This article is part of the FERMA/AIRMIC joint Brexit Newsletter which is designed to give risk professionals unique insight into Brexit related risks and mitigation strategies.
Carl Leeman is the Chief Risk Officer of the Katoen Natie group of companies, a global logistics and transport organization, operating port, logistics and on-site terminals. The group provides logistic and engineering services to the automotive, petrochemical, consumer goods, retail and food industry in 26 countries in Europe, North America, South America, Asia and Africa.
Overall, for Katoen Natie, the Brexit risk is only one risk among many global risks. Partly thanks to a good geographical spread of their clients and good preparation, it does not constitute a life-threatening situation for the organization.
Global political and trade instability is not a new challenge for Katoen Natie, and it is also sometimes a source of opportunities for the company if large businesses are outsourcing some of their activities in reaction to such events. Katoen Natie can offer a wide range of tailor-made solutions to different industries in multiple countries, and this diversification and adaptability are precious assets in an unpredictable environment.
During Summer 2018 in the absence of a Brexit withdrawal agreement, concrete implications for Katoen Natie started with questionnaires from clients. This acted as a trigger for action. Since then, most client businesses have increased their preparation as regards a possible no-deal Brexit.
For the Engineering Business Unit, the company made detailed inquiries of all its suppliers. It sent a checklist to all suppliers of critical devices and other elements to understand which of them were made in UK, or heavily dependent on the UK.
This checklist touched upon the most sensitive consequences of a no-deal Brexit, such as the impact on price, level of stocks, customs delays… To avoid supply interruption, the possibility of alternative sourcing outside the UK was also raised. The results were quite encouraging with no major, foreseeable disruptions.
For most of the largest ports in continental Europe, the activity with the UK represents only a small portion of their global traffic. Having said that, ports like Zeebrugge or Calais, which depend a lot on trade between the UK and the continent, are likely to suffer in case of a no-deal Brexit.
As an illustration, the UK automotive industry exports a large portion of its production to the EU. The activity is likely to be reduced and investments will be halted until the Brexit final outcome is known and the current uncertainty is removed.
To mitigate the consequences of a hard Brexit, Belgian authorities have set-up a dedicated customs department to plan for the new formalities involving verifications, import duties and quantitative limitations. Belgian businesses trading with UK have also been advised that they will need an import/export identification number.
If Belgium expects a 50% increase in custom declarations for exports, the authorities have indicated that it should be absorbed by the current system without any major issue. From a logistical perspective, more truck parking and reinforced staff (around 140 persons) will support Zeebrugge to handle the additional workload. Most problems are likely to arise from unprepared companies with no appropriate documentation.
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