Top tips for creating your Brexit action plan for 3PL and 4PL companies

By Adam Awan - 

With Brexit potentially happening on October 31 how ready is your 3PL or 4PL company?

Brexit or not? - Haulage Exchange

What is a 3PL and 4PL?

Before we discuss a plan for Brexit let us clarify what a 3PL and 4PL is. Firstly, the simple part, the PL stands for Party Logistics, meaning outsourced logistics. It is often debated exactly what the difference is between 3 and 4 but generally, a 3PL holds stock it does not own and then is responsible for its distribution. A 4PL, on the other hand, does not hold any stock but organises the planning and management for the whole of the supply chain by outsourcing these stages to trusted partners.

The effects of Brexit

Within the EU, the management of the UK-EU supply chain has been fairly straightforward. But the characteristics that have facilitated this may not apply once the UK departs from the EU, particularly if there isn’t a comprehensive deal agreed between the two entities.

Positively Deloitte has outlined the potential impact of Brexit on consumer goods suppliers, including why the UK’s exit from the European Union is likely to increase companies’ reliance on 3PL and 4PL companies. Their reasoning being organisations that operate a just-in-time supply chain or trade-in perishable goods are at particular risk as delays to delivery of goods become more likely. However, once these companies are able to factor the changes into their supply chain planning and adjust accordingly, we expect to see them become increasingly reliant on their 3PL and 4PL providers.

The recommendation to 3PL and 4PL companies is to future proof supply chains with the challenges of Brexit as a key focus. The government has released this handy guide on preparing: Your Brexit guide to imports and exports.

Many businesses have a good grasp of this by now, but some are still in the relatively early stages of the process. For a generation, trade between the UK and EU has happened on the basis of agreements that facilitate the free movement of goods, labour, capital and services. The primary focus must be on having the appropriate data and authorisations in place to continue trade more goods in a worst-case-scenario Brexit on October 31. Here are some top tips for 3PL and 4PL organisations:

Customs and tariffs

Be prepared for potential new duties on imports. You may need new approvals, you need to plan how you will absorb additional costs, you need to think about replacing certain specialist suppliers, and you must consider how this will impact decision-making for core activities. You must also think about transaction costs for cross-border goods movement and ascertain whether pan-EU distribution models will involve paying multiple duties. You will want load quotes to be easy to manage, because if you don’t address this then you will find significant additional administration that costs both time and money. Timesaving should be a key consideration, as delays due to being ill-prepared could be very damaging to your business.

Systems and data

Examine the new data and processes involved in submitting import/export declarations. This includes product origin data. You need to understand how you will capture all this and make it available to support the dispatch and receipt of goods. Thinking about changing product flows, the mapping of new supply models, and the correct alignment of commodity codes with product masters. It’s likely when custom rules or trade relations change under Brexit all relevant materials need to be reclassified. Certain technologies will be more helpful than ever in ensuring everything is recorded for compliance and other requirements. Think things like Electronic Proof of Delivery (P.O.D.) and real-time ETA solutions. It may be beneficial to join a freight platform like Haulage Exchange, whose Freight Vision solution enables end-to-end, real-time freight management and integrates with telematics. Technological solutions could be key to managing the complex changes that will occur as a result of Brexit.

Legal

Businesses must prepare to assess a 3-way legal impact involving contracts, intellectual property and personnel. Will it be easy to renegotiate existing contracts, or will it be better to leave them? What safeguards can be implemented in new contracts to protect against potential uncertainty? It goes without saying that adhering to legal requirements must be a priority for every business, so particular attention must be paid to changes in order to ensure you are meeting all your legal/compliance requirements.

VAT

After Brexit, trade between the UK and EU will become imports/exports in VAT considerations. Postponed accounting will mean VAT won’t be payable on imports, but it will be accounted for. Some EU countries will have to pay VAT on imports from the UK, so you should think about how this will impact your cash flow. Also, consider how this will impact your existing systems/processes, and what additional administration costs will be applicable.

Supply chain hubs

Do an assessment of how supply chain hub locations may be affected. For example, consider how you will make swift deliveries or meet deadlines when you have a border to cross and associated costs? It may be necessary to hold stock within the UK and the EU to be able to service both quickly. Do you currently serve the UK from an EU-based hub?

Lead times

Calculate the impact on margins and planning. New customs bottlenecks are likely to cause longer lead times, which could impact on service levels and margins. This is not good for products with shorter shelf lives. How will this affect your warehousing and stock management? Perhaps it will be necessary to invest in extra capacity. Will you need to turn to more UK-based suppliers? How ready are they to serve your market?

Grants and incentives

Check for news on how the government plans to fill funding gaps. EU businesses benefit from various incentives, some of which probably apply to you. Will new grants be at the same level? How do you apply for new funding sources, and what form is it provided in? These questions could define where you choose to base certain components of supply chains.

Finding carriers

Finding a reliable UK fleet is going to be key to your success after Brexit. It is likely goods will be taken to borders and UK carriers will need to dispatch the goods within the UK. This is very different from now when a carrier could drive goods between Germany and Manchester as an example.

This is where a partnership with a freight exchange such as Haulage Exchange is so important. The system will enable you full visibility to both load poster and courier feedback, allowing for access to reliable, vetted fleets who you can trust to deliver your goods in the UK.

The bottom line

The implications of Brexit for companies in all manner of industries represent an opportunity for 3PL and 4PL organisations to fill significant gaps in supply chains. If your business hasn’t already made a Brexit action plan, there really is no more time to waste.

Only the most well-prepared companies will win the extra business that becomes available after Brexit. Companies will want 3PL and 4PL businesses to help keep their supply chains as smooth, cost-effective and efficient as possible as new challenges and barriers arise, so you need to have lots to offer when the time comes.

Looking for a freight exchange?

As we mentioned above joining a freight exchange could really benefit you when planning for Brexit. At the Haulage Exchange, we pride ourselves in being Europe’s largest haulage network, with over 6,000 professional haulage companies at your service, so you can build your sub-contractor network up quickly. Other benefits of joining Haulage Exchange include:

  • Access to over 44,000 vehicles across the UK and Europe
  • State-of-the-art management tools to posts available loads, organise and manage loads
  • Track load statuses – be in the loop with your loads in real-time and even set up alerts direct to your customer
  • Access reports in real-time reports including our unique ‘replay’ tool enabling for you to see collection to detailed POD details with a signal click

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We're here to help

By email, chat or on the phone, our team of dedicated
Exchange specialists are here to help.