25 May 2024

UK and EU trade is facing a crisis on all fronts

Banking & Finance
| The European |

Actively embracing technology is an essential requirement to accelerate the success of EU-UK trade, says Frank Dunsmuir of Digital Trader Services

With the impact of the pandemic on the global economy still being felt, logistics service providers (LSPs), freight forwarders, hauliers, suppliers and businesses across the EU are continuing to face challenges related to global supply chain bottlenecks, which are pushing up inflation and hampering economic growth. 

Adding to these challenges, at the beginning of 2022, moving goods to and from the UK and the EU became considerably more complex and paperwork heavy. For those businesses that have already struggled with changing processes post-Brexit, and pandemic driven supply shortages, this is creating the perfect storm for those unable to quickly adapt. In its recent report the Public Accounts Committee shared its view that since the end of the transition period on 31 December 2020, UK trade volumes have been suppressed by the impact of Covid-19 and wider global pressures “but it is clear that EU exit has had an impact, and that new border arrangements have added costs to business”.

Clearly how the UK and EU confront these disruptions will have a big impact on economic growth and success this year and beyond. What is now needed is for businesses to become resilient and adaptable, so that they can withstand external shocks and flex around an uncertain economy and evolving regulatory environment.

Digitising trade and border processes 
First and foremost, the UK and EU must embrace a digital-first mindset to automate trade processes. This will require utilising new, technology-based systems that can automate customs administration procedures to create compliant error free declarations without needing access to deep customs expertise. 

Thankfully, there are services that can support businesses with this transformation. Digital Trader Services is providing solutions which help streamline the laborious and intensive processes surrounding the import and export of goods. 

However, the required transformation of the processes and technologies facilitating trade will not come easily or quickly. It needs new legislation from both sides of a trade partnership and close collaboration in often fractious and challenging negotiations, as well as engagement across industry. It is important that decision makers remove the current barriers, by accepting that actively embracing technology is an essential requirement to accelerate the success of UK-EU trade, so businesses no longer experience these issues when trading.

What’s more, alongside these growing challenges to trade, many logistics businesses are calling for greater transparency and support when moving goods through global supply chains. With this in mind, Digital Trader Services recently launched Atamai Freight, a digital platform which can help hauliers and businesses collaborate in real-time on the management of goods in transit. This delivers end-to-end visibility of every consignments’ journey in real-time and uses digital information through smart seals to protect and demonstrate the load’s integrity.

Overcoming skills shortages 
These aren’t the only barriers to trade. Another lies in the availability of skills and talent within the customs industry. When the UK left the EU, it had around 8,400 customs intermediaries – and research from Digital Trader Services suggests that in a worst-case scenario the UK is short by a staggering 42,000 customs intermediaries that the current model would need to cope with five times the declaration demand. 

This is again where digital trade can help to alleviate the pressure businesses are under. Technology has the power to significantly reduce the reliance on customs workers which businesses struggle to acquire – enabling them to automatically and seamlessly complete lengthy, confusing procedures in-house.

Changing expectations for sustainable trade 
Beyond the impact of the pandemic on supply chains, there are other long-term shifts which have made supply chain transparency more important.

Following COP26, a growing number of consumers are putting pressure on businesses and expressing their preference for businesses that are dedicated to environmentalism. Consequently, companies are striving to address their concerns while improving internal systems and scrutinising energy use throughout the supply chain.

Not only this, but the EU’s carbon border tax adjustment plan to impose a tariff on companies importing certain greenhouse gas emitting products into the single market could have a significant impact on any business that relies on carbon intensive materials, such as steel. 

Businesses also need a wider understanding of the supply chain. One weak link in the chain is enough to break the whole circuit and businesses need to know where they stand if they want to avoid any delays or major disturbances. Through using technology to monitor supply chains, businesses can pre-empt and respond quickly to suppliers that experience issues, whether from compliance, ethics, or local crises. 

Ultimately, although the start to 2022 has presented UK and EU businesses with more challenges than they hoped for, both parties remain strong economic forces with a huge amount of potential. So long as businesses are open to changing their thinking and embracing new technological solutions, then they will be able to not only improving their understanding of the whole supply chain, but also able to maintain growth, avoid lengthy trade delays and become greater global trade partners. This will be crucial in the near future, as shortages and supply issues look set to continue into the future.

About the author

Frank Dunsmuir is Head of Customs and International Trade, Fujitsu and Consortium Partner at Digital Trader Services (DTS). 

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