With new Brexit trade requirements introduced in January, greater digitisation is key to maintaining supply chain momentum, says Roger Sutter, group treasurer at Kuehne + Nagel
The last two years have seen supply chains across the UK and EU strained – not only by the pandemic, but also Brexit, which has placed onerous paperwork requirements on importers, exporters and hauliers.
However, by introducing greater digitisation, companies can evolve their trade into a more paper-free era and, at the same time, speed up trade processes imposed by Brexit.
“In the UK, we have seen situations like items missing from supermarket shelves and this is a consequence of Brexit, the trucker shortage, and the pandemic as a whole,” says Roger Sutter, group treasurer at international transport and logistics company Kuehne + Nagel.
“Many companies once had very finely tuned supply chain networks which have come out-of-sync and now it is taking longer to import goods and more paperwork is involved.”
He believes that greater digitisation is the answer to many of the additional paperwork issues that both importers and exporters have faced in the post-Brexit environment. Kuehne + Nagel itself has put digital solutions in place to support its customers when trading between the UK and EU.
“In the case of Brexit we have done this by implementing a digital Brexit solution called ‘Your Easy Brexit Solution’ to help our customers manage the paperwork involved,” he says.
“The solution is relevant to all companies involved in export and import trade between the EU and the UK, and is designed to help them in that process by allowing more efficiency. The platform has been such a success that we’ve deployed it for customs clearance worldwide.”
He continues: “Unfortunately, there is still too much paperwork to handle for organisations involved in trade across the board, but wherever we can digitise processes we have done so.”
Kuehne + Nagel’s treasury department has implemented an e-invoicing platform, which enables it to receive and handle 500,000 invoices electronically per month.
The company also uses SWIFT to communicate with its network of banks and makes millions of payments electronically over SWIFT’s secure network. It has also implemented an AI-based solution which helps it to predict when its customers will make payments.
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Meanwhile, national courier and logistics company Speedy Freight recently warned that new Brexit requirements to UK import regulations could cause further disruption to UK supply chains. The company believes that all organisations involved in imports and exports must invest more in staff training and improve their processes to deal with this.
Under the additional rules, UK importers are now required to provide all customs paperwork upfront or face the prospect of the goods they are importing being refused entry.
Importers have also now lost the 175-day grace period they were previously allowed for the payment of tariffs. While it is possible to defer some VAT payments, all other charges must now be paid upfront.
“If you look back to January 2021, we had widespread disruption to UK supply chains, with brands bogged down in unfamiliar paperwork and HGV drivers stranded at the border,” says Speedy Freight’s network service manager Shona Brown.
“If businesses want to avoid the customs chaos this year, it’s essential to be adequately prepared for the new legislation.”
However, David Murray, financial controller at Speedy Freight, says that some progress has been made to deal with ongoing Brexit regulations, which have impacted exporters, importers and hauliers alike.
“Our experience over the last year has shown that e-copies of customs paperwork and boarding passes have been accepted by border force teams both in the UK and the EU,” he says.
“That being said there are certain instances where drivers need physical copies, such as European health certificates and transit documents.”
He explains that boarding passes and customs declarations can be created and sent electronically to both customers and drivers, thereby reducing the paperwork a driver needs.
“However, the driver will need a compatible phone to be able to receive and display the paperwork, so investment is needed to supply drivers with the correct equipment,” he adds. “Customers can also use cloud-based storage for their documents, reducing the need to file away documents for audits at a later date.”
Nevertheless, he admits that introducing such technologies comes at a cost.
“Implementing this kind of system can also be a significant financial investment for a company due to the need for backups in case of a system crash,” he says.
Aside from the additional paperwork Brexit has entailed, trade has always traditionally been characterised by vast amounts of paperwork from original, paper-based letters of credit to guarantee payment in trade transactions to Bills of Lading, which are issued by carriers to shippers and serve as shipment receipts.
However, modern-day digital solutions are now establishing themselves including the SWIFT/International Chamber of Commerce Bank Payment Obligation, which offers the same payment assurance as a letter of credit but is electronically transmitted between the importer’s and exporter’s banks.
The use of blockchain technology to digitise trade transactions has also gathered momentum with consortia, such as the Marco Polo Network, designing platforms that provide controlled access to a centralised database that contains all the information relevant to a specific trade transaction.
These platforms work by enabling all the players involved in a trade transaction including the importer, exporter, their respective banks, and the shipping companies to input all relevant trade information into an online, secure database, and also view all the information there, in real-time.
“Letters of credit is another process that we believe should be further digitised but some countries do still require letters of credit to be paper-based,” says Sutter. “This is a situation that varies from country to country with most of the advanced, developed countries already using technology-based processes.
“The use of blockchain-based platforms for trade represents an interesting proposition. We have ourselves looked at this, but not followed up recently,” he says, noting that there was a, downturn in global trade during the pandemic but it has now recovered to pre-pandemic levels.
“What would be ideal to happen is for one of the blockchain trade platforms that are being made available to establish itself as the single, standardised platform for global trade to simplify trade processes, but we are not at that stage yet.”