Blog 7: Brexit – Freight Forward and Covid Cohesion

To:
Andrew Grainger

Trade facilitation realist

Nottinghamshire, England UK

Breda, 28 May 2021

Dear Andrew,

It seems the frequency of our letters is creeping up a bit. This means either we are busy (which we are), or that Brexit is moving to page 14 of the news.

I did have an interesting conversation with a former student who works for one of the global freight forwarders. They obviously had a hectic period before and after the new year informing customers, through webinars, and helping customers obtaining the right documents, registrations, licenses and such. In his experience, getting customers to generate the right documentation was, and still is, in places, a major headache. Many customers still struggle with invoices, incoterms, HS codes, EORI numbers and so on. They scaled up their shared services centres considerably, but capacity remains an issue.

Since this type of company also offers groupage of less-than-truck-load services, these problems quickly multiply. This is the reason why some of these companies, such as DB Schenker and DPD, suspended their services for brief periods in the beginning of the year.

What I found interesting is that these large companies in general think in terms of resource capacity and infrastructure. They develop a system that consists of transport capacity, storage capacity, and documentary processes, that has a certain scope and capacity. It is much less easy for them than you would think to expand, or deal with hick-ups and fluctuations. Once elements in their system reach critical capacity, they are stuck like anybody else. At least for the short term.

Another issue that came up is that Brexit exposed differences between the way of working on the Continent and Great Britain that were already there. The UK-arm of this company apparently has a hit-and-run type of sales policy, much more than the continental country organisations which are more focused on long term customer relations. Problems with documentation, licenses and registration can be dealt with in a much more efficient fashion with long term customers than with new customers. The result of this was – and is – that a temporary moratorium on taking on new clients on the Continent provided a lot of relief in the back office, while this was never an option on the UK side. I am not sure that this says about Brexit, though. Are we more different that it appears? Does that make Brexit an inevitability?

My former student also enlightened me on the shortcomings of the transit mechanism for transport under customs supervision. Using T1 documents seemed an obvious solution to avoid stoppage at the border. However, these documents need to be cleared in the NCTS system, and that, apparently, is a problem on the UK side. So sending goods into the UK under T1 documents results, in many cases, in incomplete clearing of these documents, which results in a lot of extra work to fix the problem. This is a risk no logistics services provider is willing to take.

I left a topic from earlier conversations I had with our industry representatives, and that is the relationship between Brexit and Covid. We started our conversation with this, and tried to leave it behind us, but it keeps creeping back in the conversation.

This intertwining of these two topics creates a problem for our intended investigation of reverse trade facilitation. The current situation offers us a muddled picture of a new border and Covid. If we plan to investigate the consequences of the introduction of a border, we need to find a way to isolate the two effects, or at least control for the effects of Covid. One such situation is the evaluation of the way Brexit has impacted the transit of unaccompanied trailers on ferries. Covid might have had a lot to do with this as well. Perhaps we need to have a sit down and identify some of these situations where Covid and Brexit interact, and figure out how we can separate the two.

Hope you are well. I feel there is a lot of political tension brewing in the UK, especially in Scotland and Northern Ireland, and many British people that ‘live’ in Spain are discovering that that excludes them from services in the UK. There is a lot of real estate on offer in the Costas, apparently.

I am looking forward to reading your next letter.

All the best

Albert