Almost five years ago the 2016 British referendum occurred, and the end result was to leave the European Union. Since the referendum in 2016, many things have happened including heated discussions between the United Kingdom and the European Union, several prime minister transitions, and changing public sentiments towards Brexit’s outcome. Brexit was initially set to happen in March 2019, but due to delays in negotiations the United Kingdom left the European Union on January 31, 2020. To ease the complex ties between the two, a “transition period” was put in place until December 31, 2020. During this transition period, the UK sought to alleviate some of the issues it would encounter when doing business with EU members; this includes, but is not limited to, pharmaceuticals, food management, and aviation. Below we will discuss an example of how one industry has been impacted.
An Example of Brexit in the Fishing and Marine Cargo Industry:
The rockiness of the negotiations between the EU and UK has caused ripple effects in numerous industries as they cope to retain existing business deals and trade routes. For example, deliveries of Scottish seafood to the EU from smaller companies have been halted periodically, after post-Brexit problems with health checks, IT systems and customs documents caused a huge backlog. Scottish fishing has been plunged into crisis, as lorry-loads of live seafood and some fish destined for shops and restaurants in France, Spain and other countries have been rejected because they are taking too long to arrive.
The industry’s biggest logistics provider, DFDS, a Danish company, pointed to delays regarding health certificates, issues with the IT system interface between the group and local authorities, and incorrect or missing customs documentation from customers. Such Brexit-related delays and costs are ‘pushing Scottish seafood firms into crisis’. If the issues are not resolved soon, some fear the trade, worth more than £1bn annually to Scottish businesses, could collapse.
A Logistics Nightmare:
A similar story is happening across the European Union. DB Schenker, a major logistics company owned by German rail giant Deutsche Bahn AG, suspended deliveries to the U.K. due to “significant” problems caused by post-Brexit red tape. The company, which has about 76,000 employees in 2,100 locations, “has been forced to put a temporary hold on the acceptance of new consignments for shipment” to the U.K., it said in an emailed statement. DB Schenker said only about 10% of goods it had been commissioned to ship were accompanied with accurate customs forms. Their decision is the latest example of disruption to cross-border trade following Britain’s exit from the EU’s single market and customs union.
On Jan. 8, parcel delivery firm DPD also temporarily suspended deliveries into the EU due to high error rates with new customs forms. Trouble with clearing customs has been one of the major early issues of Brexit, with some companies facing dayslong delays to move their goods. Deliveries into the EU from Britain now require customs declarations, and DB Schenker said customers should submit documents such as compliant invoices, proof of origin of their goods and their commodity codes.
What Are Companies Doing to Accommodate the Logistics Nightmares:
This is not only impact logistics of trade; many companies are adding locations as a consequence of passporting rights being revoked (as a direct result of Brexit). An example of this is W Denis Insurance Brokers, the Lloyd’s of London broker, who launched a new European-based insurance broking business in Lithuania. The loss of passporting rights following Brexit means that UK insurance brokers are prevented from working directly on EU based risks, unless the broker has an appropriately authorized subsidiary in the EU. As a result, the Leeds headquartered firm has launched W Denis Europe UADB, which is authorized and regulated by the Bank of Lithuania, to enable it to continue to work with its clients in Europe. Having a European presence allows for the reinstatement of passporting rights throughout all EU states.
For more information on Brexit’s impacts on Global Property & Casualty and Global Employee Benefits, please contact your IMA service team.
https://www.ttnews.com/articles/db-schenker-halts-deliveries-uk-due-brexit-trouble