Examining whether the current challenges posed by the Post Brexit Trade Deal and the end of the Transition Period are temporary hiccups or a more permanent problem.
When the 11th hour Brexit Trade Deal arrived at the back end of 2020 most businesses hailed it as a breakthrough, largely because the prospect of no deal would have been so damaging to UK businesses.
On the one hand the deal has given most UK businesses certainty, which will enable companies to finally be able to make long term plans, as well as invest for the future.
I am a great admirer of how UK businesses are able to adapt and innovate, as their operating environments evolve, which will provide many opportunities to grow into new markets, as the UK continues to sign trade deals around the world.
However, on the other hand and despite business’ initial enthusiasm, the devil was always in the detail. Indeed, some sectors weren’t included in the deal, such as financial services.
It’s also clear that the new arrangements are not without their challenges. I talk to many business leaders and every company and sector is having to adapt and to adapt very quickly. My company, Morningside Pharmaceuticals, is no different, as we import and export our pharmaceutical products globally, as well as to the EU.
So the question to really ask is whether these are short term teething problems or a longer term fundamental challenge?
Pre-Brexit, we made extensive preparations for every eventuality, such as increasing buffer stocks and off-site warehousing; agreeing post-Brexit processes with freight forwarders; and ensuring EU supplier and customer readiness.
But inevitably there have been some issues since the new arrangements began, although it’s still too early to say whether these are all down to the new post-Brexit landscape, or are being amplified by the ongoing Covid-19 pandemic restrictions.
A few of the challenges we’ve faced so far include additional paper work, which has slowed turn-around time for shipping arrangements; extra shipping costs; customs brokers refusing work because of increased demand; and a shortage of haulage firms and drivers able, or willing, to take UK deliveries.
Some of the consequences of the Trade Deal have also affected our supply chain. One example is around specific Incoterms, which specify who is responsible for paying for and managing the shipment, insurance, documentation, customs clearance, and other logistical activities. This has led to a substantial amount of paperwork needing to be carried out by our EU suppliers, at a time when their resource time is inhibited by the pandemic.
To work through these issues we have taken a number of actions including; working closely with our EU partners and Freight Forwarding companies to refine shipping and customs processes and continuing our export strategy to focus on the rest of the world, as well as the EU.
We will also continue to work closely with the Department of Health & Social Care (DHSC), which is keen to support our sector where possible, as well as look to engage Government directly and through Trade Associations, like Chambers of Commerce, which I would encourage businesses to provide feedback to.
So to come back to the question, the majority of the current challenges we face should be short to medium term bumps in the road that get resolved in time as we learn to adapt. A longer term fundamental concern is the new trading arrangement with Northern Ireland and the issues around rules of origin, which must be resolved quickly.
As a business that has exported to more than 120 countries since our inception in the 1990s I have seen first-hand the opportunities which are out there, and the huge benefits on offer for UK Plc. It’s clear the new trade deals negotiated by the Department for International Trade (DIT) will offer UK businesses a real long-term advantage, including the potential for the UK to join trading blocks like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
So, despite all of the headwinds we face, there are green shoots ahead and businesses must bear in mind that Brexit is a process, rather than a complete package from day one.
One very useful way to get a personalised list of actions for your business is through the Brexit Checker on www.Gov.uk website, which provides a quick ‘gap analysis’ of your business activities to help navigate through the new trading environment.
In time UK businesses will adapt to the new arrangements with the EU and begin to grow into exciting international markets, which offer huge growth potential for ‘Brand UK’.
It may just be a bit bumpy along the way.
Dr Nik Kotecha OBE, Chief Executive – Morningside Pharmaceuticals Ltd