode capability handling e-commerce platforms are the norm of the future. They help optimise on cost and find models for benefitting from the opportunities created by Brexit. Talk to your new-age logistics platform suppliers. Their consultants can help re-engineer your business supply chain network to evaluate the affects of potential strategies during and post Brexit. A business can find creative ways of reducing the liability and risk with a well-designed logistics strategy and reap the benefits.