implications of brexit logistics shipping

BREXIT – Implications on logistics and shipping companies

Brexit refers to the exit of the United Kingdom of Great Britain and Northern Ireland (”the UK”) from the European Union (“EU”). The referendum was held on 23 June 2016 and as it stands, Parliament has voted in line with the people to leave the EU.

Theresa May in her speech on 17 January 2017 has all but confirmed that the UK will not remain a member of the EU single market or the customs union.

There may be wide reaching effects of Brexit on shipping and logistics companies plying their trade in the EU, as well as issues for companies exporting into the UK.

This article seeks to address and highlight some of the effects that could come into play and the areas in which companies might want to take stock of ahead of developments.

Border and Customs code and checks

The UK may have to produce its own customs code and regime, including but not limited to border controls for trade between the EU and the UK. This might add an additional step in the process of shipping / transport which might need to be factored into contracts when dealing with costs and delivery times.

Not only might goods imported and exported be subjected to extra checks, but the personnel involved in the transportation of the goods might be affected as well. Specifically there might be additional costs to factor in for work permits, visas, etc.

Import / Export taxes and documentation

There could be additional import and export taxes applied on goods, to the extent that goods are exposed to double import taxes depending from where the goods are first brought in. There might be additional documentary obligations / requirements, not just in relation to the amount and type of paperwork required to be submitted but the complexity of that paperwork too. This in turn could lead to additional training for staff to ensure they are apprised of all the changes. This would possibly lead to increased operational costs since a substantial number of import and export companies rely upon their logistics and shipping companies to advise them on the documentation required and product codes for taxing purposes.

Delays

The performance of contracts and costings / pricing in relation with the contracts could be affected due to the additional documentation required to be prepared / checked, and additional time required at ports and terminals in the UK and in the EU for the border / customs checks.

Compliance with two regulations / legislations

Documentation, goods and company operations may have to comply with the regulations and legislation of both the UK and the EU, and these may vary in time due to changes in the UK. This could increase the costs and time incurred to try and ensure compliance with these obligations.

Cabotage rights

Currently the EU member states all grant cabotage rights to each other. When the UK leaves the EU, these rights may be withdrawn and will have to be re-negotiated, or the UK companies will lose their rights to offer such services throughout the EU and the UK.

Security and data protection

There could be a different regime in terms of data protection once the UK leaves the EU. Also in terms of security, there is a question mark over whether the sharing of information between the police and security services in the various EU companies relating to threats would be as open and forthcoming, once the UK leaves the EU.

Insurance

Insurance premiums may go up in view of the additional risks and costs involved. The different insurance requirements for operation in the UK and in the EU would also have to be considered. It may be that companies have to take on additional insurance and additional heads of insurance.

The above is just a brief delve into what possible effects Brexit could have on Logistics and Shipping Companies. LA Marine is hosting a joint seminar with Coleman Insurance Brokers on 22 February 2017 from 16.00 at their office in Bournemouth; “The Implications of Brexit on your Import and Export Business”, together with Brian Sullivan who is a Chartered Insurance Practitioner and has been in the insurance industry for over 35 years, having retired from the TT Club in December 2016. If you are interested in attending the seminar, please email Zoe Taylor (or call us on 01202 786331).

Juanita May Low
Juanita May Low
Associate

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