Author Archives: Jaguar Freight

ByJaguar Freight

Anti-trade Rhetoric: How Is It Affecting the Industry?

NAFTA’s terms provided for the elimination of most tariffs on products traded among Canada, Mexico, and the United States.

  • U.S. exports to Canada and Mexico support more than three million American jobs.
  • For services and many categories of goods, the United States maintains a trade surplus with the NAFTA countries.
  • U.S. trade with NAFTA partners has unlocked opportunity for millions of Americans by supporting Made-in-America jobs and exports.

On one side, many anti-NAFTA critics highlight that NAFTA has allowed the U.S. to outsource far too much employment to Mexico, where labor wages are traditionally lower than both the U.S. and Canada. Pro-NAFTA critics argue the increase in outsourced labor was expected, and that the US would take the opportunity to further its’ workers technical abilities and productivity.

The competition with China’s low-cost manufacturing sector continues to be a contributing factor of the varying levels of success and failures of NAFTA over the past two decades. NAFTA is not the only free trade agreement affected by China’s incessant ability to provide low cost labor. Virtually all free trade agreements are affected by China’s labor force.

In the face of a Donald Trump inauguration, the question now shifts to how anti-trade rhetoric will interrupt NAFTA and other free trade agreements. The creation of NAFTA escalated globalization, the inverse will surely be true should subsequent trade agreements be terminated or tramatically amended..

Shipping and logistics are woven throughout nearly every industry that globalization affects. Whether you’re a cosmetics retailer or toy manufacturer, getting your goods from point A to point B is imperative for the survival of your business. Globalization, powered by free trade agreements, is guided by the inclination of the federal administration to pursue free trade with partner countries.   

At this point only speculation is relevant; with a new administration on the horizon, a new day in the age of globalization is upon us, how far the anti-trade rhetoric will be taken is yet to be determined. Virtually all industries can expect to be impacted by changes to the currently implemented NAFTA, TPP, and other trade agreements with the U.S. The only question remaining is, to what degree?

At Jaguar Freight, we pride ourselves in being able to provide you and your team with exceptional freight forwarding services. Our team is dedicated to pioneering the next stages in freight forwarding and logistics.

Resources: Office of the United States Trade Representative

ByJaguar Freight

Shipping Industry Reacts to a Donald Trump Election

The election of Donald Trump as president elect has thas caught the world off guard. The shipping industry is particularly feeling the effects of America’s decision to elect Donald Trump, as the realities of his campaign promises involving anti-trade rhetoric and protectionism begin to materialize.

Few details were provided in Trump’s 100 day plan regarding trade policies, but the situation has the potential to become alarming, as ship operators are dealing with the worst down-cycle in 30 years. His overall protectionist, anti-globalization stance, has the potential to be detrimental to the industry as a whole, however, as always the devil is in the details and it depends on what is actually passed into law.

TPP and Trump

Donald Trump has repeatedly criticized the Trans-Pacific Partnership, a trade agreement to lower or eliminate tariffs between the U.S. and 11 other countries. Overall, TPP’s goals is to: promote economic growth; support the creation and retention of jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty in the signatories’ countries; and promote transparency, good governance, and enhanced labor and environmental protections.

The controversy surrounding the benefits and drawbacks of TPP is based on conflicting studies. Critics of the TPP, such as Senator Bernie Sanders, argue that trade agreements like the TPP “have ended up devastating working families and enriching large corporations.”

President Obama has argued “if we don’t pass this agreement—if America doesn’t write those rules—then countries like China will.” According to the Congressional Research Service, “many Asian policymakers—correctly or not—could interpret a failure of TPP in the United States as a symbol of declining U.S. interest in the region and inability to assert leadership… failure to conclude TPP could, in effect, allow China to shape regional rules of commerce and diplomacy through its own trade and investment initiatives, potentially creating regional rules and norms less beneficial for U.S. interests.”

Moving Forward in January

As the day president elect Donald Trump is inaugurated moves closer, industry analysts are concerned on how extreme Trump’s new administration will push their protectionist policies, and if major trading partners, such as a China, will do the same.

The U.S. has the responsibility to uphold global standards, and be a leader in the shipping realm. The world’s largest operators will be counting on the U.S. to pull them out of the looming crisis, as growth prospects in the U.S. are stronger than in Europe and most of Asia.

One of the the greatest risks to the shipping industry would be if Trump disrupts the agreements already in place, and instills new protectionist agreements, prohibiting or limiting trade with countries we have already been trading with. The risk is in the inevitable ripple effect of other countries taking similar actions.

Stay on top of the latest news in transportation logistics and supply chain management, visit our website or blog. Custom transportation solutions for a global community. The support of a dedicated team, with intuitive technology, that’s what Jaguar delivers.

Resources: https://fas.org/sgp/crs/row/R44278.pdf, http://www.cnbc.com/2016/09/27/wto-cuts-2016-world-trade-growth-forecast-to-17.html

ByJaguar Freight

New Service: Antwerp to New York

Reliability where it matters.

Introducing a weekly LCL ocean freight service from Antwerp, Belgium to New York by Jaguar Freight.

We’re more comfortable with global freight movement than anyone in the industry.

Sit back and rest assured knowing you will get:

  • Full tracking and visibility of freight while in transit.
  • First class customer service support team to answer any questions.
  • Reliable weekly consolidation service from Antwerp to New York.
  • Fixed weekly sailing with short transit times and quick container stripping upon arrival so your freight is available within 48 hours of the container being discharged in New York.

Shipping History of Antwerp, Belgium

The port of Antwerp has a particularly rich history. Ever since the Middle Ages ships laden with cargo and passengers have found their way up the river Scheldt to Antwerp. After the “Golden Century” in which Antwerp grew into a prosperous international port, the closure of the Scheldt in 1585 represented a new low in the history of the port. It would be nearly 300 years until the toll on the Scheldt could be finally redeemed in 1863 and the river became fully open to commercial traffic once more. The “port on the river” began to flourish in the decades that followed. After the Second World War, the Marshall Plan and the Belgian government’s Ten Year Plan brought hitherto unseen growth: the volume of the docks doubled and the port expanded along the Right bank of the Scheldt right up to the Dutch border.

Late 18th century – 19th century

Napoleon Bonaparte brings sweeping changes and the Scheldt is once more opened to shipping. He sees Antwerp as “a pistol pointed at the heart of England” and decides to build new docks and shipyards. The first dock, “Le petit bassin,” is built in 1811 and “Le grand bassin” follows in 1813. These are later renamed the Bonaparte dock and the Willem dock respectively. Between 1816 and 1829 the port experiences average annual growth of 4.5%. Thanks to the industrial revolution and new technologies the port forges trading links with Africa, America and Asia. At that time Antwerp is larger than the ports of Rotterdam and Amsterdam together.

Arrival of the giants

With the arrival of the MSC Beatrice, the largest container ship in the world at the time with a capacity of 14,000 TEU (14,000 twenty-foot containers) a whole series of records are smashed. The arrival ceremony symbolises important progress for the port of Antwerp. Container carriers are rapidly increasing in size, and Antwerp is doing everything necessary to accommodate these leviathans.

Currently

According to the current forecasts, Antwerp will need to have new container handling capacity by 2020-2021. And so the Port Authority is already making preparations for a large new tidal dock with accompanying terminal capacity on the Left bank of the Scheldt. The Saeftinghe Development Area covering more than 1,000 hectares has been earmarked for this dock along with surrounding sites for logistics, transhipment and industry. Construction of the Saeftinghe Development Area will be carried out in phases.

Our newest expansion to Antwerp is an example of how we are growing as the industry grows and changes. At Jaguar Freight, we pride ourselves in being able to provide you and your team with exceptional freight forwarding services.

Source: Port of Antwerp

ByJaguar Freight

World Economics Post Hanjin

Keeping abreast of current worldwide economic conditions and forecasting are essential traits for businesses involved in far-reaching shipping and operations. In the wake of the Hanjin bankruptcy, what changes have arisen, and how will they affect global supply chain management? Given that international shipping is the powerhouse behind multinational economics, what are the broader, more pervasive results of this dynamic shift in the industry?

What Happened

On August 31st of this year, Hanjin Shipping, a South Korean company with over 200 cargo ships, suddenly declared bankruptcy, stranding 90 of those ships, holding $14 billion in cargo.  As the seventh largest shipping company on the planet, this is being seen by many analysts as a bellwether, the first in a series of financial dominos to fall. The causes of the failure of Hanjin range from numerous EU bailouts, the collapse of the Chinese economic bubble, to as far as the US student loan debt crisis. All these factors and more weakened global market confidence and, as investors pulled back, businesses like Hanjin were left without enough capital to continue to operate.

Short Term Effects

The first concern of the worldwide shipping industry is to finance the stranded ships so they can be docked and offloaded. The primary merchandise involved is appliances and technology, but even those items can suffer depreciation if they sit in transit too long. Given the upcoming holiday season, supply chain management systems are actively seeking other logistics solutions and workarounds to move products from production to the hands of retailers and consumers.

Long Range Results

It seems facetious to call the $14 billion in stranded merchandise minor but, compared to the more encompassing losses the industry can expect, the $14 billion dollar loss is just that. This is not an isolated incident. The G20 countries have long been warned of the potential for disaster from the failure of any of a number of financial sectors; but the consistent global expansion for years seemed to belie that truth. When Hanjin applied for financial assistance at the final crucial moment, they exposed a long-standing lack of economic soundness that had gone at the very least undetected, if not outright ignored, for years. The impact of the fall of Hanjin will be felt far beyond the shipping and retail industries. It has been the first to fail, but is unlikely to be the last. Of the 12 shipping companies, 11 have published major losses in the last quarter. As a result, many of them have created alliances to shore up resources. However, with 90% of the world’s goods traveling by ship, any weakness is certain to have widespread and nefarious effects on consumer confidence, banking rates, and even international relations.

To stay abreast of the latest news in transportation logistics and supply chain management, visit our website or blog.

ByJaguar Freight

Hanjin and Force Majeure

Force what?

Force majeure is a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, or an event described by the legal term act of God (hurricane, flood, earthquake, volcanic eruption, etc.), prevents one or both parties from fulfilling their obligations under the contract. In practice, most force majeure clauses do not excuse a party’s non-performance entirely, but only suspend it for the duration of the force majeure.

Hanjin’s Bankruptcy

The typical carrier bill of lading contains a clause stating even if the carrier declared force majeure, the carrier is entitled to collect all the freight charges due. You can quickly imagine the messiness paying third parties rather than Hanjin directly is going to cause should the bankruptcy trustee come to collect.

Hanjin will be declaring force majeure with respect to its contractual obligations to provide transportation services. It is possible that Hanjin will exercise the provisions of the “Hindrance” clause in its bill of lading to declare that the transportation services have been terminated, that it is entitled to full freight, and that the merchant now needs to make any necessary arrangements to complete the transportation services to destination.

Consequently, whether or not any of its vessels are seized, it may well be that arrangements will need to be made to make sure that goods in Hanjin’s possession or control are released and then moved to final destination.

How are US Ports dealing with Hanjin’s loads?

On the West Coast, terminal operators in Los Angeles and Long Beach are unloading all of the containers from the vessels. Containers that do not belong to Hanjin are processed according to normal procedures and terminals are holding onto import loads in Hanjin containers and will deliver the containers to truckers only if the beneficial cargo owners pay the terminal cargo-handling charges upfront. The terminals are not accepting Hanjin export loads and empty containers.

At the Northwest Seaport Alliance of Seattle and Tacoma, Terminal 46 is now accepting import containers, but is not accepting export loads and empties. Olympic Container Terminal in Tacoma is not accepting any Hanjin deliveries for now and the Husky Terminal is not accepting exports or empties, but is unloading imports and is encouraging truckers to bring their own chassis.

In Vancouver, Global Container Terminal said it will no longer receive Hanjin ships.

On the East Coast, the largest terminal in the Port of New York and New Jersey, Maher Terminals, has made no statement on if, or how much, shippers must pay to get Hanjin containers. Maher is the only New York-New Jersey terminal that receives Hanjin ships, and APM Terminals, Port Newark Container Terminal, and Global Container Terminals didn’t disclose how they are handling Hanjin containers.

Philadelphia reported no impact from Hanjin ships or containers. Boston does not receive Hanjin ships.

Baltimore, Ports America Chesapeake, which operates the Seagirt Terminal in Baltimore didn’t disclose how it’s handling already received Hanjin containers. The terminal did say it will not accept any inbound Hanjin cargo, and they will continue receiving but not delivering Hanjin empty containers.

At the Port of Virginia, Hanjin export containers may be picked-up at the terminals by the original shipper only with authorization from Hanjin.

The South Carolina Ports Authority has waived the non-vessel delivery fee for export loads out-gated and all import loads discharged on or after September 1 will be placed on hold until such time as all SCPA charges are settled.

The Georgia Ports Authority, which oversees the second-largest port on the East Coast, Savannah, wasn’t available to comment, nor was Port Miami. The Port of Jacksonville said it does not have any calls from Hanjin or other CKYHE Alliance members.

Along the Gulf Coast, Houston is holding containers until they receive $100 to cover the Port of Houston Authority’s terminal throughput charges, which are separate from stevedoring costs.

Stay tuned to our Blog for more information on the status of this dynamic shift in our industry. Jaguar Freight is a freight forwarder providing custom transportation solutions for a global community. The support of a dedicated team, with intuitive technology, that’s what Jaguar delivers.

Sources: LexSage, Hugh Finerty

ByJaguar Freight

Hanjin Shipping Collapse To Raise Freight Costs

As you probably already know, Hanjin Shipping filed for bankruptcy protection Aug. 31, 2016, after months of trying to raise liquidity and restructure its debt, triggering a mad scramble by shippers to locate and gain control of their containers.

This unfortunately means the inevitable increase in the cost of a wide range of goods, such as, furniture, clothing, food both frozen and fresh. The fundamental nature of economics is the driver behind the price spikes; as demand increases, supply becomes elusive yet competitive, causing freight costs to balloon.

As the the seventh largest container carrier in the world, Hanjin’s doubtful future is a pivotal moment in the shipping industry. Carriers have announced they will hike container freight rates by as much as 50 percent beginning next month as retailers scramble to secure shipping ahead of the peak year-end holiday season. $14 billion worth of cargo has been stranded, leaving many shippers struggling to find replacements.

What else is driving costs?

Port fees. Hanjin would normally pay the fees for port usage and container handling as part of its freight services. Cargo shippers have been forced to pay thousands of dollars in fees to terminal owners and truckers to reclaim their goods from Hanjin ships to prevent perishable foods from spoiling and to avoid losing sales because goods are not available when customers want them.

Is this going to last?

Not exactly, yes, but no. While billions of dollars were left stranded at sea following the bankruptcy announcement, the shipping industry is beginning to recoup. Industry analysts expect the freight increases to be short-lived as more shipping capacity comes online.

Retail markets specifically will most likely see a dip in profits this quarter, if they are to avoid drastically increasing the price of goods to the consumer. To maintain competitivity, the cost fluctuations will hit profit margins for the majority of retailers.

Container freight charges have been exponential since May, and could continue to push forward during these next few tumultuous months. With holiday season approaching, it’s not too late to get your goods to market for the holiday season, but you may need to accelerate some of your previously agreed shipping schedules. The average cost to move goods in 40-foot containers from the U.S. West Coast to Asia was quoted at $1,700 this month, up from $788 in May.

As a professional freight forwarder, our main goal is to ensure your total satisfaction. Contact us if you’d like to talk more about how Hanjin’s demise is potentially affecting your business. At Jaguar, we deliver excellence, so you can.

Sources: JOC, Reuters

ByJaguar Freight

The Trade Facilitation Agreement Today

Traders from both developing and developed countries have long pointed to the vast amount of “red tape” that still exists in moving goods across borders, and which poses a particular burden on small and medium-sized enterprises. To address this, WTO Members concluded negotiations on a landmark Trade Facilitation Agreement (TFA) at their 2013 Bali Ministerial Conference and are now in the process of adopting measures needed to bring the Agreement into effect.

The TFA contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. It further contains provisions for technical assistance and capacity building in this area.  The Agreement will help improve transparency, increase possibilities to participate in global value chains, and reduce the scope for corruption.

The TFA was the first Agreement concluded at the WTO by all of its Members.

The benefits to you

Numerous studies have estimated the positive impact of the TFA on global trade and income. As trade has become more liberalized, other obstacles to trade have gained importance, and in today’s trade logistics context, facilitation has become more important than ever. The inclusion of trade facilitation in the WTO agenda reflects a number of specific trends in international trade and logistics.

The logistics experts at Jaguar Freight are here to help guide you and your company through the ever changing landscape of global freight forwarding. Get in contact with us today for more information.

Please read on for the details:

Section I

Section I contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It clarifies and improves the relevant articles (V, VIII and X) of the General Agreement on Tariffs and Trade (GATT) 1994. It also sets out provisions for customs cooperation.

More specifically, Section I covers:

  • The types of information that governments publish, and the manner of publication.
  • The process by which national trade legislation is made. This includes the process for enacting laws on trade-related matters by the national legislative body (congress, parliament, legislature, etc.) as well as secondary legal acts (regulations, rules, orders, etc.) issued by executive or administrative bodies.
  • The means by which a trader can obtain reliable “binding” information about the tariff classification, origin, or other customs treatment of his goods before he imports them.
  • The rights of traders to obtain review and correction of decisions made by Customs officials or officials of other border agencies.
  • Disciplines on any system of issuing notifications or guidance to concerned authorities to enhance controls and inspections on imported goods, particularly food products, beverages and feedstuffs.
  • The “fees and charges” that governmental authorities assess on, or in connection with, imports or exports.
  • The “fees and charges” that customs authorities assess on, or in connection with, imports or exports for services provided to the importer or exporter.
  • Submission of the documents required for the release of imported goods to customs and other border agencies.
  • The means by which a trader can pay his duties, taxes, fees and charges.
  • The methodology or practices that Customs uses to determine which import, export or transit transactions or operators should be subject to control and the type and degree of control to be applied.
  • Customs verification of compliance with customs and related laws and regulations through examination of the trader’s books and records at his premises following release of the goods.
  • Documents and goods imported by air express-delivery operators and other expedited shippers.
  • Movement of goods intended for import under customs control.
  • Formalities connected with importation, exportation and transit.
  • Freedom of transit
  • Customs-to-Customs exchange of information for purposes of verifying goods declarations

Section II contains special and differential treatment (SDT) provisions that allow developing and LDC Members to determine when they will implement individual provisions of the Agreement and to identify provisions that they will only be able to implement upon the receipt of technical assistance and support for capacity building.

To benefit from SDT, a Member must categorize each provision of the Agreement, as defined below, and notify other WTO Members of these categorizations in accordance with specific timelines outlined in the Agreement (see below).

Section III contains provisions that establish a permanent committee on trade facilitation at the WTO, require members to have a national committee to facilitate domestic coordination and implementation of the provisions of the Agreement. It also sets out a few final provisions.

History

Trade facilitation became a topic of discussion at the WTO at the Singapore Ministerial Conference in December 1996, when Members directed the Council for Trade in Goods to undertake exploratory and analytical work on the simplification of trade procedures in order to assess the scope for WTO rules in this area.

Hundreds of proposals made by Members, individually or through groups or alliances, were submitted for consideration by the Negotiating Group. After months of painstaking streamlining and revisions, the proposals became part of the final text of the Trade Facilitation Agreement agreed by Members at the Bali Ministerial Conference in December 2013.

Ratifications

The Agreement has not yet officially entered into force, yet. The Trade Facilitation Agreement will enter into force once two-thirds of Members have domestically ratified a Protocol of Amendment and notified the WTO of their acceptance of this Protocol. This charts shows a regional breakdown of the Ratifications received so far (protocol of acceptance deposited). So far 91 countries have completed the ratification process.

Sources:

http://www.tfafacility.org/sites/default/files/case-studies/unctad_reaping_benefits_from_tf_policy_brief_42_e.pdf

http://www.tfafacility.org/

ByJaguar Freight

How The CyberChain™ Suite Can Help Your Supply Chain

As industry professionals and business owners, we know what you need to resolve all of your logistics concerns. The CyberChain™ Suite is your ultimate supply chain solution. Cost efficient? Check. Transparent? Check. Technologically advanced? Check. Data driven? Check.

The CyberChain™ Suite
From a strategic perspective, CyberChain can help address a number of challenges in your organization, including:

  • Warehouse Management
  • Network Integration
  • Load and Route Optimization
  • Planning and Execution
  • Dock Appointment
  • Yard Management
  • Freight Audit and Payment
  • Fleet Operations
  • Driver and Vehicle Performance and Regulatory Compliance
  • Rate Management
  • Customs and Regulatory Compliance
  • Electronic Data and Document Exchange
  • and Collaboration Solutions
  • E-Commerce/Order Fulfillment Solutions
  • Mobile Solutions (Domestic)
  • Supply Chain Optimization
  • GPS/Security Tracking Solutions (Domestic/International)

The CyberChain suite includes four powerful modules that do more than tell you where your products are and when they’ll arrive. They provide deep visibility and actionable intelligence. CyberChain enables you to make the process and performance improvements that lead to cost savings and competitive advantage. The CyberChain modules—our renowned CyberTrax™ TMS, plus the ASN Portal™, Flashlight™ and POEM — can be implemented in combination or individually to accommodate your objectives, budget, and scale of business. And because we designed and built them in-house, we can customize the modules to fit the way you do business.

Get a straightforward, confidential and secure route to real-time information.
CyberTrax is the Transportation Management System (TMS) at the core of Jaguar’s
logistics offering. CyberTrax TMS provides deep, real-time data about your supply chain,
right down to the SKU level. It’s precisely the kind of real-world, real-time commercial
data that can trigger key communications through the system and inform internal
adjustment actions. CyberTrax TMS is transparent and available 24/7, so you can
access it at any time for the latest transportation information possible.

Business Benefits:

  • Run reports to see “at a glance” information that supports tactical decisions such as
    all shipments from suppliers over time, and all shipments by mode, origin destination
    and time intervals.
  • Get real-time shipping information at any time, from any Web browser.
  • Access all your data, whenever you need it.
  • Access archived shipping information as easily as current data.

Technical Benefits

  • Ensure near-universal systems compatibility with a password-protected, web-based system.
  • Engage Jaguar Freight software developers to customize your deployment.
  • Enjoy the peace of mind provided by 128-bit SSL encryption.
  • Download reports and data in multiple formats.
  • Provides access to all of your data so you can use it however you need it.

Jaguar can help you find ways to optimize your supply chain logistics, more conveniently, with fewer soft costs and disruptions. Our proprietary TMS tools will push real-time, SKU-level transparency out to your front-line colleagues. They’ll receive reports with actionable information, which will free you to focus on priority tasks. Stay tuned to our blog for more information about implementing technology to further your supply chain.

ByJaguar Freight

Jaguar Freight CEO Responds to the Brexit Transition

This year has been quite the whirlwind with changes in our industry. From the expansion of the Panama Canal, to new SOLAS regulations, and now the Brexit transition. Per usual, change is the only constant when it comes to global freight movement. We see advancements in technology almost daily, and international politics contribute to the constant influx of change, but what about massive change, such that as Brexit?

Wanting to get a deeper understanding of how Brexit is affecting the logistics industry, we interviewed Jaguar Freight’s CEO, Simon Kaye, a native Londoner. Simon’s experience with international trade is rooted in UK and US logistics. Having studied accountancy and finance at the City of London University, Simon founded Jaguar Freight Services with his father, Percy Kaye, in both London and New York in 1993. Simon moved permanently to the United States to establish Jaguar’s New York headquarters in 2002.

Some people are suggesting Brexit is the biggest step backward since World War II, what do you have to say about this?

Backwards or forwards no one really knows, but it’s certainly the most significant change in Britain’s relationship with mainland Europe, as well as its global trading partners, in decades.

Post-Brexit UK needs a new trade deal with the European Union, what do you think that will look like?

Britain is the second strongest economy in Europe and the largest single destination for Germany’s auto industry, as well as many other European manufacturers, so whatever the outcome, Britain will be going into the negotiations in a strong position. It is in no one’s interest, Britain or the EU, to try and impose a punitive trade deal on the other..

There is word about trade negotiations taking place on a country-by-country basis, what countries do you think will be most affected by Brexit, why?

Germany’s position will become even more significant after Brexit. Due to its strong and successful manufacturing economy, many countries will be looking to Germany to “steady the ship”. On the other hand, countries like; Austria, Greece, Poland as well as France and Italy will have to tackle their own political rumblings for an in/out vote. There are many who think that Britain is just the first domino to fall.

Brexit affects every E.U. member and those wanting to join it. Free-market economies rely heavily on open trade, as a logistics expert, how do you think limiting a free-market economy will change the logistics of goods and services internationally?

The flow of goods and services will not stop due to Brexit. Britain and the other European nations trade freely with almost everyone other country around the world and are only limited by the regulations imposed as part of bilateral trade agreements. The negotiations that will occur over the next 2 years will be instrumental in how easily trade will flow between global trading partners. What bureaucratic barriers will be imposed and what tariffs will be agreed will go a long way in determining the impact on global trade.

What, in your opinion, will happen in the short-term?

My opinion is that the British economy and currency will suffer in the short-term due to uncertainty and concern around negotiations with the EU. However, ultimately I believe that due to Britain’s strong economy and history of international trade and political prowess, it will emerge even stronger than it currently stands as a global trading nation.

Continue to follow the Jaguar Freight blog for more information on the Brexit transition. Our team members at Jaguar Freight are always ready to answer your questions about the ever-changing shipping landscape. Clear supply chain leadership, expertly coordinated around the globe, backed by an exceptional degree of customer care, that’s what we deliver.

ByJaguar Freight

How is Brexit Affecting the Shipping Industry?

EU Infrastructure

  • The EU is made up of 28 Member States
  • The EU is home to some of the world’s largest container and passenger ports in Rotterdam, Hamburg, Antwerp, and Piraeus.
  • UK’s largest trading partner is the EU.
  • Over three million jobs in the UK are linked, directly or indirectly, to exports to the EU.
  • European Union law, in the form of Treaties, Regulations and Directives, affects a wide number of commercial issues including trade, environmental regulation, international trade sanctions, competition law, employment, tax, immigration and infrastructure projects.

Landmark Decision

On June 23, 2016 the UK electorate voted for Brexit, and consequently started the beginning process of leaving the European Union. The UK will be the first Member State to do so since the creation of the first European “Community” in 1952.

Post-Brexit UK, what might change?

Laws of particular importance to the shipping industry are likely to be those regarding trade, insurance, environmental regulation, international sanctions, contract terms, competition law, employment, dispute resolution and trade treaties with non-EU states.  We discuss some of these below.

Competition Law: EU competition law applies to agreements and market conduct that affect trade between Member States, and the EU Commission has primary jurisdiction to enforce EU competition law, including granting clearance to mergers and investigating cartel activity. Where the effects of an agreement or market conduct are confined to a single Member State, national laws apply. Brexit would likely lead to a separate competition regime applying to the UK and to competition enforcement in the remaining 27 Member States, leading to the need for dual clearances in the case of mergers and exposure to regulatory investigation under two parallel, but distinct, regimes. Brexit would likely mean that compliance with both UK and EU competition rules would become more complex and burdensome.

Contract Terms: Many shipping contracts (for example voyage and time charters) provide for trading to certain countries or geographical regions. Since Brexit, there may be uncertainty as to whether a contract signed pre-Brexit (which contains such a clause) which refers to the EU will continue to include the UK. If existing contracts are drafted in a way that presumes the existence of an EU containing the UK, or makes a reference to the EU without specifically defining what that is, such contracts may give rise to disputes as to the meaning or ambit of the contract. Care will need to be taken in the event that an existing contract is renewed, as the court would likely apply the definition of EU as at the time the (renewed) contract is entered into, which might be different from the original or intended definition.  The impact of Brexit on any related contracts will need to be assessed, including those intended to be on ‘back to back’ terms, in which relevant clauses may not be similarly defined.

Insurance: Any insurer in the EU is automatically entitled to write insurance business in other member states. This means that, for example, German insurers can write business in the UK, and London underwriters can write shipping risk in Germany (and indeed all other EU states). This is known as “passporting” and the idea is that the insurer’s “home” regulator regulates that insurer’s activities, removing the need for the insurer to be regulated in each Member State. Brexit would undermine this and, unless alternative measures were introduced, may restrict the ability of insurers (and those buying insurance) to shop around and get the best price and terms for their business.

Sanctions: As a member of the EU, Britain is party to, and therefore must comply with, the sanctions regime imposed by the EU. Those sanctions are currently against states such as Russia, North Korea, Belarus, Syria, and Yemen. The situation regarding Iran is currently, as widely reported, in a state of change. It remains to be seen whether the UK would implement mirror legislation, or even harsher or less strict sanctions. Regardless of whether it were to impose any replacement sanctions regime, the UK would not be ‘sanctions-free’, as it would still be a party to, and therefore have to comply with, the sanctions imposed by the United Nations against several regimes.

Trade: Under EU law, trade within the Union is liberalised as between Member States, allowing goods and services to be traded within the EU without internal customs barriers or tariffs. In addition, EU citizens can move freely, establish themselves commercially or as residents and can trade without restrictions (except for certain professional qualification rules). EU membership therefore gives UK businesses access to the EU “Single Market”. As to external trade with non-EU countries, the EU benefits from a wide range of bilateral and multilateral trade treaties, allowing preferential access to EU goods and services in these countries, as well as reducing or eliminating customs or tariffs.

Current Situation

Now that the UK has voted to cease its EU Membership, UK businesses will no longer benefit from EU internal trade access without a bilateral agreement between the UK and the EU. Although it is possible to be a member of the European Economic Area (EEA) as an associate state of the EU, it is not clear whether the UK is seeking to do this or seeking to enter into an entirely new free trade or association agreement with the EU. Operating within the EU market may become increasingly complex and consequently potentially more expensive for UK operators, as might operating in the UK market for EU operators. Those operating in the UK and also in the rest of the EU would face the burden of having to comply with both EU and UK laws on trade, rather than complying with the current harmonised EU system.

The key issues for U.K. shipping are visas and work permits, fiscal arrangements including tonnage tax, and border controls at ferry terminals.

The impact of the UK exit could also affect exporters from a variety of EU nations. The U.K. is the leading destination for exports from Norway with the value of that export trade sometimes double the nearest runner up in recent years. Ireland, Turkey and Poland are the U.K.’s second-largest sources of imports. Ireland sends largely pharmaceuticals and meat, Turkey sends auto parts and apparel, while Poland exports machinery, automobiles and electronics, according to GTA.

One of the cargo sectors likely to be hit particularly hard by a reintroduction of customs and duties is the automotive sector. Germany is the third-largest source of U.K. imports and automobiles make up a third of the value of those imports. Other key exports to the U.K. from Germany include machinery and pharmaceuticals.

All of the above mentioned implications assume the EU structure remains status quo. However, further fallout from the Brexit vote may be that the future of the EU, as we currently know it, is now in question.

Continue to follow our blog for more information on the Brexit transition. Our team members at Jaguar Freight are always ready to answer your questions about the ever-changing shipping landscape. Clear supply chain leadership, expertly coordinated around the globe, backed by an exceptional degree of customer care, that’s what we deliver.

References: http://goo.gl/a1ojdN, http://goo.gl/4Zs5km

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