Is frictionless trade achievable after Brexit? Deal or No Deal.

2018-nov-22 08:00:00

What can companies do to minimise the risks and maximise effectiveness after Brexit? Are there opportunities to gain a competitive advantage compared with today? Centigo proposes a structured and proven approach which ultimately could lead to a certification equivalent to 'trusted trader', in order to gain fast-lane status and avoid significant friction.

Expectations on entirely frictionless trade, regardless a deal or no-deal scenario, have come down since Centigo and I published an article in April (How to turn Brexit into a competitive advantage). According to bookmakers a no-deal scenario is much more likely today. Any deal would still entail a border of some kind to cross between the EU and the UK for all import and export shipments.

Knowing that time is scarce and that companies have varying starting points, levels of ambition, risk appetite and risk exposure, the approach is designed to be agile (delivering in sprints meeting more frequent milestones) and adaptable to the context. The approach includes Discovery, Analysis, Planning and Implementation. It builds on experience not only from Brexit preparations but from trade compliance process and change projects worldwide for export/import intensive multinationals.

So what activities are relevant for such companies to consider, and to do so urgently – given the leadtimes for preparations? Typical improvement areas to achieve more friction-less cross-border trade include the following:

- Certification: Go through the process to become a ‘trusted trader’ (if the benefits hereof justify the effort), starting by applying and then work to meet the criteria. It is likely that the HMRC will base such a certification on AEO.
- Data: Structure, clean up and verify completeness for example HS tariff codes, country of origin, component/product tagging.
- IT systems: Ensure the capability to work effectively with trading data.
- Routines: Define the way of working and document it.
- Roles and responsibilities: Secure that all involved know what to do.
- Training and change management: Ensure that all involved know how to do their tasks and understand why and the importance hereof.
- Supply chain re-routing: Evaluate and make changes to sourcing and distribution patterns given changed costs, risks and potentially also lead-times.

What are the advantages of such an agile approach for preparations?

- Deliveries in increments designed to be realistic to meet deadlines which may not defined by the company itself.
- Monitoring external factors to evaluate risks and opportunities during the process and adjust accordingly.
- Flexible to scale up or down depending on risk assessment and risk appetite.

Regardless 'deal' or 'no deal' scenario, there will be a border of some kind to cross. This means an increase of workload, either small or significant, to handle trading. To set up the routines, systems, data and roles/responsibilities proactively can mean a huge difference for profitability and market share going out of the Brexit process.

A military saying is to prepare for the worst and hope for the best. Where do you stand? If you are interested in exploring opportunities to make the right preparations? Please contact our London office to discuss how to minimise friction in trade, and explore opportunities to gain competitive advantages. Contact: ragnar.agnell@centigo.co.uk.

Tags: Brexit International trade Blockchain Digital Value Chain Centigo_UK United Kingdom


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