Brexit Committee Update January 2019

Brexit News – January Update

With much heightened activity around Brexit, this XMA update is written following the sizeable defeat of the Withdrawal Agreement Bill in the House of Commons and the recent instruction that the Bill might pass if the EU agreed to significant changes in the backstop arrangements.

XMA’s Brexit committee can take no comfort in the UK Parliament’s stated desire to avoid a ‘No-Deal’ scenario on 29 March and continues to follow government advice to make best preparations for such an eventuality.

Key elements

Logistics

Much of the sector are highlighting the extreme difficulties that would arise in a ‘no-deal’ scenario including XMA’s parent company and main distributor (Westcoast) whose lead courier into Europe – Europa, state, that if either the UK or EU customs were not ready, this could lead to significant delays at channel ports.  The majority of Westcoast’s and XMA’s import and exports come/go through Dover-Calais.  At present, the likelihood of such customs readiness is extremely low and hence customers will experience both shortages and delays in receiving goods.  Perishable goods are likely to get priority leading to greater delays for IT and consumables.

Many PCs and Servers are built to order in Eastern Europe and XMA are working with manufactures and customers to ensure forecasted products can be held locally in the UK.  Our parent company Westcoast have purchased increased warehousing space to accommodate such requests and XMA are advising all customers to forecast demand beyond March 29 and engage with your XMA account manager to ensure XMA can place appropriate forward orders on your behalf.  Post 29 March, XMA recommend that customers should attempt to order stock available in the channel and reduce their reliance on specific build to order devices.

Through our parent company (Westcoast), XMA are also stocking increased quantities of a wide range of products from major vendors that are realising their supply chain is likely to be disrupted.  Whilst all vendors have been engaged, all have an array of plans to minimise disruption.  However, many will involve XMA taking increased inventory which XMA are ready for.

As the OEM of Viglen Desktop PCs, Ultrabooks and Chromebooks which are assembled in the UK, XMA have established all known customer forecasts for 2019 and have pre-ordered components to meet projected demand plus anticipated additional demand in the event that supply constraints are experienced across Europe.

Ireland

Through Westcoast Ireland, XMA are able to deliver next day to the majority of the Irish Republic and Northern Ireland from the stock based in the UK.  Whilst XMA are working with Westcoast to anticipate increased stockholding in its Irish facility in Tallaght, Dublin – this will be limited and hence Westcoast have a strong engagement with their delivery partner Primeline to ensure goods are delivered either through Dublin or Belfast, whichever is speedier.  Delays are inevitable in their opinion though.

Much the above delays will lead to increased cost of delivery which Westcoast will incorporate into the cost of the product and pass onto customers.

Exchange Rates

This is the Brexit Committee’s biggest concern given the general indication is that the British ports and customs processes are not yet adequately prepared for a no deal Brexit. A small delay will potentially cause huge delays to goods deliveries in both directions and non-perishable goods will not be prioritised. As a result, we are looking to take the following steps:

Tariffs

XMA’s parent company Westcoast’s Data Governance Office are working hard with vendors to ensure commodity codes are accurate and stored so that all paperwork contain appropriate identification for customs to clear/obtain excise duty.  Whilst there are very few products and regions that are anticipated to bear tariffs and Westcoast have not identified any on WTO terms at present – this may not always be the case.  Accurate identification of goods will be critical and forms the basis of much of XMA’s / Westcoast’s work at present.

Paperwork

XMA and Westcoast will use outsourced freight forwarders to process paperwork/customs waybills.  Most of XMA’s / Westcoast’s key suppliers are readying themselves for the increased workloads.

Incoterms

XMA receive most goods Delivery Duty Paid.  If XMA become responsible for any duty or carriage – these will be included in the cost of the product and passed on to customers.  Customers should be aware of any changes of terms from their suppliers and XMA will keep customers informed of any agreed changes and their effect.

Contracts

All key contracts cover the UK and no vendor with an existing all of EU and EEA contract with XMA has yet proposed a constriction to the UK only.  All have expressed their intention to include the UK as a region on the existing contract

Whilst there is still much uncertainty, the significant short/medium term issue affecting XMA customers is delay at the ports.  This will be mitigated with a signing of the Withdrawal Agreement and will allow the UK to build more robust custom procedures where required in collaboration with the EU.  XMA will continue to lobby parliament through our parent company Westcoast.

For any questions or queries contact our XMA Brexit committee at approvals@xma.co.uk

Read XMA's next Brexit Committee Update