Update for traders

Deadlocked on deadline

March 29 is history and now a new Brexit deadline has been established. Whether it holds or not is anyone's guess but there are key ways for your company to keep trade flowing no matter what the outcome.

Mike Towle 29.03.2019

London (AEB) –  March 29 has come and gone and not only is the United Kingdom still in the European Union there are few signs, despite a new deadline, that it will be leaving anytime soon. In fact, if you could pick one word to describe the current imbroglio it would probably be turmoil.

As this blog is being written it’s being reported that Theresa May is spending the weekend trying to plot a way out of the stalemate after Parliament rejected her deal for a third time last week.

And more importantly, she is now acknowledging that the end of the road may be in sight. Addressing the House of Commons on Friday after a 344 votes to 286 defeat in that body, May hinted that another election could be in the cards.

 "I fear we are reaching the limits of this process in this House," she said.

What does all this mean for traders? 

‘’They need to be ready for the case of a hard Brexit,’’ said AEB Managing Director Markus Meissner, adding that he believes there is a good chance we will see  a hard Brexit at the new April 12 deadline.

‘’There are few willing to compromise and maybe not much room for compromise in any scenario.’’

There is now a growing number of business analysts telling companies that the time is now to ensure they are prepared for any Brexit outcome.

''Failing to prepare is preparing to fail,’’ said Jessica Gladstone, a partner at law firm Clifford Chance, which partnered to do the study with management consulting company Oliver Wyman.

‘’Given the difficulty of knowing exactly what turbulence lies ahead many businesses are putting Brexit in the 'too hard' box’’ she said. 

‘’However, exporters that understand exactly what Brexit's risks and rewards could be for them will be able to implement the right plans at the right time to ensure that they are one of the winners rather than one of the losers.”

Angela Merkel -  Photo: Bundesregierung/Kugler
Angela Merkel - Photo: Bundesregierung/Kugler

 Geoff Taylor, AEB's general manager in the UK, said most companies there have no idea that Brexit will force them to complete import and export declarations for the first time in more than 40 years and that the cost of those added declarations will have a major impact on profit margins unless they move to an automated solution.

‘’The biggest thing that strikes me is that the vast majority of businesses are doing nothing because they are waiting for the final details of Brexit to be communicated,’’ said Taylor.  ‘’Post Brexit, the burden for export and import declarations will be huge. That’s going to cause shock and havoc throughout the business community because everyone has their head in the sand.

You can find help and insight for Brexit in our Brexit toolkit. It's loaded with all you need to know to navigate your way through any outcome.

‘’Our message is, why wait?'' said Taylor. ''This is confirmed. It’s going to happen. Why would you wait for all of the Brexit details to be disclosed? Instead, shouldn’t you be considering software like our customs management applications that can streamline this part of your operations?’

‘’Going to a freight forwarder and asking them to do your customs declarations for you is not the answer.  The volume is going to be so significant that the increased cost of money to business will impact  margins. Implement software that’s going to automate processes.’’

AEB Customs Management is our central platform for managing customs processes. Its end-to-end IT integration and smart automation allows companies to accelerate customs processes and save valuable resources. The AEB software also helps companies take advantage of free trade agreements, making products more competitive. And all that on the foundation of a smart solution for classifying master product data. Companies gain by having complete transparency of customs processes in a single secure and automated solution.

Claire Umney
Claire Umney

Claire Umney, strategic initiatives director at AEB, said the investments companies are making now in operations should be aligned with what’s needed to prepare for Brexit.

‘’An internationally growing company should invest in new market research and look for opportunities in automating their supply chains, in particular the cross-border transactions,’’ Umney, who works for AEB in the UK, said. 

‘’Companies should understand the structure of their supply chains and ensure risk is removed by having flexibility in sourcing and selling into different markets. The good news about this kind of investment is that it will not be wasted, regardless of what happens with Brexit, but without it, a company’s growth strategy will fail as will their ability to cope with the challenges Brexit might bring.’’

Frans Kok, general manager of AEB Asia Pacific, agrees.

''As most companies plan for the next 5 to 10 years when they make plans for strategic investments it is key to understand the implications Brexit will have on their business models,’’ he said. ‘’Look at the latest tariff disputes between the USA and EU and how it impacts the supply chain immediately.’’

The Wyman and Chance study found that hardest hit regions will be Bavaria in Germany and London in the UK though there is no escaping in other areas. The industries expected to be the hardest hit are the automotive sector and financial services.

Taylor said it’s time for business everywhere to let go of the notion that Brexit may not happen.

‘’The ship has sailed,’’ he said. ‘’We have signed Article 50, which is our exit. This is happening. It would take a massive people shift to stop it and the average man on the street does not care. He’s more worried about how you will get to his holiday destination or where the pound will be against the Euro.’’

Mike Towle
About the author
Mike Towle
Mike Towle has been involved in content creation for more than three decades. A former reporter, he’s worked in all forms of international media – digital, print and video. He’s driven to find the best way to tell every story and then publish it in a mode that finds its perfect audience.

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