Brexit: withdrawal agreement under scrutiny

Last week brought positive news as the EU Commission and the UK government have finally negotiated a so-called withdrawal agreement.

This withdrawal agreement provides the legal basis for a transition period that will maintain status quo for trade and transport across the borders until at least the end of 2020, and even longer if the parties agree on it. A transition period will make life easier and give us as well as our customers more time to prepare for the changes that Brexit will bring about.

We are certainly pleased about this, but as many of you may have seen, the agreement is far from approved in the UK. Here it is causing a heated political debate and it seems to be facing a troublesome way through the political system, in the House of Commons in particular. It also needs the approval of the EU member states, but their support seems to be clearer. The reality is that we have a long and winding road ahead of us before the proposed agreement is approved.

Therefore, it will be a big mistake to slow down our Brexit preparations. The very real risk that the agreement will not be ratified means that we may still face a hard Brexit on 29 March.

We have come a long way in our Brexit preparations. We are training staff in customs clearance in many countries. We are applying to become an Authorised Economic Operator (AEO). We are meeting with customs officials, their IT consultants, ports and other operators about integration of IT systems – and if you have any doubts or questions about this, or need guidance and inspiration, I can only recommend that you contact our Brexit team who have been working hard to guide the preparations and gather knowledge. The team members are: Allan Bell, Jean Aubert, Emma Leam, Mikael Mortensen and Brian Nielsen.

A Brexit without a transition period will be very challenging, but we will be able to handle the challenges if we continue preparing our business for a hard Brexit and help and inspire our partners and customers to do the same. However, our main scenario is still that an agreement will be reached and a sensible transition period will be established, but it will serve us well to be prepared for all possible outcomes.

Niels Smedegaard                               

French ministers visit Dunkerque

Last week DFDS had the pleasure of welcoming Édouard Philippe, Prime Minister of France, Elisabeth Borne, Minister of Transport, and Xavier Bertrand, Regional President, to the DFDS terminal at Loon-Plage in Dunkerque.

The Government Committee visited the terminal to talk about Brexit and to experience the loading/unloading operations at first hand. The Prime Minister spoke about France’s preparations for Brexit, and mentioned the need to build extra facilities for border control and customs, and larger parking lots to cope with the consequences of Brexit.

Jean-Claude Charlo, Head of DFDS’ French organisation, says: “The Prime Minister was impressed by Dover Seaways’ efficiency while unloading and he also took the opportunity to exchange a few words about Brexit with me and Operational Director Sébastien Douvry”.

Mikael Mortensen joins DFDS’ Brexit team

As you know, Mikael Mortensen recently decided to step down as MD in Rotterdam in order to move back to Denmark with his family. I am now pleased to announce that Mikael has agreed to temporarily step into the DFDS Brexit team as a consultant in order to assist the rest of the Brexit team and business with the challenging task of getting DFDS ready for Brexit.

“Mikael has valuable experience which we can use in our work to get commercially ready for Brexit and develop new solutions that can mitigate the effect of Brexit on our customers’ business. This will also help us develop our offers for customs clearance and transport in a post-Brexit world,” says Filip Hermann, Director, Strategy & Consulting.

“These tasks can hardly be solved locally as many customers, traffic flows and contracts require services from various parts of our network, and even Divisions. Therefore, we need Mikael to keep the overarching commercial needs in focus and our priorities right in the development of new services, negotiations of new contracts that reach past the Brexit date and dialogue with customers in particular areas,” he says.

Mikael Mortensen can be reached on phone +45 2199 8899 or e-mail mmo@dfds.com

DFDS at parliamentary Brexit meeting in Berlin

Kell Robdrup spoke about DFDS’ preparations for Brexit at a parliamentary meeting in Berlin. He was accompanied by Ortolf Barth, Marcus Braue, Joachim Woehlkens and Nelli Nolde from DFDS’ Cuxhaven office.

Brexit will have a significant effect on Cuxhaven, which is a major port for the huge German trade with the UK. Therefore, the Cuxhaven Port Association hosted a parliamentary evening in Berlin on Monday 15 October to discuss the port’s preparations for Brexit, with representatives of government, administration, the British Embassy (where the meeting took place), the European Parliament, the business community and 100 other participants.

These of course included DFDS, which had SVP Kell Robdrup on the speakers’ list. He emphasised that DFDS is striving to ensure a smooth transition to the new customs and government requirements for trade and immigration from 29 March 2019.

“These include offering customs clearance, cargo storage and the provision of warehouses for industrial customers in order to build up stock to ensure a smooth delivery to their customers. DFDS is in the process of building the expertise and finding the space needed for this at our terminals. However, Kell also emphasised that our business in Cuxhaven depends on the German government and authorities making their own preparations so we that will be able to handle the chaos that may occur in the first few months after a so-called hard Brexit, even though we still hope for and believe in the possibility of an agreement,” said Kell.

This thinking was very much in line with that of the chair of the port society Hafenwirtschaftsgemeinschaft (HWG) Cuxhaven,  Hans-Peter Zint, who said: “We have gained an understanding of Cuxhaven’s special situation so we can develop common solutions. Cuxhaven will be Brexit-ready on 29 March 2019.”

Stephan Freismuth, Customs Manager at BMW Group, addressed the urgency of the processes needed for the BMW Group. “The United Kingdom is not only our fourth-largest sales market, but the vehicles and vehicle parts we produce there are also predominantly exported to the Continent,” he said.

Dr. Rolf Bösinger, Secretary of State in the Federal Ministry of Finance, said that they plan to add a considerable number of additional customs staff to the workforce.

Business getting ready for Brexit

Ask DFDS’ Brexit Task Force

If you have questions about how you adapt to Brexit, we will be more than happy to offer guidance so please reach out to the members of the task force.

 

Will it be a soft Brexit, a hard Brexit or something in between? The answer is blowing in the wind as no deal has been struck between the EU and the UK yet. “We hope for the best – a Brexit as soft as possible – but we plan for the worst – a hard Brexit on 29  March as set out in the time plan negotiated between the EU and the UK,” says Emma Leam, the Shipping Division’s Agency Director in Immingham. Emma is along with Allan Bell from Logistics leading business’ work to prepare DFDS’ operations for Brexit.

“This is about getting ready to handle the challenges Brexit will pose to DFDS and our customers, and it is about reaping the benefits of the opportunities for additional services and sales, which Brexit will also bring about,” she says.

“We work on this in close cooperation between Shipping and Logistics as the full flow of goods involves both. We are also working closely with head office functions, such as Tax & Accounting as well as IT that are integral parts of any solution,” she says.

 

New requirements and opportunities

The project group is working hard to enable DFDS to achieve several different goals. Among other things, the group wants to enable DFDS to:

-ensure a seamless transition to new customs and government requirements for trade and immigration.  This means that we need to comply with new requirements from the customs authorities from day one,

-make customs clearance a new business offering and a service that benefits our customers

-offer warehousing/storage for trailers and cargo awaiting customs clearance

-offer warehousing/storage for industry customers who want to build stocks to secure seamless deliveries to their customers

-offer duty free sales on board our passenger ships.

 

Building knowledge and finding space

To achieve these goals, each location needs to build the right base for this, including:

–    Building knowledge on customs, customs authorities and customs clearance. This includes recruiting staff with the right experience and skills as well as training of staff. One way to build stronger partnership with the customs authorities is to become an AEO (“ Authorised Economic Operator”) which gives certain fiscal, commercial and operational benefits as well as showing our competence.

–         Securing the necessary space in the terminals for customs clearance and storage of trailers and goods

–         Developing the infrastructure in port to maintain an efficient flow in the terminal when activities includes customs clearance and storage of trailers and other goods

–         Enhancing IT systems that can handle customs clearance and the requirements of the authorities in the various countries. This would include integration with the systems used by the authorities or closer cooperation with these. Work to enhance our IT systems is centrally managed by Brian Nielsen, Senior Project Manager, IT.

–         Ensuring customer engagement in the process (see below).

 

Customs communities: Working in Groups

“Brexit is only a few months away, and to speed up the process so we are ready to handle the challenges and take advantage of the opportunities, we have decided to divide the work between dedicated groups of local BUs that share equal conditions,” Emma says.

These customs communities are:

  • Immingham, Ghent and Gothenburg
  • Immingham, Felixstowe, Rotterdam, Newcastle and IJmuiden (Freight)
  • Immingham, Cuxhaven and Esbjerg
  • Dover, Calais, Dunkerque, Newhaven and Dieppe (Freight)
  • All passenger routes
  • Irish Border Group

This week, colleagues from the customs communities were invited to a meeting in Copenhagen, where they met management and were informed about the work ahead.  Among other things, Stéphanie Thomas, Legal counsel and Customs and Excise Lead, presented a list of basic questions they should plan to ask their customers to be ready for Brexit Day 1.

This includes questions like:

  • Do you have an EORI? (Economic Operator Registration and Identification)
  • How will you pay customs duties and import VAT?
  • What do you have to send us in due time?
  • Do you know your tariff codes?
  • Are you aware of origin rules?
  • How to deal with customs valuation?

(See article by Jean Aubert on The Bridge about the Customs Community meeting).

 

Ask us

“I can’t emphasise enough how important it is to maintain progress in the work. This includes applying to become an Authorised Economic Operator, training and communicating to customers and staff,” says Emma who has organised drop in sessions for staff in Immingham on 5 and 12 November.

“If you have questions about how you adapt to Brexit, we will be more than happy to offer guidance so please reach out to the members of the task force.” says Emma.

Colleagues dealing with Customs and Brexit met in Copenhagen

Brexit is very much on the agenda in DFDS, and on 2 and 3 October, the first customs community group meeting took place at DFDS House. This group aims at bringing together the staff involved in delivering customs services, and the meetings will become a recurring event.

This inaugural meeting was opened by EVP Peder Gellert Pedersen and VP and Head of Group Accounts & Tax, Jesper Mikkelsen Heilbuth. Peder welcomed the attendants at DFDS House, and called the customs activity meeting an excellent initiative – as customs services are likely to be particularly important to DFDS with the combined effect of Brexit and the acquisition of U.N. Ro-Ro

The DFDS Way

In his introduction Peder explained we have challenging but exciting times ahead of us. Some of these challenges consists in developing supply chain solutions, accelerating improvements and extracting more value from networking activities within the group. Jesper emphasised the importance of maintaining high standards, best practice and compliance in these development efforts while keeping in line with the business objectives. Both Peder and Jesper insisted on the DFDS way of doing things, which combines best practice, continuous improvement and customer focus.

Technical workshops

The participants took part in some more technical workshops organised by Stéphanie Thomas, Legal Counsel and Customs and Excise Lead, and Lotte Blumensaadt, Group Indirect Tax Manager. These workshops covered various subjects ranging from incoterms and updates on AEO (Authorised Economic Operator) applications to VAT awareness. The workshops were an opportunity for interesting and informative exchanges between colleagues from Denmark, Germany, UK, France, Sweden, Norway and Belgium. Most of them had only joined DFDS in 2018, particularly Gislene Alves from Belgium who joined DFDS on the day of the meeting.

After the meeting, Stéphanie said: “I am very encouraged by this first meeting. There were many exchanges, and we sensed a lot of commitment from the people who attended. We take away several action points and ideas to develop for the next meeting.”

It was agreed to set up a virtual group to keep the momentum and stay in touch, and it was also agreed to have bi-annual meetings to address more in-depth matters. The next meeting will take place in January 2019.

Brexit transition period benefits all

Great news: The UK’s Brexit secretary, David Davis, and the EU’s chief negotiator, Michel Barnier, have made a provisional agreement on a Brexit transition period, whereby the UK will retain the benefits of the single market and customs union until 31 December 2020.

“This is very good news for DFDS and our customers, and indeed for everyone in the UK and the EU who deals with business across the sea. If the provisional deal is, as expected, signed off by the EU member states, it means that we will be able to continue our day-to-day business as usual until 2021. This will give us much more time to prepare for a Brexit, and thus mitigate the consequences for our customers, and give us good time to develop the customs clearance or other solutions we may need after a full Brexit,” says Niels Smedegaard.

Trade is part of the draft withdrawal agreement that includes other important areas such as EU citizens’ free entry into the UK. However, it is not yet fully complete. For example, there is still no agreement on the Republic of Ireland/Northern Ireland border issue.

DFDS is getting ready for Brexit

DFDS has many passengers and freight customers on our EU – UK routes who depend on our services and who would like to see uncertainty replaced by more solid information about the future after Brexit.

“However, in spite of long and intense negotiations between the EU and the UK, very few things are certain at present. We also do not yet know for sure whether there will be a transition period, and what the transition arrangements will entail. Therefore, we have established a task force to assist with preparing DFDS for Brexit,” says Peder Gellert, EVP and Head of the Shipping Division.

“And even though we believe there will be an extension of the negotiation period and a sensible transition period, we will prepare for the UK leaving the EU as originally planned on 29 March 2019,” he says.

Learning from Norway traffic

“We plan to offer customs services to our customers to limit or avoid extra waiting times and delays for them. In each of our port and terminal locations, the team is assessing whether customs checks will require additional space or equipment and whether the solution needs to be developed in co-operation with other port operators,” says Eddie Green, EVP and Head of our Logistics Division.

“We are in a good position as we already do customs clearance in Immingham for our Norway traffic. Therefore, the team visited Shipping and Logistics in Immingham to map the way we handle the traffic, information flows and customs processes for our Norway traffic. This is a valuable source of knowledge and expertise which we can use to develop services that can limit the effect of Brexit on our customers,” says Eddie.

DFDS is also looking into building partnership with the customs and other authorities to explore Hi the opportunities that lay in further integration of our and the authorities’ IT systems.

Read DFDS’ position on Brexit here: https://ec.europa.eu/taxation_customs/general-information-customs/customs-security/authorised-economic-operator-aeo_en

Brexit: share your knowledge

As we reported last week, we have launched an important project to gather knowledge about potential Brexit challenges and opportunities. And we would greatly welcome your help.

Many of you are working with Brexit, either in general or specific areas, and participate in various fora, associations etc. To capture and share the specific knowledge each of you may have, we have opened a Brexit conversation channel on The Bridge, and we would be very grateful  if you would use this channel to share whatever information, knowledge or questions you may have about Brexit, whatever area you are working in, and whenever you have information to share. And as we would rather have too much than not enough information, we welcome all postings. So please share what you know – even if you are in doubt about its relevance. Thank you in advance!

On behalf of the Project Group,
Anne Fomsgaard Nielsen