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On January 31, 2020, the United Kingdom left the European Union after a referendum vote to do so. With the high amounts of goods that get transported between the EU and the UK, there is uncertainty about how Brexit will influence the distribution of the goods from start to finish. The companies directly affected may have to find innovative methods of adjusting their supply chain for this event.
The Economy
With the UK splitting from the EU, the impact on the economy largely depends on how close the countries are after Brexit. If the countries in the UK and EU do not have a strong working relationship, this may negatively impact both sides. A free trade deal was reached on December 24, 2020, which allowed for no quotas or taxes on goods being traded. Despite this, there still may be new paperwork introduced.
Delays
The UK’s border procedure will be changed to reflect Brexit. This can potentially lead to delays in supply chains by creating a lag in the freight forwarding process. A decrease in freight imported between the U.S and UK has already occurred in the past month and may continue for a period. The new paperwork requirements imposed may also create trade barriers between the UK and EU.
Businesses
While new tariffs are not being introduced, new paperwork and regulations may be imposed on UK countries doing business in the EU. This is because with the UK departing, their businesses may be viewed as separate importers/exporters instead of members of the EU that follow the same policies. To combat this, companies from the UK may hire workers or do manufacturing in their own countries instead of outsourcing from a country in the EU. This may not only help protect against delays but also reduce costs by insourcing.
Solution
Companies directly involved with Brexit must make sure that their whole supply chain processes are monitored for any defects. The technology used must be up to date and provide for direct interaction between each part of the process. This should help protect against any new change imposed by Brexit quickly and effectively. If you need help with your supply chain process call us at 305-821-8995, we assist with international imports/exports and provide the documents needed for customs clearance.
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