A crucial deadline has officially passed for sea freight operators whose goods are destined for Far Eastern countries such as Japan, as post-Brexit trade terms remain uncertain.
Freight travelling by sea takes 6 weeks to reach Japan’s shores, meaning that vessels leaving the UK from today will arrive after the Brexit deadline. With no official deal currently in place between the two regions for the period after Brexit, it means cargo departing Britain is doing so under uncertain terms. Goods may be subject to new trade conditions, including what tariffs will applied – or if they can even be unloaded at all.
The deadline has passed in the wake of a leaked document from the UK government’s Department of International Trade last week, which revealed that just 6 of the UK’s current trade deals are on-track to stay in place after March 30th: this, out of a total 40 trade deals the UK benefits from.
The UK’s trade relations with Japan were cited in the document as “significantly off-track”.
Some exporters are concerned that in the absence of a trade deal we could see scenes such as those left in the wake of Hanjin Shipping’s collapse in 2016, which left ferries ‘stranded’ at sea. The South-Korean logistics firm was the world’s seventh-largest shipping line, holding a total market share of 2.9%, and declared bankruptcy in August 2016. At the time of Hanjin’s declaration, over $14 billion USD of freight was left at anchor or in territorial waters for over three months and remains the container shipping industry’s largest bankruptcy to date. The collapse also cost the Korean economy more than $2.6 billion.
The impact Hanjin’s collapse had on companies across the globe was astounding, and nobody was safe: from electronics giant, Samsung, who used the company for approximately 40% of their cargo shipments, to LG who utilised the Korean company for 20% of their shipping, to independent businesses in their hundreds whose operations and inventory levels were disrupted ahead of the crucial Thanksgiving and Christmas sales period.
Business Secretary, Greg Clark, suggested the mid-February deadline for British exporters, and has hinted at possible resignation if the government pursues a No-Deal Brexit.