International transport in the post-Brexit eraInternational transport in the post-Brexit era
podcast
In Dialogue with Logistics

International transport in the post-Brexit era

Authors:

Gary Dodsworth, Road Director at Rhenus UK, and Oliver Fuhljahn, Head of Automobile Logistics at Cuxport, on how Brexit has affected logistics and supply chain management

Brexit – the word itself has almost become taboo. With the United Kingdom’s departure from the European Union coming into effect and, shortly thereafter, the outbreak of the COVID-19 pandemic, international transport between the UK and the EU has seen increased challenges in 2021. Gary Dodsworth and Oliver Fuhljahn shed light on how logistics companies on both sides of the Channel have managed the effects of Brexit and COVID-19 and what long-term changes they expect for future supply chains.

EORI numbers, rules of origin, truck driver shortages, social distancing and worldwide supply shortages. These are just some of the terms that are currently giving logistics service providers nightmares. Brexit and the pandemic – two major supply chain disruptors – occurred almost simultaneously in early 2020. Companies wanting to keep their supply chains running had to contend with sudden changes in the rules of daily work life on top of new, stricter, and often complicated customs procedures for their international shipments.

But the companies were not alone. Logistics providers such as Rhenus Logistics and terminal operators such as Cuxport managed to prepare themselves and their staff as well as their customers by means of extensive training, customer information and network connections, enabling them to navigate the situation. Listen to Gary Dodsworth and Oliver Fuhljahn’s accounts of the measures their companies took and what the future challenges, such as the truck driver shortage or limited storage spaces, will mean for international supply chains.

Podcast
28.10.2021

The impact of Brexit on international transport and supply chains

Gary Dodsworth, Director of Rhenus UK, and Oliver Fuhljahn, Head of Automobile Logistics at Cuxport, talk about the challenges for international supply chains and logistics service providers in early 2021, when the post-Brexit rules came into effect.

Need more information on Brexit rules?

Find all you need to know and more on the Rhenus Brexit page.

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Transcript of our podcast episode

00:00:03
Andrea Goretzki: LOGISTICS PEOPLE TALK: The official Rhenus podcast for everyone who wants to stay up to date on logistics, presented by Gwen Dünner and Andrea Goretzki. Our guests today: Gary Dodsworth, director of Rhenus Logistics Limited, and Oliver Fuhljahn, head of automobile logistics at Cuxport. The topic: the impact of Brexit on international transport and supply chains.

00:00:33
Gwen Dünner: If Andrea and I had a time machine and were to travel back into the year 2016, we would witness again the event that stood out and would change the daily lives of millions of Brits and Europeans forever: the UK vote for Brexit. Now in 2021, five years later, the UK has left the European market, new customs rules have come into place, transport and logistics have adapted to this new situation. Within the Rhenus world, the Brexit also posed many challenges. On the UK side, our colleagues from Rhenus logistics wrote in-depth information to their customers and prepared their staff for the new rules. In Germany, the Cuxport terminal at the Port of Cuxhaven began similar preparations since this was the Rhenus department noticing the most potential impact because most of their traffic goes to the UK via Holland and Immingham.

00:01:23
Andrea Goretzki: Today, we have very special guests joining us from both sides. Gary Dodsworth, director of Rhenus Logistics Ltd. Hi Gary.

00:01:33
Gary: Hi, everybody.

00:01:35
Andrea Goretzki: And Oliver Fuhljahn head of Automobile Logistics at Cuxport. Hi, Ollie.

00:01:39
Oliver Fuhljahn: Yes, Hello to you all.

00:01:43
Andrea Goretzki: Welcome, both of you, and thank you for joining us. Oliver, Cuxport started its preparation for Brexit very early because roughly 70 per cent of its traffic has been affected by the new Brexit rules. Could you summarise what your strategy was for the preparation and why Cuxport fared better than other ports regarding traffic jams and delays?

00:02:07
Oliver Fuhljahn: Oh yes, of course. I mean, a couple of years ago, where once Brexit has been decided and the vote was for Brexit, we've been faced with a lot of problems in Cuxhaven. We have seen in the early days of our terminal and mainly with the UK as our biggest partner in Europe. So we've been faced with the problem that all of a sudden customs duties have to be implemented and all work around that needed, let's say, to be accomplished before goods are leaving or entering either markets. Three years ago, we have realised all that and we were, of course, in this case requested to do our utmost to create traffic through the Port of Cuxport as lean as possible.

00:03:02
Oliver Fuhljahn: As we were aware of customs formalities and duties and good partners here to our local customs office, we were not fearing any issues but the thing is that once you have traffic like unaccompanied trailer traffic, you need to route the cargo straight through and, well, with the daily ferry connection from Cuxhaven into Immingham, we were, of course, fearing that a certain lack of information could create any kind of hiccups, means congestion and, let's say, long queues of truck drivers waiting and cargo which cannot be sent to the UK. So the result was that we had to inform all parties involved in the supply chain, means first of all, of course, the shippers sending and dispatching their goods in or via Cuxhaven to the UK. But they, of course, have the main duty, of course, to report to their local customs offices and then, of course, to fulfil the full supply chain with all the customs formalities so that goods could be shipped throughout every day more or less 24/7 here via the Port of Cuxhaven.

00:04:30
Oliver Fuhljahn: So lessons have been learned very quick. So we invited all parties, we've trained our own staff and brought everybody, let's say, to a common sense, what requirements need to be fulfilled. Well, it took almost three years to come to the, let's say, real Brexit exit date. We were kind of happy what we have done as preparation was leading to a great result once we were carrying the goods from the first of January onwards, we've seen almost no impact on congestion. All the things we feared were not happening. So, we are quite happy with that and, last but not least, we have seen our main automobile customer asking us if we could provide a potential import hub for their goods out of UK production into the European market.

00:05:30
Oliver Fuhljahn: And it took again almost two years and we've seen the very first cars coming in the very first two weeks of January instead of the Port of Zeebrugge by the Port of Cuxhaven. From that moment on, this customer was quite happy because all the requirements, all fears, as I said already, have been perfectly planned and so the data interflow, the connection via EDI and as well with the customs worked very, very well. So let's say it like this it took a long time to three potential, let's say, dates were always awaited and then not coming. So it was a kind of parabolic flight up and downs but finally first of January everything has been, let's say put in place and customers were quite happy. So I think lessons learned is the better the preparation, the less trouble you have afterwards.

00:06:26
Gwen Dünner: So since Cuxport specialises amongst other segments in the transshipment of new built cars, have you seen any developments or changes due to Brexit?

00:06:35
Oliver Fuhljahn: Oh yes, of course. We have seen that, as well as due to the driver shortage in the UK as well as on the continent, we have seen more and more unaccompanied trailers being delivered by truck and then put on board by Cuxport staff and, of course, taken from board of the vessel in the UK. So these so-called unaccompanied trailers and traffic have risen. We've seen more, well, dwell times, means waiting times that trucks and trailers can be shipped. And so we have more storage, more storage earnings, of course, but the other thing is it's a lack of space in a certain way due to very, very reliable shipping services but if, yes, UECC so into UK, we can manage that but there needs to be no interruption and the kind of congestion in the port of discharge in the UK. So space is, of course, rare and we believe that the flow not only here on the German side as well as on the UK side needs to be followed up and our colleagues like Gary I think they take good care of what's coming and what needs to be done and carried out in the UK.

00:07:55
Oliver Fuhljahn: So we really trust in this kind of potential cooperation. Again, yes we see more traffic coming into Cuxhaven, we have seen that all these trailer and truck ferries suffer a little bit as well. What we've just realised last week is that some of the potential shipping companies who manage RoPax, means they have RoRo as well as passenger ferries, are, let's say, decreasing their fleet and try to convert their fleet into more freight ferries so that this unaccompanied traffic will become more. So I think that's one of the main reasons why Cuxport as well has gained more business out of this new situation.

00:08:47
Andrea Goretzki: Thank you, Oliver. Gary, from the UK's perspective, which have been your key measures to prepare yourselves and your customers for Brexit?

00:08:57
Gary: Well, firstly, to say as mentioned by Oliver, the date for Brexit actually changed a number of times if you remember in recent years. That in itself was confusing and quite a challenge to know when you had to be ready and what you had to be ready with. But from a commercial perspective, we started probably three years ago now before the original Brexit date, and we delivered high-quality information to our customer base, explaining the requirements or our interpretation of the requirements based on our knowledge at the time and over that period, many things changed many times, but we managed our customer portal to reflect the topics as best we can and maintain the high-quality information.

00:09:44
Gary: Operationally, we tried to put in as many processes as possible, even though we were still waiting for confirmation from the authorities, from government HMRC of the final requirement and then, in addition, we had IT development and interface requirements to join up quite a number of different systems. Then finally, as we all know, we got the Brexit date, if you like, at the end of last year, 2020. So quite a lot to do in a moving timescale but I think, looking back now, we got there in the end, although there were many challenges on the way.

00:10:26
Gwen Dünner: Very true, and, of course, the thing that everyone is talking about the most significant change due to Brexit was, of course, the introduction of different customs regulations. Instead of one market, the UK and the EU have become third countries. So the general rules of the World Trade Organisation apply. What does this mean for your customers exactly, Gary, and how have you been able to help them?

00:10:51
Gary: The UK actually have a trade agreement known as the Trade and Cooperation Agreement with the EU, and, interestingly, this was published on the 24th of December 2020. So just one week before the end of the year, and it actually didn't give a lot of chance to finalise things ahead of the new processes being affected first of January. So from a customer perspective, every export or import shipment now requires a customs formality. We help customers, for example, with their commercial invoice set-up through to arranging the process to clear customs in arrival into the EU or into the UK dependent on the flow. I would say the whole thing has been a fundamental change for businesses who trade with the UK or with the EU, whichever direction. We have and we continue to invest time and support our customers to understand the needs.

00:11:51
Andrea Goretzki: We've seen you speak about the importance of rules of origin, which clarify where materials used in the production of goods originate as opposed to the source of their shipment. Why should customers pay attention to this now?

00:12:07
Gary: Yes, this is really an important point. But interestingly, again, it was only published for the first time in that Trade Agreement that I mentioned on the 24th of December. If you think about a new rule, a new requirement, published 24th of December, one week later, it came into effect. So basically, there's a clarification of the origin, essential information that enables reduction of customs duties on importation into the UK or into the EU and the origin statement needs to be shown on exporters' commercial invoices in a specific format. As you can imagine, this one was not an easy task for exporting businesses to make this change immediately in January, so it took a number of weeks for businesses across the EU to really get that implemented to an effective level. So from a timing perspective, it could have been better, and it did cause some problems to businesses in those early weeks. But, again, we try to explain and guide our customers to make that process as easy as possible.

00:13:19
Andrea Goretzki: Do these rules of origin play a similar role in Germany, Oliver?

00:13:24
Oliver Fuhljahn: Yes, of course. I mean we've seen already that certificate of origin is being requested by, of course, the customs. If we talk about imports potentially via the UK or third countries, it is absolutely a must and we see currently in the industry everybody is talking about sustainability and all that. So plenty of rules are referring to this kind of statement or certification. So yes, it plays more and more an important role, to follow up. But, once again, if we talk about imports, yes customers in the UK or shippers in the UK bringing cargoes into Europe, or further, need to provide this as well. So yes, it is a must and, of course, it's, I think, absolutely legal to say it needs to go both ways. But, again, it's for us a kind of additional follow-up, additional documentation. But I think if we talk about export into the UK on Gary's side, it's much more to think of to carry out as in the past, yes.

00:14:36
Gwen Dünner: Thank you. Of course, what was all over the news in relation to Brexit were the major delays at the ports due to customs checks. How did you respectively experience this and what did you do to solve the problem, if we start with Gary?

00:14:51
Gary: Yes, there was, I think, in general, a big concern that we would see extensive delays from January this year. But I remember the main delays occurred in December in the lead-up to Brexit, with trucks trying to get in and out of the UK, and I think there was a combination of things that caused that. At the time, quarter four 2020, we saw a substantial spike increase in volumes coming into the UK as businesses tried to, I guess, stockpile and get prepared for the changes. Then, in addition to that, we had the COVID testing and the requirement to prove a negative test prior to travelling in and out and across the border and we saw some really difficult times in the lead-up to Christmas with drivers stuck in the UK and having a reluctance to come to the UK. Interestingly, in January, I don't think that there was a significant delay at ports and I think, generally, the main reason for this was that volumes were down in the early weeks and the fear that people had the delays would become new or would be present in the early weeks of the year were not really seen, I don't think.

00:16:12
Gwen Dünner: Okay. And, Oliver, from your side?

00:16:14
Oliver Fuhljahn: Yes, as Gary said, we've seen a lot of business going into UK prior to the date, means end of December or, let's say, throughout December we've seen huge volumes being exported, consumer goods, pulp, paper, of course, cars as well, but early days in January so there was almost nothing, but, let's say, seasonwise. But after that, let's say, second, third week of January, we've seen some more businesses coming and, let's say it like this, there was no queuing, nothing. Again, the results of the preparation we've carried out throughout the past years was, let's say, showing its result that most of the goods have been declared correctly, have been informed to the shipping parties.

00:17:11
Oliver Fuhljahn: So once recorded at the booking list, well, we felt free to leave the cargo pass through Cuxport. Of course, the customs decision if there's any kind of export stop or something like this being declared had to be awaited, but this is just a matter of a couple of hours, so it's all EDI connected so therefore we've seen almost nothing. What we've seen is that we have more customs surveys, so that they have the right to stop the goods and to have a physical check of what's going to be exported or imported or whatever. So this kind of job is being carried out more often because we've heard already the certificate of origin, so they check clear what's coming and where the source is, but again no real queues at all.

00:18:10
Andrea Goretzki: Gary, the spikes were even more noticeable because, on top of Brexit, there was the COVID impact?

00:18:17
Gary: I think the spike and the increase in volume was always going to happen. As I said, as Oliver mentioned also, as companies prepared for the end of last year, but for sure the COVID impact and specifically the testing requirement that was in place at the time. I remember that drivers from the EU, for example, before they could leave the UK and return to the EU, they had to obtain a negative test and there was just many, many bottlenecks and difficulties to keep the supply chain moving in those final weeks of last year. So, for sure, the COVID requirements impacted those difficulties.

00:18:59
Gwen Dünner: Yes, of course, and in relation to that as well, another shortage that became more and more apparent was the storage space, especially short-notice and short-term storage, to be able to manage the waiting trucks. How did you solve this?

00:19:13
Gary: Well, last year we recognised that storage space, physical storage space in warehouses as we thought would be premium, and we tried to free up as much space that we had and that proved to be a really good decision, actually, because this year, the requirement for storage space has been incredible and we've certainly seen big increases in volumes and the spike has occurred in recent weeks. I think that generally there is a lack of warehousing space in the UK, and I think many, many businesses are bringing in larger volumes. Perhaps the demand now in the UK is higher. So those early decisions to try to fill that space or maximise that space were key decisions and very important ones.

00:19:59
Gwen Dünner: And, Oliver, on the German side?

00:20:02
Oliver Fuhljahn: Now, first of all UK trade is always, let's say, an offering twice a year, a so-called peak phase if we talk about automobile exports into UK, so it's March to April and September to October where we see more or less double the monthly volumes coming and being shipped into the UK. So first of all, we are kind of used to work with the kind of highs and lows in flows, but due to Brexit as well due to COVID and as we hear currently the semiconductor issue in the automobile industry, we have rented additional space just in front of the port from our neighbour, 25,000 square metres just on the spot, which could provide kind of waiting zones or drop zones for imports or exports. So, therefore, we can use that and we have asked the local customs here as well to extend our customs and our bonded warehouse area on these additional areas as well. So we have more or less 400,000 square metres customs bonded zone. So that's, I think, one of the advantages we can provide. But, to be honest, due to the lack of current flows and business in exports, well, currently they're empty.

00:21:33
Gary: I think one other point, Gwen, sorry, that we should also mention is the lack of drivers, HGV, heavy goods vehicle drivers. I think it's a European-wide problem, but in the UK it's quite extreme at the moment and there is said to be more than 100,000 driver vacancies and that's starting to have an impact on the supply chain generally and we hear in the news every week now about major retailers, major businesses really expressing their concerns about how this problem can impact. And, of course, as Oliver said, we're coming up to the end of the year and the Christmas peak, and it will be really interesting to see how that lack of drivers affects the supply chain in the UK.

00:22:21
Gary: There's a lot of pressure being put to government to try to relax the rules either for driver testing, how you obtain your licence or to make it easier for our EU colleagues, those drivers that worked in the UK from the EU so that they can come back into the UK workforce. I think that would be a really important step and as I said, there's a lot of pressure being applied to government for them to get those things in place as quickly as possible.

00:22:51
Gwen Dünner: Yes, that's a good point. I don't know if it's the same for the German side, Oliver, or if this is something that you notice due to the lack of traffic, maybe?

00:23:01
Oliver Fuhljahn: As Gary said, truck driver shortage is a European problem. Our partner companies we have here in the supply chain for automobile logistics, they suffer a lot. We see that premiums spread out into the market, where you could hear from two up to three thousand euros as premium for a new truck driver you try to, let's say, deliver and this is kind of shocking. But yes, again, we need to work with that. One, of course, very good option is to put the traffic into unaccompanied traffic. So I think this is one of the advantages we here in Cuxhaven can provide immediately and what we've done already for many, many years. But, again, cargoes need to be carried into the port and out of the port and this is, of course, well either by truck or by train or by maybe inland waterway ship to be carried out, but, again, if it must go on road, then those missing drivers are the key issue for a potential congestion in the port.

00:24:21
Oliver Fuhljahn: And storage space, we've already mentioned that, this becomes, let's say, a very compact issue and therefore, yes, try to get the cargo out of the port potentially by a little shuttle service so that the port is not being congested by such stops is one thing. But I think Gary has got a much better overview of what's going on in the UK, where potential space is available. But I think this will be, latest in the Christmas time, again, one of the key factors if the flow is not being interrupted and in time and in sequence as most of our industry companies think of is still possible. But we will see and we'll have a close look at that and once we have the kind of impression that we stuck or about, let's say, counterports in the UK will stuck, then we will have to close again and like other ports have done in the early, early days as well. So we need to wait for that, but we'd like to push it and we hope we can do it.

00:25:40
Gwen Dünner: And, of course, one of the things that you have mentioned is to stay on top of things also regarding the future and, as we know, there are new rules coming into play in January 2022, namely for the GVMS or Goods Vehicle Movement Service, barcode requirements for all customs declarations will follow. Will this change things again, Gary, or are you already on track?

00:26:06
Gary: Yes, I think the way to look at is this year was an implementation year and, obviously, there's very high volumes coming in and out of the UK, and the government recognised that that needed some time to finalise the processes and the procedures and, of course, the IT systems. From January 22, the entire border operating model rules and regulations, those formalities come into play in January. Maybe we'll see some of the specific dates shift a little bit, push back into next year, but the really important one is the GVMS that you mentioned, Gwen, Goods Vehicle Movement Service, and that's going to play a crucial part in the control of shipments coming into the UK and also out of the UK at shipment level. We've seen that. We've recognized that. We've known that that date is coming and we're well ahead in our preparations to ensure that smooth flow and, you know, we just want to convey that message to our customers that we're proactive and we're continually looking ahead as to what the changes might mean, to try to be one step ahead and guide our customers and give that high-quality service that I mentioned previously.

00:27:21
Gwen Dünner: And, Oliver, from your side, is it also something that you're preparing for or is this something that's more UK-specific?

00:27:28
Oliver Fuhljahn: No, first of all, we realise that certain things pop up. All of a sudden, the range of goods, commodities, is, of course, it's big and therefore, for example, 'vetenarian', veterinarian, sorry, issues are coming up. So we need to follow up that as well, means our local customs office here in Cuxhaven needs to have the chance to grow with that as well. So, of course, we are not looking at state of the art, everything is working. No, I think we need to prepare on this variety of goods, we need to be prepared once there's any kind of talk about frozen fish, for example, or meat or whatever, it could become reefer containers. So therefore we have the duty to follow up all kinds of goods.

00:28:24
Oliver Fuhljahn: Waste could be as well a potential issue but again we need to work on that. Local partners are being invited to do that with us together. So, therefore, no, we do it like we've done in the past three years as well. We look ahead what could come once we can breathe, we try to think of new things, and that's the kind of development we'd like to see here and the range of goods as we here in Cuxhaven used to, let's say, be a multipurpose terminal, means not only cars, not only trailers, not only paper and pulp. We do believe that there's always still room to the ceiling, so yes we look forward to that.

00:29:10
Gary: And, Gwen, I should mention, sorry, one more thing, I mentioned about the implementation year that we've had this year, and that included something called delayed declarations. This is for imports into the UK and it allowed those importing businesses to delay that declaration for up to six months after arrival, 175 days to be specific, but that easement will not be available from January 22. That's a really important point to make, and importers need to be aware of that. We're communicating that continually to our customer base and the wider audience, and, to ensure that smooth flow, we're focusing very much on our end-to-end solution from the EU into the UK and we help the team. We have the process in place for all of those imports and indeed our export services back into the EU.

00:30:06
Andrea Goretzki: One more question about Brexit. Brexit is done, the new rules are here to stay. So what's next? Can you give us an outlook on what further changes or developments may stem from this new market situation?

00:30:22
Gary: Well, Brexit is dong that all, or at least the word is done, but customs formalities are here to stay and in January 22, we'll see more significant changes to the customs processes and the rules from the border operating model that's in place for the flow of cargo in and out of the UK and some more controls coming into play from a Rheus UK perspective, not only ourselves but a wider EU network. We're already preparing for these things and we have solutions for our customers to guide them through the requirements to ensure a smooth flow and a high quality of service. That's our absolute priority.

00:31:07
Oliver Fuhljahn: Yes, I mean once Brexit is more or less history, yes, I mean just this date, let's say, we as a logistics provider, as Rhenus Logistics Group, of course, we are able to solve and build new solutions and I do believe that there's a certain kind of new economic structure or, let's say, a customs structure in the UK as a third country, which is, from my point of view, no third country. Still, Gary, I think you mentioned that it's still Europe and it's a close market anyway. So I do believe that those formalities, I mean we do handle and work more or less with the whole world as a group and I think the option to say: okay, we do the tour or the routing via UK into the rest of Europe, why not? I think what Gary mentioned, I think homework has been carried out professionally. It has been put in place. It shows that it is kind of rustic and it works.

00:32:20
Oliver Fuhljahn: So, therefore, I would apply for any kind of routing, either via the UK or straight into Europe or vice versa. No doubt we see a lot of shipping companies calling the ports in the south of UK, so why not using UK as hub again? Customs is work to be understood and I think the Rhenus knowledge base has been built up accordingly and so we can provide any kind of custom solutions in the group. ALS is doing a very, very good job, has been requested by many, many OEMs to support and, therefore, I really feel confident that new chances will be built out of that position.

00:33:06
Gwen Dünner: Thank you again, Oliver and Gary. I am so glad that we're ending on a positive note because, even if Brexit is one of those words that makes you cringe whenever you hear it, the great thing about Rhenus is that we are all colleagues. On that note, we hope that we will see you again soon in person preferably, of course. Let us know if you are ever in Holzwickede, and, yes, thank you so much, both of you. Thank you also to our listeners. We hope you've enjoyed our first English language podcast episode. If you liked it, please share the episode across social media and please let us know if you have any more topics you would like to hear more about, or questions you would like us to answer. Andrea and I will do our very best. You can subscribe to LOGISTICS PEOPLE TALK on Spotify or wherever you listen to podcasts. Tune in next time.

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