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   Vol. 18 No. 11
Friday February 8, 2019

BREXIT - Soft Or Hard Roll

Soft Brexit Or Hard Roll

Geoffrey Arend and Sebastiaan Scholte(Part two of two). For Part One click here.
     Both the air cargo sector and its leading lobbyist and networking body, The International Air Cargo Association (TIACA) face multiple challenges this year.
     While the latter has had well-publicized funding issues, ‘air freight’ is staring at trading headwinds in the shape of Brexit, the damaging Transpacific trade war and economic slowdowns in China and the EU.
     All of which made it the perfect time to catch up with Sebastiaan Scholte, the ever agreeable and forthright chairman of TIACA, and the chief executive of Jan de Rijk Logistics.

Hopscotching The World

     Scholte told FlyingTypers, he was concerned about slowing growth in China, not least because it could impact European exports.
     But he also argued this should be placed in context, the context being that although the Chinese economy is slowing down, this is not unusual for a wealthy country. Moreover, he noted, “it’s still growing at over 6%”.

Volumes Moving On Up

     And, while there are signs of economic slowdown in the Eurozone and China, and the trade war between the U.S. and China “adds insecurity,” global air freight volumes “are also still increasing.”
     More difficult to reconcile has been the UK’s flailing efforts to reach a ‘Brexit’ deal with the EU, which, as FlyingTypers has previously illustrated, is continuing to cast a shadow over European and global air freight.

Uncertainty Rules

     “If we knew what was going to happen with the end of Brexit, if we knew what was going to happen between the U.S. and China, then I think as an industry we’d be okay,” Sebastian said.
     “But I think the biggest factor right now, and what I hear from shippers also, is this insecurity.”

How About No Deal?

     The uncertainty around Brexit is exacerbated by the possibility of a ‘no-deal’ Brexit, which most analysts and economists expect will be hugely disruptive to supply chains, as well as economically disastrous for the UK and damaging for the EU. This becomes the default, should no alternative be agreed upon between the two parties by March 29, when the UK is scheduled to exit.
     A no-deal Brexit will, according to UK contingency planning, mean reverting to trade under World Trade Organization rules. This will mean higher tariffs, new permits for trucks and drivers, and cargo will need to comply with whatever customs arrangements can be hurriedly agreed between the UK and the EU.
     Huge delays are expected at ports, the Channel Tunnel and airports.

A Hit That Will Leave a Mark

     Jan de Rijk Logistics handles 20,000 crossings a year between the UK and continental Europe, much of it moved under airway bills between European airports, so Scholte has much at stake, as Brexit is thrashed around.
     “Because of the considerable exposure that we have, sometimes I’m invited by the Dutch Government to talk a little bit from a business point of view about it,” he said.
     “A lot of people ask me, what do you do to get prepared?
     “There’s so little we can do, unfortunately.”

Best Surprise Is No Surprise

     “The best thing that can happen is that [Brexit] doesn’t happen. But if it happens, we hope it’s smooth because a no-deal Brexit and World Trade Organization rules is a disaster.
     “If there are waiting times at borders, that’s going to be a disaster.
     “The infrastructure is simply not ready for it. It cannot cope with delays.
     “Not at the tunnel, not at certain ports.
     “There is no Customs capacity, or space to do checks.”

Truck Backup
Warp Speed In The Slow Lane . . .
     Lorries stand queued up between junctions 8 and 9 of the M20 motorway as seen from the A20 road near Ashford, Southeast England, as a result of the port workers strike in 2015.
     Now concern is raised that yesterday could be today, post Brexit.

The Big Truck Line Up

     Mr. Scholte declared that “any new system post-Brexit would need to be built on pre-clearance and zero border delays so cargo could move freely as it does now under airway bills, for example, Frankfurt Airport by truck to catch a British Airways flight in the UK to Chicago.
     “Anything less would gradually see a re-ordering of European supply chains, and the role of UK airports, as part of that logistics landscape.

Hurry Up & Wait

     “What I hear is, that they won’t allow any paperwork at borders,” he said. “They will just send the trucks back, and they can only join the line when they are all electronically cleared and have everything in order.
     “So for me, hard Brexit, soft Brexit or no deal, of course I have an opinion on that, but from a trucking and air freight perspective, please let there be a seamless border crossing with no waiting times, so everything is electronic.
     “We cannot afford to have huge lines on each side of the border especially from the UK perspective, because the UK depends a lot more on products from the EU than vice versa,” Sebastiaan Scholte said.
     Next: Fold In ACF Recipe For TIACA Future

If You Missed Any Of The Previous 3 Issues Of FlyingTypers
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Access specific articles by clicking on article title

Vol. 18 No. 8
UK Brexit Merry Go Round
Chuckles for January 29, 2019
We Like CNS And We Like Mike
Miami Lands Brazil Post Deal
Letters To The Editor
FT020419Vol. 18 No. 9
A Tale Of Two Markets
Chuckles for February 4, 2019
Pig Into 2019
Favorite Lunar New Year

Vol. 18 No. 10
Lunar Lightbox 2019
Chuckles for February 6, 2019
Turkish Cargo March Into SmartIST
Explaining Blockchain To A 10-Year Old

Publisher-Geoffrey Arend • Managing Editor-Flossie Arend •
Film Editor-Ralph Arend • Special Assignments-Sabiha Arend, Emily Arend • Advertising Sales-Judy Miller

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