Vladimir Boltach, UK and Europe Operations Director at Autoparts Ltd, provided us with his insight to how Brexit could affect exporters of used car parts.
When the news broke out about the UK leaving the EU I was keeping a close eye on the developments of the Brexit negotiations. Our company has an extensive knowledge on how to export from various countries in Europe, the US and Japan. We learned how to deal with customs of each specific country we export from and know that uncertainty of the introduction of new rules and regulations can cause an unnecessary disruption to our exports from the UK in the near future. We rely quite heavily on the UK market for our exports of used car parts. This year, so far 62% of used vehicle parts we exported to Belarus and Russia came from the UK, with 20% accounted to Sweden, 7% to Belgium, 5% to Italy, 3% to Germany, 2% to the US and 1% to Japan. It is a significant part of our business and clarity is needed of what to expect.
So far we have anticipated various scenarios and our aim is to prepare in the best possible manner so as to minimise the disruption it could cause to our business. I have been working closely with our suppliers in the UK and we have been discussing the possible Brexit outcomes for the last two years. Although tough, the initial news of Brexit had a positive impact for the exports with the pound diminishing in value, and we have identified three main areas of concern:
- UK-FRANCE Border Delays. The main problem we can foresee is the delay on the UK – France border. At the moment our customs are carried out with the UK in Lithuania – the EU country which has its border with Belarus. We have permission to do this now because the UK is a part of the EU and declaring the goods (used car parts) leaving the EU in Lithuania is accepted. It is a convenient way of carrying out the EU customs for us as we have our dedicated agent at the Lithuanian customs who process our loads of used car parts very efficiently. However, when the UK leaves the EU we will have to declare the goods leaving the UK on the UK border with France (Dover). We know that this can cause queues at the UK customs terminals at Dover and consequential delays. Moreover, if the customs are to be carried out in the UK then it is likely our loads might be checked to comply with the invoice specifications. Currently, our loads are checked at the EU border with Belarus in Lithuania. We have a working system with the customs official where our staff take images of our loading from the very beginning to the end and when needed, these images are shown to the customs when loads are checked. This usually is enough for us to pass the customs. However, when requested, the whole load may be unloaded for more rigorous check. In this instance we send our staff to do it to prevent further damage to parts if done by inexperienced officials.
- TRANSPORT – New Regulations and Permissions. We use various transport companies to deliver our loads of used car parts from the UK to our main warehouse in Belarus, Minsk. Most companies we use are based in the EU with some from Belarus. If the UK is to implement new regulations for the transport companies from the EU then it may cause an increase in delivery prices for us and all other exporters. This, in a return may diminish our purchasing power (i.e. lower bids on salvage auctions from EU buyers due to the increase in transport costs). Moreover, new permissions might be required for transport companies from the EU to operate in the UK. Again, this will increase the delivery cost for us. We had a bad experience in Italy two years ago when using one of our trusted transport companies who did not have the required permission to operate in Italy. We only found out about it when their wagon with our parts was stopped by transport police in Italy and the whole load had to be unloaded at the transport police compound. We had to find and send a new wagon from a different transport company which had the required permission to operate in Italy to collect the load. The delay in delivering this load was one week and the extra cost for us was almost 5,000 Euros. This extra cost was passed to the transport company we used initially as it was not our fault. However, such permissions usually restrict competition and increase the transport cost.
- STAFF – New Citizens’ rights. Most of our staff we employ come from the EU. We use our staff with most of our suppliers to insure the high quality of dismantling demanded by our clients in Belarus and Russia. We use a unique dismantling procedure where all vehicles we buy for dismantling are checked and tested by our staff and dismantled parts carefully packaged and stored as specified in the dismantling plan created for each vehicle purchased. Our worry is with Brexit looming, how do we operate with our staff in the UK? There is a possibility that we will need to apply for visas again which will increase our overheads. Moreover, most transport companies who collect salvage vehicles and parts from the UK might need to apply for visas for their drivers which may result in further delays in collections.
To summarise, I think that the quicker a decision is made on Brexit the better for the businesses in the UK and Europe. A clear and agreed exit path will decrease the uncertainty and will make it easier to decide on the future plans.
About Autoparts Ltd:
Autoparts Ltd or as they are known in the Belarussian and Russian market, F-Avto – www.f-avto.by, was founded in 1994. Since then the company has become one of the leading exporters of used car parts to Belarus and Russia. The business model of their company in the UK is to buy complete or salvage vehicles for dismantling from trusted suppliers and auction houses. Currently F-Avto is exporting from 7 countries: UK, US, Belgium, Germany, Sweden, Italy and Japan. For export cooperation more information can be found on their website – www.autospares.by/en
About Vladimir Boltach:
Vladimir moved to live in the UK in 2003. He joined Autoparts (F-Avto) in 2007/08 as a consultant in the UK and progressed to the position of UK and Europe Operations Director. He has a degree in International Business from the University of Central Lancashire and Management degree from Belarussian State University. More information can be found at www.linkedin.com