The United Kingdom will now have to sign new trade treaties with everyone, without the bargaining power of the European Union, which will lead to higher duties, and therefore, increased costs for shippers, Xeneta CEO Patrik Berglund said.
Norway-based ocean procurement software provider Xeneta believes the United Kingdom’s decision to leave the European Union will have a negative impact across all parties involved in the container shipping segment, from shippers, to freight forwarders and the container carriers themselves.
Last week’s ballot outcome revealed 51.89 percent of UK voters were in favor of leaving the European Union, while 48.11 percent were against the decision.
Xeneta CEO Patrik Berglund said the UK’s decision to leave the EU will impede on free trade, thus raising costs in a way that will not benefit any parties involved in the container supply chain.
“For the last 40-plus years, the UK has been part of a mega trading block capable of negotiating the most favorable trade treaties – and therefore import duties – with other blocks and nations,” Berglund said. “Now, all of a sudden, it’s going to have to sign new treaties with everyone, without the bargaining power of the EU in its corner, and that will undoubtedly lead to higher duties, and therefore costs for shippers.”
Berglund also expressed how the so called “Brexit” will cause further headaches in terms of supply chain management. “Optimal supply chain management relies on a quick and efficient international logistics network, and it goes without saying that guarded border crossings impede that process,” Berglund said. “The flow of containers will face a new bottleneck, increasing complexity and potentially forcing shippers to consider alternatives – such as more local sourcing (meaning less shipping), or re-positioning facilities in territories more conducive to easier trading.”
Looking ahead, it’s impossible to predict how the decision will impact freight rates in the immediate future, especially since the industry was unpredictable enough prior to the Brexit vote, Berglund said.
His current advice to all parties in the container chain is to “stay informed.”
“Brexit is anything but subtle and the fallout will be widespread,” Berglund said. “All decision makers need to be aware of the latest developments in costs to empower making the best choices, and getting the right prices, for their cargos.”
Xeneta: Brexit will create widespread disruption across container industry
