Brexit Offers Opportunities for the Logistics Sector

Brexit is just one of many threats facing the logistics industry in the UK, but should be seen as an opportunity for positive disruption, according to TIP Trailer Services head of strategy Mathijs Slangen.

“Brexit is one of many trends, from e-commerce to electric vehicles, that we are seeing in the supply chain,” Mr Slangen told the CoolLogistics Brexit seminar in London on the day the UK delivered its Article 50 letter to the European Union.

Forecasting the outcome of Brexit was complex and it was difficult to foresee what the consequences would be, he added.

It might not all be negative, however, Mr Slangen said. “This is a good time for disruption. We are already seeing many conventions being challenged, so this is a good time to disrupt further. We should be looking at fully digitalising the customs process, for example.”

Garry Honey, founder of Chiron Risk, which advises companies on reputational risk, said that Brexit had come about due to the “politics of protest and the perils of plebiscites”, and warned that hopes of an early trade deal with Europe were unlikely to be well-founded.

“The only certainty is uncertainty,” Mr Honey said. “Reaching a deal won’t be quick. Tariff deals take a long time.”

Read the Brexit letter Britain gave to the European Union

“Brexit is just one of many threats facing the logistics industry in the UK, but it should be seen as an opportunity for positive disruption”Mathijs Slangen, Vice President Strategy and Strategic Accounts at TIP Trailer Services

Other risks included the “unknown unknowns” that would emerge as the Brexit negotiations took place over the next two years, but Mr Honey said that trade negotiations were unlikely to start until the terms of the UK’s separation from Europe had been settled.

Maersk Line Ireland country manager Simon Smith said that the impact of Brexit and what would come next were unpredictable.

“There is an air of uncertainty in our industry at the moment,” Mr Smith said. “The UK is a huge trading partner for Ireland, so we take Brexit very seriously.

Ireland has long used the UK as a land bridge in its logistics chain to continental Europe, but if tariffs are imposed there may be opportunity for shortsea operators to introduce more direct services between Ireland and Europe.

For the UK itself, the government must “ensure that its mission is to keep Britain trading”, according to Freight Transport Association deputy chief executive James Hookham.

“There is no way you can take time out in the supply chain,” he said. “Access to the single market is the most important thing. So much depends on how severe border controls are and what duties are imposed.”

Nevertheless, Brexit offered the UK an opportunity to be bold in new markets, according to Webster Roberson director Alan Robertson. “The Chinese like British food brands and we should be exporting more there. We now have the opportunity to become less bureaucratic.”

Brexit: Leave Voters Want Other Countries To Follow Suit
There are an incredible amount of unknowns lying ahead for a United Kingdom outside of the European Union. The political and social earthquake triggered by the June 23 referendum result is still rumbling on and is only set to get stronger as the formal process begins today with the triggering of Article 50. One of these unknowns is the knock-on effect the UK leaving will have.

With the current rise of Euroscepticism across the union, Brexit may well lead to Frexit, or Italexit or any number of other laboured 'country+exit' combinations. For those that voted to leave the EU, at least, this scenario is apparently favourable.

An Ipsos MORI poll in February revealed that 65 percent of 'leavers' would prefer to see other countries exit the European Union in the next five to ten years.

Brexit Begins

The UK officially initiated the Brexit process by invoking Article 50 of the Treaty of Lisbon (one of the governing documents of the European Union) today. [Reuters/Guy Faulconbridge, Elizabeth Piper]
In Brussels shortly after noon, British Envoy to the EU Tim Barrow hand-delivered a six-page letter from Prime Minister Theresa May to EU Council President Donald Tusk. Moments after its delivery, May told UK lawmakers, “There can be no turning back.” [New York Times/Stephen Castle]
The letter struck a firm but cordial tone: “We are leaving the European Union, but we are not leaving Europe - and we want to remain committed partners and allies to our friends across the continent.” It also suggested seven principles to prioritize in the negotiation process, such as, “We should engage with one another constructively and respectfully, in a spirit of sincere cooperation,” and, “We should work together to minimize disruption and give as much certainty as possible.” [Washington Post/Brexit letter full text]
Negotiations between the UK and the EU must be completed within two years from when the EU is notified. The immediate next step will come from Tusk, who has promised to “present the draft #Brexit guidelines” to the remaining members of the EU. [New York Times/Jasmine C. Lee]
Yesterday, the Scottish Parliament voted to seek another referendum on independence from the UK, aiming for a vote by early 2019 - which would have Scotland potentially leaving Britain as Britain is still negotiating its own departure from the EU. May has encouraged Scotland to wait on its referendum, but Scotland’s first minister, Nicola Sturgeon, has pointed out that in Scotland, most voters wanted to stay in the EU last summer, and the country is being removed from the bloc against its will. [Washington Post/Karla Adam]
Sinn Féin is pushing for a vote in Northern Ireland over uniting with the rest of the island in order to remain in the EU; Northern Ireland also voted against Brexit last summer. But widespread Protestant opposition to even a referendum about Irish unification probably makes that idea a nonstarter. [Wall Street Journal/Jason Douglas]
Meanwhile, some companies are already reacting to presumed rules changes post-Brexit. JPMorgan, for instance, is reportedly scouting new offices in Europe because its current setup - which is centered in London with the ability to maintain European clients and branches outside the UK - will be less viable post-Brexit. [Wall Street Journal/Max Colchester]
And the bigger economic questions loom: Will the UK be able to negotiate the free trade agreement May has said she wants, or will it end up negotiating from a weaker position, with more to lose than the rest of the EU in these negotiations? [Wall Street Journal/Wiktor Szary, Colleen McEnaney, Jovi Juan]
In an immediate blow to May’s ambitions, Germany’s Angela Merkel said that the future of the UK-EU relationship cannot be determined simultaneously with the terms of Brexit. Leave must happen, and “only when this question is dealt with can we - hopefully soon after - begin talking about our future relationship.” [Guardian/Daniel Boffey, Jon Henley]
May’s letter also met sharp criticism because it hinted at the possibility that the UK would decrease security cooperation with Europe if it was unsatisfied with the trade deal reached in negotiations. [Washington Post/Karla Adam]
On the bright side: Some theorize that watching Brexit and the early days of the Trump administration play out has pushed European countries like France away from far-right parties that had previously been growing in influence. Exhibit one: pro-European French presidential candidate Emmanuel Macron, who polls predict will handily defeat far-right nationalist Marine Le Pen in the election’s second round. [New York Times/Steven Erlanger]