How Brexit Caught Logistics Leaders by Surprise

1 March 2021 –

Susan Boylan, director analyst in the Logistics Strategy and Operations Team of Gartner, Inc., describes the key changes in tariffs, immigration rules and customs clearance procedures that U.K. logistics providers are grappling with right now as a result of Brexit.

Despite the years of wrangling over the terms of Great Britain’s exit from the European Union, many importers, exporters and logistics leaders have been caught by surprise over the details of the final agreement. Their “palpable sighs of relief” over conclusion of negotiations have turned into shock over the complexities that U.K. companies face in doing business with EU countries. Now, says Boylan, products must be strictly classified by rules of origin, in order to ensure that they qualify for preferential tariffs laid out in the free trade agreement. That’s not easy for some items that are sourced from multiple locations, such as food, automobiles, footwear and chemicals. Some organizations have decided to pay applicable tariffs, rather than go to the trouble of tracing the classification of their goods.

Yet another thorny issue arising from Brexit is the status of skilled workers employed in the U.K. but holding EU citizenship. Companies desiring to source labor from the EU are now required to identify an immigration sponsor and pay an accompanying recurring fee for each individual worker. All affected employees must apply for EU settlement by July in order to keep working in the U.K.

Finally, U.K. companies attempting to import product from the EU are encountering huge headaches in customs clearance and inspection requirements. Currently, one in five consignments are being sidelined because they lack the proper declarations and paperwork. That has led to a severe capacity crunch in transportation services for goods moving into and out of the U.K. “It’s pure disruption at the moment,” Boylan says.

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