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![\"Brexit](\"https:\/\/www.dilx.co\/insights\/wp-content\/uploads\/2020\/01\/Brexit-roadmap.png\")
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Here is a breakdown of different terminologies of Brexit doing the rounds and how each of them can impact the investors and economy.<\/span><\/p>\n The UK leaving the EU is not an uncertainty anymore. From 31st Jan. 2020, the impact of it will be felt in the businesses around the world. Brexit is a reality that businesses around the world have to face and prepare for. Whether you are: Exporting to UK \u2013 direct or indirectly, doing multinational trade via the UK, into the UK \u2013 directly or indirectly or manufacturing and configuring for exports in the UK. In all the cases, Brexit will affect your business operations \u2013 in terms of costs and timelines. But it can be an opportunity and threat, depending on how a business is prepared to handle it.<\/span><\/p>\n <\/p>\n Some of the key implications for businesses operating in the logistics sector: Air Freight Maritime Landscape Road Haulage Rail Sector Borders LSP Contracts <\/p>\n <\/p>\n Taxation Customs <\/p>\n <\/p>\n Across the Globe & UK <\/p>\n <\/p>\n Other issues like airline licenses, medicine certifications, and certain civil rights might end overnight with an increase in bureaucratic checks on goods and people traveling to and fro from the country.<\/span><\/p>\n The UK needs to keep a fast pace post-Brexit and set-up bilateral free trade agreements to keep its economy going especially in US & China. If that doesn\u2019t work out, 80% of giant Manufacturers & Retailers having distribution hubs in the UK; might shift to EU territories specifically to Benelux (Belgium, Netherlands, and Luxembourg).<\/span><\/p>\n According to estimates from the International Monetary Fund (IMF), a hard Brexit would also lead to significant long-term economic damage across the European continent. Below is Estimated GDP losses % in case of No-deal Brexit scenario:<\/span><\/p>\n <\/p>\n <\/p>\n The Guardian reports that the UK will face a three-month meltdown at its ports, and a \u2018hard\u2019 Irish border, according to government documents on Operation Yellowhammer. The dossier says up to 85% of lorries using the main channel crossings \u201cmay not be ready\u201d for French customs and could face queues of two and a half days.<\/span><\/p>\n <\/p>\n <\/p>\n Key Challenges that Logistics Companies Could Face as a Result of Brexit:<\/b><\/p>\n <\/p>\n <\/p>\n LSPs & other supply chain companies<\/a> can find ways to balance the BREXIT impact:<\/span><\/i><\/p>\n Faster Digitisation: Market Platforms: <\/p>\n![\"\"](\"https:\/\/www.dilx.co\/insights\/wp-content\/uploads\/2020\/01\/Brexit-4.png\")
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\n<\/strong>No-deal or hard disruptive U.K. exit from the EU will have catastrophic implications for Europe\u2019s trucking companies and supply chains.\u00a0<\/span><\/p>\n
\n<\/b>UK carriers will not be able to fly between two third countries and stop in the EU, nor will they be able to fly between two member states or within the one-member state which could impact certain freight routes.<\/span><\/p>\n
\n<\/b>Shipping can be broadly thought of in terms of Short-sea routes and the Deep-sea routes at inland EU ports as well as international freight traffic. No deal will affect them with Cabotage (transport between port to port which will not be liberal)<\/span><\/p>\n
\n<\/b>Road haulage is the dominant mode of freight transport within the UK. The majority of goods imported to and exported from the UK by road are handled by overseas haulers. No deal will affect them with international driving permits they need to issue for driving through the EU and EEA countries<\/span>.<\/b><\/p>\n
\n<\/b>There would not be any foreseen that Brexit will affect the UK\u2019s relationship with non-EU countries pertaining to the rail sector. The UK is currently a member of international rail organizations and is likely to remain so.<\/span><\/p>\n
\n<\/b>The UK government estimates that there will be a 6 month period of disruption at the UK border, being at its worst for the first 3 months. Delays could arise due to a number of factors:<\/span><\/p>\n\n
\n<\/b>Few LSPs have written clauses into their contracts that ensure delivery within a certain timeframe, with penalty clauses being activated for delays to delivery. Managing these obligations in a no-deal scenario will be important as it may need updating to manage some of the potential risks arising from Brexit or in response to Brexit-related restructuring.<\/span><\/p>\n![\"Brexit](\"https:\/\/www.dilx.co\/insights\/wp-content\/uploads\/2020\/01\/Dilx-2701_ADS.jpg\")
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\n<\/b>The ramifications of any Brexit depend upon its form majorly will be VAT; which will rise around a fifth of the UK\u2019s tax revenue. Exports of goods and services outside the EU are generally excluded from VAT, however, EU Member States do generally charge VAT on the import of goods and services from outside the EU which will be an applicable scenario to UK post-Brexit.<\/span><\/p>\n
\n<\/b>Consignees of goods shipped across a customs border may need to make payment of duty. In a no-deal scenario, the value and volume of such payments will increase significantly. This could present challenges for LSPs \u2013 such as communicating to parcel recipients why\/what duty is payable, ensuring robust systems and processes are in place to handle increased payments.<\/span><\/p>\n![\"Supply](\"https:\/\/www.dilx.co\/insights\/wp-content\/uploads\/2020\/01\/IM3.jpg\")
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\n<\/b>Post No-deal Brexit, the actual commercial impact for importers across the globe will be TARIFFS. U.K. comes out of the EU; tariffs will be based on World Trade Organization terms. Other companies\/retailers across the globe that trade and ship product from the U.K. will get hit with a second tariff. That will essentially be a double blow.<\/span><\/p>\n![\"UK](\"https:\/\/www.dilx.co\/insights\/wp-content\/uploads\/2020\/01\/IM4.jpg\")
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\n<\/b>It\u2019s time to implement internal, external and inter-company digitization and standardization of processes to bring in transparency, documentation handling, and price discovery.<\/span><\/p>\n
\n<\/b>Multimodal capability to handle forwarding platforms will be a norm in the future. This provides an opportunity to optimize costs and find models to benefit from the opportunities created by Brexit.<\/span><\/p>\n