As we have been thrust into the new year, the same old issues are facing everyone the forwarding world. Brexit is still the main issue we all need to focus upon. Negotiations are still on-going and the overall conclusion that both the UK government and EU parliament agree upon needs to be favourable for freight forwarders around the world.
The March 2019 deadline for our exit isn’t as far away as we think, with time creeping up on us. The UK’s plans to leave the European Union’s single market remain short on the details that will assist its members as they go about their business of managing much of the UK’s visible international trade. This needs to be addressed to try and combat the many concerns that people have of customs clearance.
With many ports already being filled to the brim and causing mountains of congestion throughout the country, a simple answer to these concerns and questions would be enough to settle the nerves of many of the affected freight forwarders.
If all is running smoothly, and an agreement on the Brexit bill happens through this month, then the breakout groups will be chewing through the 20,000 EU rules and regulations which will be affected by Brexit in this month.
This is a long process, so the odds of getting any more clarity on how Brexit will affect the rest of the freight forwarding industry is slim, however, this is a step in the right direction and once the regulations are sorted, then we will have a clearer picture of exactly how are exit from the EU will affect customs clearance and import / export trade within the UK.
This month should also see work start on the Great Repeal Bill, which would see EU law transposed on to the UK’s statute books and repeal the European Communities Act. That would need to be ready to go on Brexit Day, two years after Theresa May pulled the trigger.
These may not seem like monumental steps in the on-going Brexit debate, however, the Great Repeal Bill is vital for the transition of the UK to leave the EU and is something that we all need to pay attention too before we leave. If this isn’t put in place beforehand, our deadline of March may look to be extended, which could spell trouble for forwarders due to an extension of uncertainty that we currently reside within.
Considering future talks on Brexit, and how they should pan out, many in the forwarding world should be paying close attention to whether we take a hard, or soft approach to our inevitable exit.
Leaving the EU without a preferential trade arrangement in place would make the UK significantly poorer, and this would no doubt be the outcome of a hard Brexit. That would leave us outside and shut off from the European market of 500 million people who could buy our products and services. Reverting to World Trade Organisation rules should not be contemplated.
Any company with an interest in shipping to or from Europe will need to pay close attention to the outcome of this. This could be detrimental to business for many freight forwarders and something that would have to be repealed if necessary.
In other news, we have recently seen developments within the road haulage industry. The Road Haulage Association is dismayed that within 3 weeks of informing the sector responsible for delivering London’s economy, that the Ultra-Low Emission Zone would be introduced 17 months ahead of schedule, Transport for London’s latest consultation, announced today is now looking to extend the Low Emission Zone London-wide from October 2020.
The current Low Emission Zone imposes charges of £200 per day on all lorries that do not meet Euro IV or above. The new proposal will require all HGVs to be Euro VI, those that do not meet that standard will pay an extra 100 per day.
This is essentially an extra tax for most HGV drivers around the country, and no doubt an issue that will arise again. These drivers keep shops, restaurants, tourist attractions and of course hospitals, around the country, functioning and this is something that these drivers will not tolerate in their everyday duties.
On a more positive note for the forwarding world, passenger to freighter conversions will form a sizeable tranche of the ‘new’ main deck metal entering the market over the next 20 years, according to airframers Boeing and Airbus. This will add a resounding economic growth platform for many in the industry, and is something which several key individuals are excited about.
Airbus has forecast 1,224 conversions over the next 20 years and Boeing has assumed 1,560 conversions in the same period. This expected growth has prompted independent aviation consultancy IBA to create a freighter advisory practice, headed by Moshe Haimovich who joined the firm this year.
Now that we have come into 2018, it would be remiss of me not to consider the future of freight forwarding, and how the rest of the year may pan out for the industry. The freight forwarding market is going through a structural change with logistics stakeholders needing far more visibility into their supply chain in 2018. Many forwarders, even some of the largest, lack the tools that would give them the visibility and the agility to prosper in what will no doubt be a challenging market in the upcoming year. This may seem like a shock to some, but the future of freight forwarding still relies heavily on the consistent innovation technologies that help the industry function at 100%.
The new year will also bring up more new business. Freight forwarders are up against more competition than ever. Part of the reason is that many logistics companies that traditionally defined themselves as something else (say an as ocean carrier, or even a warehousing company) are now providing forwarding and NVOCC type services.
And of course, everyone is talking about how even Amazon is getting in the game as well, and with their backing this could spell out trouble for smaller forwarding companies. These are major issues that will face us all in the forwarding world over the next year, but not issues that people within the industry have faced before.
Freight forwarders are as nervous about the future as any other type of company these days – and for good reason. It’s hard to think of another industry facing more uncertainty with many of the macro-trends happening in the world right now. Whether it is Brexit, Trump or many of the other global issues that can affect trade, this could be another potential year of uncertainty, but making sure that all distribution areas within the industry make the best out of any bad situation is key to installing confidence in investors around the world.
There is always a way to overcome these obstacles however, and 2018 will offer just as many solutions to all the issues facing us over the next 12 months. Forwarders need to work incredibly hard over the next few months to differentiate themselves from the competition and excel in delivering quality services. If this is done, then the rest of the issues will simply fade into the background.
Matt Dailly, Editor, FORWARDER magazine