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Issue 5 2018 - Freight Business Journal


///COMMENT & ANALYSIS


In a fret about Brexit? Here’s how to prepare…


By Mohit Paul, BluJay Solutions


Freight businesses with their eyes on Brexit headlines might feel uncertain, and wonder how to prepare for a post-Brexit world before the UK’s future trading relationship with the EU is confirmed. But whatever the outcome, a ‘wait and see’ approach will do businesses no good. They may be risking major service disruption by failing to prepare their supply chain for the change on the horizon.


A rock and a hard place?


Even if the UK government secures the soſtest possible landing, the processes that we use to trade with the continent today will be replaced with something new. Current models for trade between the EU and


other countries will cease to apply to the UK, leaving logistics providers casting around for a new framework. While it’s impossible to know


what a final deal will look like, there are many things that freight companies can do in advance of the Brexit deadline. While no-one pretends that trade and cross-border transportation will run smoothly in the immediate post-Brexit period, businesses that start preparing now have the best chance of successfully navigating this uncertain new world.


Customs change


One of the great challenges of the post-Brexit relationship between the EU and the UK


declarations, but there’s no reason why this has to take place in Folkestone, Portsmouth or Dover. Whatever Brexit scenario pans out, there will not be a need for


complex new technology


at the border. If businesses cannot support customs entry effectively, however, it will likely cause severe bottlenecks in the back office that can be as disruptive as any delay at the border. Logistics companies should


is the potential for change in customs declarations, with a parliamentary report warning of “catastrophic” consequences, such as massive tailbacks at the Channel ports and perishable goods being leſt to rot at the border.


Certainly, there will be a need to lodge ‘normal’ customs


Going East: The future of freight in Turkey


Sitting at the crossroads of Europe and Asia, Turkey plays a pivotal role in the international freight industry. With the country currently high on the global news agenda, logistics businesses worldwide are beginning to question what lies ahead for Turkish logistics. David Williams, managing director of Rhenus Logistics UK explores the country’s current role as an important worldwide player in the freight industry, and what the


future may hold. Any recent visitor to Turkey can’t fail to notice the heavy investment being made in infrastructure, especially highways, across the country. This is particularly evident in major industrial and economic hubs, for example Istanbul, which sits at the heart of Turkey’s logistics network. Although much of the region has


witnessed political upheavals in recent years, the Turkish economy has remained largely buoyant, so continued investment into land, sea and air infrastructure is likely. Indeed, major upgrades to the country’s logistics industry sit at


the heart of plans to mark Turkey’s centenary in 2023. Among the proposals laid


out in the 2023 vision include establishing Turkey as one of the world’s top ten economies, achieving a gross domestic product of $2 trillion and increasing annual exports to $500 billion. The freight industry will play a vital role in helping the country meet these ambitions. Powering Turkey’s continued


economic growth has been a shiſt away from the traditional backbone of its industry,


textile production. As reliance on this


sector has declined, the country has sought to develop other areas of industry, including chemicals, electronic, automotive and mechanical manufacturing. Unsurprisingly, the emergence


of these new sectors has led to a sharp increase in freight forwarding businesses looking to establish routes to and from Turkey. However, in order to establish itself as a key player in the global logistics industry, Turkish forwarders have sometimes prioritised price over service. I’d therefore urge importers to exercise caution and remember that you get what you pay for. A


Businesses looking to move


into the Turkish market will benefit from a logistics partner already established in the country. Indeed, earlier this year, Rhenus announced a dynamic new partnership with Solmaz Logistics Services, one of Turkey’s foremost logistics businesses and, with over


a comprehensive network of over


200 inland customs


be aware, for example, that the


government is replacing


its import/export processing system, CHIEF, with the Customs Declaration Service (CDS), due to go live in the autumn. The new system requires different data from CHIEF, but the requirements have already been published. Logistics businesses must


competitive price might not always result in the desired level of service.


Customs and legislation


There is a long-held perception in Europe that complex culture and legislation makes dealing with Turkey difficult. From experience, however, I would argue that this is untrue. Exporting and importing to and from Turkey is no more difficult than any other country, but, as with all international trade, requires good market awareness and a sound understanding of local-regulations.


ensure that their systems are able to generate and process the required data at speed and avoid creating admin bottlenecks that will delay business. A high- capacity customs solution will also be useful, helping companies to streamline processes.


Trading troubles


We may well be entering a new economic era defined by trade wars, not least after the US President announced $50 billion-worth of tariffs targeted at China. Much is being made of the UK’s exposure to EU import tariffs for a range of goods and services. After Brexit, it’s


estimated that customs


declarations to UK Customs will increase by a factor of five to over a quarter of a billion each year, while the number of UK firms needing to make a declaration will double to over 270,000. While the question of tariffs


lies largely in the hands of the negotiators, businesses can get access to the most business-friendly procedures


40 years of experience, Rhenus Logistics has long been associated with the UK-Turkish market. When the opportunity arose to


join forces with Solmaz, which also boasts 40 years’ experience in the region, both companies seized the chance to enhance their respective offerings with a new and dynamic collaboration. This provides businesses with access to a network which boasts a workforce of over 1,600 employees based in over 60 facilities in 16 cities. Seamless customs formalities


are key to a successful Turkish operation. Solmaz has established


by becoming an “authorised economic operator” (AEO). This is the gold standard of international trade – a self-policing system that demonstrates that a business has a consistently exceptional level of compliance. AEO businesses experience


significantly less hassle at customs borders, helping to keep goods moving. AEOs could be crucial for freight companies, especially those that operate across the Irish border. Currently, less than half a percent of UK businesses have AEO status – ten times fewer than Germany. Logistics businesses would be wise to


make researching their


eligibility a priority, especially as it can take six months or more to be accredited. Organisations have reason to


feel apprehensive about what lies ahead – but that doesn’t mean that they are powerless to prepare for the future. The only wrong action to take is to do nothing and hope for the best. Now is the time to implement customs processes that can handle the change.


secure infrastructure. Importantly, the new partnership provides existing


and potential clients


with a competitive advantage when considering their logistics requirements.


What next for the industry?


Turkey’s key strategic location at the heart of the transit to the Middle East and the Far East has made it a hub of industry for centuries and I don’t foresee this changing for a long time. Turkey’s unique position, an independent entity but enjoying close links with the EU, should encourage more British exporters to take advantage of the opportunities. Indeed, we would expect to


see further investment in Turkish infrastructure. Over the past ten years, we’ve seen a real increase in government commitment to improving infrastructure, which has positively impacted land, sea and air transport operations. With Turkey’s government


customs specialists


operating from border posts and


houses.


Both Rhenus and Solmaz have attained AEO accreditation, providing companies with the assurance that their goods are being transported within a safe and


working hard to make the country a global leading economic powerhouse, I’d encourage UK exporters to consider opportunities – both new and expansions – in the region. Now is the time for businesses to plan how they can make the most of these offerings.


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