Express operators claim to be ready for Brexit but tight-lipped on measures

DHL and UPS appear to be reluctant to go into detail on their Brexit preparations but both companies told CEP-Research that they are confident of being able to adapt to the changing regulatory and market landscape when the UK makes its scheduled exit from EU on March 29, 2019.

Next week's EU summit (17-18 October) has been commonly seen as a deadline for an agreement setting out the terms of the UK-EU ‘divorce’ - the so-called withdrawal agreement - to allow enough time for the UK Parliament and the European Parliament to ratify it.
 
But fears of a 'no-deal' Brexit have gathered momentum in recent weeks as negotiations have seemingly stalled. It therefore came as a surprise last weekend when, in a media interview, European Commission president Jean-Claude Juncker sounded a very upbeat tone, saying an accord will be reached with the UK in November if it doesn't happen this month.

"We have to get away from this no-deal scenario. It wouldn’t be good for Britain or for the rest of the (European) Union. My assumption is that we will reach an accord which will achieve the conditions of the withdrawal treaty," Juncker said, adding that it was not possible to predict whether there will be a conclusion to the Brexit negotiations in October. "If not, then we will do it in November".

If a deal fails to materialise at this juncture, there is also the fall-back option of the EU summit the following month (13-14 December).

Commenting on how DHL viewed Brexit, a Deutsche Post DHL group spokesperson said: “As a globally operating logistics supplier, we know how important open borders and cross-border trade relationships are. We therefore regard the UK’s exit from the European Union as marking a “deep break” in European history. The unique European integration project and especially the single market developed over the past 25 years have not only brought political stability, but also more prosperity. Every effort should be made to hold on to these achievements, insofar as possible.”

The spokesperson noted that the specific consequences of Brexit will emerge from the ongoing negotiations between the UK and the other 27 EU member states, not only for the European project as a whole but also for the economies of the individual states in the bloc.

“We are following the process with great interest, conducting constant analyses with a view to our services and offering the relevant stakeholders our expertise. Even though the future conditions for trade between the EU and the UK have not yet been laid down in detail, we can assure our customers that we are already making as many internal preparations as we possibly can to prepare for Brexit and will be happy to support them in an advisory capacity.”

The global nature of Deutsche Post DHL's activities meant that the group was accustomed to dealing with a variety of trade barriers and restrictions, the spokesperson added.

“Adapting to changing conditions is one of the daily challenges of our business. Against this backdrop, we are confident that even after the UK has left the EU, we will be very quickly able to develop new solutions for our customers where necessary and work together to implement them. Our customers will benefit greatly from the high level of expertise we have gained in dealing with all kinds of customs regimes based on our global activities. This is how we will contribute to remaining a pioneer in cross-border trade for our customers.”

For its part, UPS appeared to play down any real concerns over Brexit. A spokesperson for remarking in a brief statement: “We are here to serve customers no matter the regulatory framework. Our job will be to employ the flexibility of our smart global logistics network, the expertise of our transportation and customs professionals along with our knowledge of logistics value chains to help customers adapt and grow in any situation.”

With CEP firms disinclined to elaborate, at least in public, on the possible impact of Brexit on their operations while the outcome of negotiations remains unclear, it has been left to trade body, the European Express Association (EEA), which represents the likes of DHL, FedEx/TNT and UPS and smaller peers “with one single voice at the European level”, to set out the issues facing the sector.

In a position paper published in June this year entitled, 'Ambitious post-Brexit partnership should minimise disruption to EU-UK trade', it said that for the express delivery sector and its customers, it is essential that the future partnership between the EU27 and the UK ensures minimal disruption in trade flows. “The EU27 and UK should therefore work towards an ambitious and mutually beneficial future relationship and ensure a smooth transition”.

The EEA urged the negotiators to ensure continued connectivity between the UK and EU by maintaining status quo in terms of access for road transport operators through a sectorial road transport agreement; continued air connectivity between the EU and the UK through a comprehensive air transport agreement (including seventh freedom rights for cargo); continued alignment on aviation security through mutual recognition of the application of regulations; continued alignment on aviation safety through continued participation of the UK in EASA; and simplified and cost-efficient customs processes built on the principles of the Union Customs Code (UCC) to ensure continued trade in goods and limit administrative burdens.

Focusing on the latter issue, it underlined that once the UK has left the EU, and if no deal is agreed, both parties will treat each other for trade purposes as 3rd countries.

“It is therefore vital that the simplified processes for import and export outlined in the UCC are included in any future agreement between the EU and the UK. Without such simplified procedures, each individual Member State will have to manage an increase in administrative customs processes at their borders when trading with the UK (and vice versa). The increase in formal declarations will not only slow the movement of goods but vastly increase the cost of processing cross-border trade.”
Turning to the projected continued growth in e-commerce and the likeihood of an increase in goods re-entering the customs union or the UK for repair, alteration or return, the EEA said it was imperative that a simplified electronic process be found for such an occurrence.

This was the only way to develop the already established trade links between the UK and EU and would also reduce administrative burdens and costs, allow for expedited trade at the borders and ensure consumer satisfaction and confidence.