(Updated with FedEx quotes)
Express and parcel operators are set to suspend their no-deal Brexit contingency plans for a second time following the UK's formal acceptance of the EU's offer to delay its departure from the bloc until 31 January 2020.
They had previously cancelled such measures after the original deadline of 29 March 2019 was extended by a further six months.
Contacted by CEP-Research to comment on the new Brexit extension, which has taken the no-deal scenario of October 31 off the table, a spokesperson for DPDgroup said: “DPDgroup was relieved that a no-deal Brexit has been avoided, for the sake of business and especially at the beginning of the peak (end-of-year) period.
“We had a full shift plan going on that has been suspended once we had the confirmation of the extension to 31 January 2020. For instance, some of our customers were already requested to provide us with customs data for their shipments. We have informed them that this was no longer necessary, for the time being at least. Until a deal is duly ratified, DPDgroup will keep its plans for a no deal Brexit ready.”
The spokesperson added: “The deadline is now likely to be 31 January 2020 and in the meantime all contracts and regular customer shipping will continue as normal.”
In a brief statement on the prolonged Brexit deadline, DHL noted: “We are pleased that an immediate no-deal Brexit has been averted, subject to final formalities. We now hope that the additional time will be used to come to a timely resolution that allows all businesses to move forward.
“We continue to work closely with our customers and remain fully committed to supporting their cross-border trade post Brexit.”
Trevor Hoyle, FedEx’s SVP Ground Operations Europe and Brexit Lead, commented: "As an enabler of global trade, FedEx has advocated for a Brexit deal that avoids creating new barriers, streamlines customs processes, maintains regulatory cooperation and makes it as easy as possible for businesses to bring their ideas and products to the global market.
"We therefore welcome the efforts made by the UK and EU to reach a withdrawal agreement, and hope that all sides will now use the Brexit deadline extension to finalize an agreement and provide clarity and continuity for businesses. Our Brexit planning team will monitor the situation in the comings weeks and months, and we will continue to support our customers to prepare for whatever the future holds."
As for UK government measures to facilitate trucking goods to and from the UK, yesterday 'Operation Brock,' a plan to manage traffic congestion in the event of disruption to cross-Channel services, was activated in preparation for the UK’s exit from the EU on 31 October.
However, today the Department for Transport (DfT) revealed that in the light of the agreement to extend the Brexit deadline, “the Government has taken the decision to stand down Operation Brock as soon as possible.” He did not elaborate on when this would be done but Wednesday, 30 October has been mooted.
The new Brexit deadline would also appear to have implications for the freight capacity contracts, worth up to £86.6 million, which the UK government signed with four European ferry companies earlier this month in preparation for a ‘no-deal’ departure on 31 October. The arrangements are designed to “help ensure vital medicines continue to enter the UK after Brexit, whatever the circumstances.”
In the event of the capacity not being required – for example, if a deal was agreed, or the departure was postponed – the termination of contracts would cost just over £11.5 million, considerably less than last time when the original Brexit date of 29 March was extended, CEP-Research understands.
There is also the prospect of the UK Department of Health and Social Care (DHSC) suspending contracts worth £25 million in setting up an 'express freight service' to deliver medicines and medical products into the country in the event of a no-deal Brexit.
Earlier this month, it awarded contracts to UPS, ferry company DFDS and Biocair, a global courier firm specialising in the clinical trials and bioscience sectors, to “help to ensure that patients and care providers have access to medicines and medical products after Brexit.” The contracts cover 'express parcel services,' 'pallet services' and 'specials.'
At the time of CEP-Research going to press, no one at the DHSC could be reached to comment on the ramifications for contracts now that the Brexit deadline has been extended by three months.
In a related development, the EU last week approved a seven-month extension for two contingency measures to maintain UK road haulage and air connectivity in the event of a no deal Brexit, although trucking firms would face extra costs and red tape.
Under the agreements, the road haulage contingency measure, which was due to expire on December 31 this year, will be valid until the end of July 2020. The aviation access contingency will be extended from March 2020 to 24 October, 2020.
The UK Freight Transport Association's (FTA) European policy manager, Sarah Laouadi, noted: “Both agreements will allow some degree of continuity, but it is clear that permanent solutions should be reached to enable businesses to plan efficiently for long-term business stability and avoid yet another cliff edge.”
But Laouadi warned that there are still “pitfalls” to the arrangements that, while providing some “breathing space” to logistics companies, also come with restrictions that will “increase the cost of transport, create unnecessary red tape and could simply fail those specialised haulage companies that serve a particularly dense network of customers and multiple sites in Europe.
She continued: “The news that UK hauliers will be allowed to carry out most journeys without the limited ECMT permits is a relief to the majority of hauliers, since the permits were not designed to cope with the quantity of traffic which flows to and from the EU on a daily basis.
“However, a small number of operations will not be covered by the contingency, and the flexibility which UK businesses currently enjoy will be eroded gradually if a deal is not reached between the UK and EU.”
Laouadi added: “And while the aviation agreement will bring short term relief for businesses which rely on airfreight to keep their supply chains quick and efficient, a permanent arrangement should be prioritised to keep goods flying to and from the UK.”
