Working on the docks at Southampton, it could easily be said that Mike Thomas, client services director at Import Services is about as close to Brexit as any member of Theresa May’s cabinet, past or present.
Depending on the way things have played out since May’s delivery to the nation on November 14th, it may even be arguable that Thomas knows a great deal more of the true implications of an EU withdrawal.
Well, certainly when it comes to logistics any way.
Sitting on the board of directors of Import Services, one of the UK’s leading port-centric logistics companies, Thomas knows a thing or two about moving things out of Europe. He knows about bringing them into the UK, too. And, through his thorough knowledge of the supply chain services knows just how to get all of those products into the hands of retailers and ultimately the consumer, in modern, real time.
Bloody hell, ToyNews is going to start campaigning Mike Thomas for Prime Minister, isn’t it – we hear you all cry. It’s not a bad idea. But something tells us Thomas wouldn’t like to leave the world of logistics any time soon.
His expertise certainly seems to go beyond ‘just a day job.’ It’s why, when Thomas starts talking to you about bonded storage and AEO accreditation as your greatest defence against a tumultuous Brexit, you’re pretty happy to let him take the reins on the conversation.
And the upshot of that to begin with, is that when it comes to the steps that you ought to be taking – or at least considering – as part of your supply chain service, as we near that crunch date of March 29th 2019 – the first is in bonded storage.
Dealing with Brexit
"I think bonded storage really is something that should be taken very seriously at this juncture, not knowing how the EU withdrawal deal will come through,” says Thomas.
“Bonded storage is the ability to hold product VAT and duty free stock holding in the UK.
“The physical stock is here in the UK, but not released into the market. There are a number of bonded operations around for 3PLs. Of course, companies can look at their own warehousing operations to achieve this. For Import Services, we have had quite a demand from our client base and other enquiries looking at just how we would go about helping them in the case of a hard Brexit.”
Hold on, you may be saying. This all sounds a little like the whipped up news stories of ‘stockpiling’ that circulated the mainstream media only the other month.
“It’s about looking at the practical approach,” continues Thomas, “a hard Brexit would be difficult to envisage at this stage, but it could still be the case at this point in the negotiations [all at time of writing – Ed].
“We are quite privileged as we are clustered around the container port of Southampton and our location is very much geared towards the transportation, principally from the Far East, of manufactured toys, products, gifts – fast consumer products and the juxtaposition of the container port and our own facilities, with bonded storage, enables us to tackle a hard Brexit scenario in the best possible way.
“We have got the ability to work within a hard Brexit environment – whatever guise that takes in the future and the bonded storage of product offers the ultimate flexibility.”
To tick off another box, Thomas reminds us that “you can also re-export it without any VAT or duty implications, or forward it to market wherever that location would be.”
It’s a little late to be thinking about AEO accreditation, he warns, if that’s not something you already have in place. It’s something you’re going to want to have at your disposal however, but, says Thomas “any provider that has an Authorised Economic Operator accreditation, which is recognised in the highest level of customs within the EU as a badge for ultimate audit control of stock, inventory, customs reporting and more, is a particularly useful asset to have at your side as we head towards March 29th.”
In layman’s terms, this badge will offer you the likelihood of a much smoother transition of product across borders.
“We are a third party logistics business looking after the interests of our clients supply chains, and because we have an AEO umbrella badge, our clients act within our own facilities and they benefit from the AEO accreditation that we can offer the supply chain.”
Highlighting areas of concern regarding Brexit isn’t Thomas’ style. Perhaps we’ve all become tired of the media circus that has hounded this pursuit for the last two and a half years? Perhaps Thomas is mostly focused on the practicalities?
“The areas to think about in terms of Brexit start with the pricing model that the UK benefits from,” says Thomas.
“We have a very competitive edge on distribution back to the continent and there is no heads up on any change to that pricing model, unless Brexit really does, over time, make a sea change in terms of our trading partnership.
“The privilege of us having more vehicles coming into the UK than going back out gives us a very competitive distribution profile. So, we can completely distribute products as we do everyday across continental Europe from our Southampton hub.”
It’s this that is the reason a number of US clients and – increasingly – overseas interest have started to look at the UK as a hub for the EU, rather than having disparate warehouses across the EU marketplace.
While this is currently the size of it now, what will it look like after Brexit? No one can tell, yet. Not even Thomas.
There are no changes on the early horizon, he states. But the long term effect is an unknown. The man’s mantra stands thusly, however, that “business will continue whatever,” it will simply take a little more thought about how to move product from A to B while avoiding those potential pinch points, traffic issues in the case of hard borders. “But traffic will find different routes to market to ease that flow.”
Right, enough now on hard Brexit, hard borders, backstops … the world of logistics has so much more on its plate, too you. Not in the least is the changing world of retail and making practical this on-demand, fast product culture we each inhabit now.
The advances in logistics
There’s a time in every journalist’s life when the topic of Advance Shipping Notifications crops up and it’s their job to begin to make sense of it. It’s ToyNews’ turn to have a stab and simply put, it’s the latest move in digitising the logistics sector.
And why does it need digitisation? Why because of the way in which our orders are changing of course.
“We have had a tremendous amount of change in just the last 12 months,” explains Thomas.
“If I put base zero from last year’s season to this year’s season, the percentage increase of SKUs of individual items per order has grown massively, the frequency of orders has increased and the volume per order has decreased
“We are a good bellweather of what is happening in the market. Orders are required more frequently and in a ‘just in time’ environment, add to this the fact that the real spike to the peak time of year grows more acute every year – it’s all driving a lot of changes in the logistics sector.”
For one, is digitisation. Bring in the Advanced Shipping Notifications… Import Services has moved into a place where it is now sending ahead of its consignments, an ASN – an electronic bill detailing the product that is on the move, before the physical products arrive.
“By doing this,” says Thomas, “we are making everyone aware of the passage of goods before it takes place and it will pass through all the chain and checkpoints, allowing for smooth transition.”
And with both Brexit and on-demand consumers to deal with, anything that makes the process of shipping all the smoother, is all the more welcome.
“We set our stall out very clearly at Import Services to invest very heavily in systems capabilities, so tracking and tracing, advanced shipment – all of the communications we have with our key end customers from Amazon to Tesco, we send advance electronic information to ahead of deliveries.
"This is the new world of retailing, one we are all entering.”
The problem with the way we are placing our orders as consumers, and demanding it the next day, is murder on any logistics system stuck in its ways of the 90s even early 00s.
Of course, there won’t be many of those – suffice to say Import Services remains a leader in the field of advancing its system.
“We are looking at the various technical ways in changing the way we pick, the way we process, engineering that process into productivity,” says Thomas.
“We see a pattern of smaller orders and more frequent orders required very swiftly that is not going anywhere but one way. That velocity of volume to the market in a peak period as we head towards Christmas requires us to work on productivity to be able to give our clients what they need.
Automation is a key part of how we are thinking now for 2019 and early in 2020 when our new dock facilities will be coming on stream. We are taking steps with additional warehousing operations and facilities.
Evolution is a constant process we embrace at Import Services. With tech becoming more affordable, that will be something we look at as we head into the 2020s…”
There you go, as if to sum up the character of the man, Mike Thomas is a man who likes to look at the practicalities of getting it all done, even in the face of the adverse weather of change. Well, it is his job after all.