CHEMICAL DISTRIBUTION 13
NOT DONE YET BREXIT • THE UK’S DEPARTURE FROM THE EU AT THE START OF 2021 COINCIDED WITH SOME VERY DIFFICULT EXTERNAL CONDITIONS. HOW ARE THINGS 18 MONTHS LATER, FECC AND CBA ASKED? IN THE PAST few decades, rapid globalisation brought with it a major shift in chemical manufacturing, with production capacity migrating east. A highly optimised, efficient and cost-effective global supply chain allowed international chemical corporations to invest in new facilities, not least in China, which now accounts for some 40 per cent of global chemical revenue. Globalisation feeds off the availability of lower land and labour costs, resulting in lower unit costs and increased competitiveness. But it also rests on the possibility to deliver that product to users efficiently, raising risks as a result of an extended supply chain that has to be dependable, efficient and economic. Those risks were highlighted by the emergence of Covid-19 and the resultant lockdowns, port closures and congestion and volatility in both prices and in consumer demand. For chemical distributors and traders in the UK in particular, those problems were compounded last year by the country’s final departure from the EU; their trade body, the Chemical Business Association (CBA), collaborated with the European umbrella organisation Fecc, of which CBA is a member, in a webinar on 20 June to examine how Brexit had affected CBA members so far. CBA was represented on the webinar by its supply chain lead Lisa Robertson, its regulatory affairs specialist Elain McGavin,
different conditions applying for trade with Northern Ireland, something that continues to cause disagreement and ongoing discussions between the UK and the EU. “Other disruptions, such as strikes, political issues, Covid lockdowns and the Ever Given blocking of the Suez Canal for six days impacted the supply chain,” Doggett added. “A rise in energy costs, volatile supply, a massive increase in freight rates and inflation continue to challenge the global supply chain, as well as shortages in drivers, raw materials and equipment. Most recently, we have been facing another global crisis following the Russian invasion of Ukraine. The consequences of this are far-reaching and have wrought further havoc on the already disrupted global supply chain.” DEVIL IN THE DETAIL Many UK exporters are still reporting issues with supply chain disruption both for European and domestic movements, including border
delays, extended delivery times, additional paperwork, delays in shipping and increased freight costs. One of the key issues since January 2021 is the incorrect use or misunderstanding of the requirements for Incoterms, the set of internationally recognised three-letter trade terms, which were not relevant when the UK was still in the EU. An additional issue is that, when leaving the EU, it was the UK’s intention that its domestic regulations would strongly resemble those of the EU. However, the UK would not blindly follow the EU’s footsteps and would actively make decisions with its own best interests at heart. There has been a divergence in regulation, as the EU has made amendments to its regulations, while those in the UK have mainly been at a standstill. At the moment, it is unclear how they will advance. This legislative process proves challenging for international trade. In the case of chemical regulation and Reach, for example, Northern Ireland operates under EU regulation (EU REACH and CLP NI), whilst the UK operates under its own regulation (UK REACH and CLP GB). Chemicals and their supply chains are of major importance for society and the economy. Fortunately, they are on the agenda of politicians and decision-makers. The future will hold more uncertainty and change. Businesses, as well as regulations, will have to keep working to keep up. www.chemical.org.uk www.fecc.org
technical director Douglas Leech, and CEO Tim Doggett, who explained what happened on 1 January 2021: “Overnight, considerations such as rules of origin, commodity codes and Incoterms became standard requirements for trade between the UK and EU. Additionally, the Northern Ireland Protocol resulted in
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