Mike Thomas, Client Services Director at Import Services recently sat down with a Global Toy Publication to answer a few ‘hot topic’ questions:
Q. The UK has just been granted another Brexit extension by the EU despite assurances that we would be out by the 31st October – will this have caused any issues for UK businesses?
MT: Import Services as with a host of other businesses, has invested a significant amount of time and resources in making contingency plans to manage a ‘Hard Brexit’ and maintain open supply chains to our Clients’ customers across Continental Europe. Whereas Brexit planning has created a distraction, we believe the exercise has also been worthwhile and I know our Clients have appreciated the support and advice we have been able to provide, during an already tough trading period.
Q. The ‘flextension’, as it’s being referred to, means that the UK can leave on the last day of November, December or January if a Deal is ratified in one of those months. Will this uncertainly pose issues for logistics?
MT: The Flextension now enables a General Election to proceed with the question over Brexit being the principal ticket item. Therefore there is no prospect of any deal being ratified until after the country has voted and potentially a stronger political party emerges with a necessary majority in Parliament. The latter, to either proceed with a ‘Managed’ Brexit or trigger another referendum. However, with Brexit fatigue so evident, the business community in particular is keen to conclude on this subject, by understanding the new set of circumstances and implementing plans to deal with them. Timing wise, we would not envisage any changes materially affecting supply chains until after a transitional period, which is expected to extend until the end of 2020.
Q. If the period between ratification and leaving the EU is short – eg: if a deal is ratified during the third week of a month – what can companies to do to ensure they are ready for Brexit at short notice?
MT: Changes involving product address labelling, complying with a separate EU Customs regime, establishing importer of record and fiscal representation to enable continued supply to EU customers, are all steps either in place or at an advanced stage of planning to activate should the need arise. The trigger would follow a majority vote for Brexiteers in the forthcoming Election and after a phased approach, should this be the case, which is anticipated to extend until the start of 2021.
Q. As talks have rolled on far longer than planned, has it become any clearer what the potential implications of Brexit might be for UK companies and their logistics?
MT: It could be during a period of trade adjustment between the UK and EU, current supply chain models change however, this depends on so many variables arising from forthcoming trade discussions, if and when a Withdrawal Agreement is ratified in Parliament.
Q. How has the toy trade been faring during this time? Is the prospect of a post-Christmas Brexit welcome?
MT: The Toy industry is preoccupied in delivering orders to customers in this peak Christmas period, particularly as trade is already challenging enough, so all vested parties are relieved to know Brexit is on hold for the second time this year!
A post-Christmas Brexit is therefore a better prospect, although long-awaited clarity is still some considerable way off and reliant on the Election unblocking the current political impasse.
Q. What is Import Services doing to help its clients during the ongoing uncertainty surrounding Brexit?
MT: Import Services has developed a contingency plan for our Clients to maintain open supply chains to customers across Continental Europe. During this preparation we have consulted widely and invited key input from HMRC, relevant Government & EU departments and with the UKWA, which together with our distribution partners have collectively enabled us to provide advice in helping plan for a worst case ‘Hard Brexit’ this year. As we now know, a more likely outcome [should Brexit proceed post a General Election], is for a ‘Managed’ process involving a practical transition, when the new rules of trade emerge and particular aspects involving the Republic of Ireland should also clarify, as this is a key market for our industry.
Q. If we leave on the 31st January with No Deal, what can we expect the biggest issues to be surrounding imports?
MT: In a ‘Worst Case’ No Deal scenario the more challenging aspects will be for UK exporters, although there will be ways around this to assist, for example holding stock under bond and enabling swift movement of product across the UK jurisdiction to clear Customs into the EU. Operating under an AEO accreditation will facilitate this process. Import Services offers the best of both worlds plus a locational advantage for inbound logistics, adjacent to Southampton’s Container port the first call for Far East container ships plying to Northern Europe. All our DC’s are capable of holding product VAT & Duty free, until sold in wherever market our end-customers reside!
We are also helping EU based businesses seeking to place buffer stocks in the UK as a contingency too and in this respect all-set to help keep retail supply chains flowing successfully.