How is Brexit Affecting the Material Handling Industry?

Since January 2021, Brexit has had a clear and lasting impact on every stage of the logistics process. From transport fees to restrictions on imported goods, the effects of this new change are evident in the warehouse industry. It’s also said to have negatively impacted supply chains and will possibly continue to do so for at least the next five years.

What impact has Brexit had on the material handling industry so far?

Due to Brexit, rules and regulations have changed within the logistics process and so relevant companies have had to quickly and efficiently adapt to the ever-changing situation at the hands of Brexit. Some of the changes include the following:

Custom changes

These changes have seen the end of free trade between the EU and Britain. Essentially, this means more paperwork and an important need to meet new products standards. These standards are far more strict than they were previously, particularly when it comes to trading restricted goods and livestock, to name a few.

Supply-chain disruption

The disruption and delays in the supply-chain come often at the hands of increased and thorough custom checks at British ports. As such, a backlog of demand to major supply chains is created, especially when it comes to grocery supplies and products needed for the manufacturing industry. However, this is forecast to ease after the initial adjustment period.

Regulation changes

Workers’ rights and consumer protection has been changed to UK trading standards as opposed to the former European standards when Brexit occurred. It’s important for the warehouse and logistics industry to stay on top of and be regularly informed regarding any and all regulation changes that come with potential Brexit changes.

What effect does Brexit have on the suppliers and distributors?

The recent Brexit deal left SMEs within FMCG reeling. They were left feeling unprepared, with no idea which direction to go in as a result. Due to associating logistics costs, many suppliers and distributors were forced to cut off sales to the European Union. In turn, this hinders a business’ ability to scale internationally, which will, ultimately, cause bottom lines to decrease.

Business suppliers and distributors are still looking to effectively navigate their way around new regulations, changing their prices in order to become more smooth and effective once the transitional period, or adjustment period, has ended.

Prior to the Brexit changes coming in, many suppliers found themselves stockpiling certain products, including medication and other emergency supplies, in order to beat any blockages or delays in the supply chain.

Has transportation of goods been affected by Brexit?

A number of transportation links have been affected by Brexit, including road haulage, air freight and maritime transport. When it comes to the transportation of goods, lorries, trucks and other vehicles are most likely to bring that stock into the UK using the road network as opposed to the railway. However, without the presence of warehouses across these main routes, supply chains would slow down or even start to deteriorate over time.

Stock being exported from the UK will then be handled by those who work overseas. Despite this seemingly efficient process, Brexit has meant that admin hurdles, mandatory border checks and even delays at key ports have come into play.

In order to try to tackle these delays, air freight has become far more popular in order to beat congestion on the ground, but the same rules and checks will still apply once those goods have been imported into another EU country. Although this increase in air freight alleviates the pressure put on road haulage companies and even sea freight, it has caused a build up of traffic in the air, thus making the situation even more of a logistical nightmare.

Will Annand, a Manufacturing Account Manager at Trident Worldwide has been quoted saying;

“manufacturers i’ve spoken to at the start of this year has explained that their main issue was, of course, the changes in documentation and how not providing the correct information causes huge delays, and in some cases, penalties from customs which is affecting businesses massively. This has caused them to change their shipping Incoterms more to X-works and FCA in order for the financial and timing responsibilities to be placed more on their customers rather than themselves”

What predictions can be made about the material handling industry post-Brexit?

After Brexit, there will be a number of changes that come into force for the material handling industry. Those changes will mean that we simply have to adapt to this new way of working, logistically, but it won’t mean that the industry will be made better or worse, it will just be somewhat different from what we’d ordinarily be used to.

There have already been a great number of changes made to the industry, some being more subtle than others, but the Brexit change is well and truly underway and it has been for some time. With the rise of E-commerce and next day delivery expectations set up by customers, businesses such as Amazon will experience some of the most severe and immediate changes in comparison to other sectors and industries.

The changes that have already been made so far at the hands of Brexit has only proven how resilient, versatile and adaptable the material handling industry can be. Demand will likely soar as an increasing number of products start to be made right here in the UK, but this will then ease the pressure on those handlers at the borders, both in the UK and overseas.

Long-term trends, such as automation, material flow and even improvements in fleet management will continue to alter, but this will only drive improvement across the material handling industry, and this still would have been the case even without Brexit.

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