Cant touch it, cant see it? Its still subject to export controls
Export control is a complex matter, and companies need to scrutinise their trading relationships and business transactions regardless of whether they are doing business domestically, within the European Union, or internationally.
Most businesses are aware of export control regulations and licence requirements for physical goods’ movements. But the United Kingdom and other countries also control the transfer of ‘technology’ not in the public domain (i.e. information required for the development, production, or use of controlled materials) in the same ways as the transfers of physical goods. This includes, but is not limited to, software, instructions, working knowledge, design drawings, models, operational manuals, skills training, and parts catalogues.
The UK’s Export Control Act 2002 sets out the legislative framework for the control of strategic goods and technology. In the UK, an electronic transfer includes transfer by e.g., fax, e-mail, or telephone, from within the UK to a person or place abroad. But U.S. export controls must also be considered because any re-export of sensitive materials or technology with U.S. origin is subject to U.S. control. This may also apply to materials made outside the U.S. if the end-product is sensitive in nature and based on, or derived from, sensitive U.S.-origin technology.
In addition to controls on technical data transferred by tangible means such as e-mail, faxes and paper documents, the U.S. government also seeks to control technical data that is passed on through oral or visual means, e.g. during telephone conversations, web conferences, meetings, and skills training. Under U.S. law, an export licence may even be required to make technical data or software available to a foreign business partner during a telephone conference.
Further complicating the matter is the “deemed export” rule. The U.S. government considers the release of software or technology to a person who is not a U.S. citizen or permanent resident to be the equivalent to a physical export to that person’s country, whether the transfer takes place in the U.S. or not.
And this doesn’t just affect manufacturers and exporters. Companies outside the U.S. that are involved in research and development (R&D) activities may also require a re-export licence if using U.S.-originating export-controlled software or technology, as the outcome of the R&D itself could become subject to U.S. export control laws. Given the far-ranging nature of U.S. controls, it is important to have effective compliance programmes in place throughout the organisation.
The volumes of materials and accompanying information, and the number of parties involved in today’s supply chains make it virtually impossible to manage global trade compliance without implementing software solutions. Comprehensive global trade solutions facilitate automated processes and information exchanges throughout the supply chain to ensure compliance with all applicable laws and regulations, and add value by increasing operational efficiency, reducing costs and mitigating risks at the same time.
Software solutions have become essential for operating effective compliance programmes today, managing all aspects of export control requirements by incorporating updated, applicable legislation, standardising processes, preventing transactions, recording activities and flagging critical persons, materials or actions. They largely automate all export control activities and guide entire organisations through their obligations on a global level. As regulatory compliance directly affects operational performance, fulfilment time frames, cash flows, brand reputation and competitiveness, businesses should ensure they have the right solution in place.
Driver shortages: Why the industry needs to be worried
While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks.
A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so.
What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.
"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"
That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.
But where has this skills shortage stemmed from?
Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.
COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.
It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing.
So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done?
Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change.
Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.
Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line.
On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains.
Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months.
Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector