The Brexit Column: Lapland logistics | KPMG | UK

The Brexit Column: Lapland logistics

The Brexit Column: Lapland logistics

In this week's column Mark Essex discusses how Santa's logistical operations could be affected by Brexit.

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Director, Public Policy

KPMG in the UK

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Everyone else has had his or her say, but an important voice has been missing from the Brexit debate. Father Christmas (a.k.a. Santa) has been busy modelling what the UK’s exit might mean for the world’s most ambitious logistics operation. In the UK alone, he has to deliver to approximately 11 million children at some 17,000 presents a second. We know he is helped by large sleigh, flying reindeer and the ability to bend the rules of space and time, but you can appreciate why he’s taken such a keen interest.

Let’s examine Santa’s existing set-up and potential response to Brexit. He and his wife, Mrs Claus, jointly own an EU-headquartered business (based in the Finnish part of Lapland), which manufactures and distributes toys to the planet’s 1.83 billion children under 14 (the final number of ‘giftees’ depends on a quasi-judicial process regarding their behaviour over the preceding 12 months). 

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On hearing about Britain’s vote to leave the EU, Santa and his strategy elves immediately began contingency planning. He even considered whether it might be more efficient to move his base to the UK. Cold conditions are vital for the reindeer, but those can be found in the Highlands and on the Shetland Isles – just 6 degrees south of the Arctic Circle. And just think of the extra money he could spend on toy production with the weak pound making everything 14% cheaper for his euro and dollar denominated operation.

He decided to stay put however. Elves are a mutinous bunch and wouldn’t take kindly to the idea of their families back in Lapland receiving lower remittances as their sterling wages became worth less. He also didn’t fancy the prospect of making thousands of visa applications for the elves, and anyway, would letters addressed: “Father Christmas, Lapland” find their way to him in time? 

Currently, Santa has 32 hours to fulfil his orders (from when the first child west of the International Date Line closes his eyes, until last one on the eastern side of the line opens hers). Sweeping North-South along the meridians of longitude, Europe is normally an opportunity for Santa to catch his breath and eat a mince pie after the densely populated countries of East Asia and the Sub Continent. After delivering to western Russia, he pops back to HQ in Lapland, collects his entire EU consignment – including the UK – and whizzes across Europe, blissfully free of pesky customs inspections. Then onto the homeward straight through West Africa and the relatively less-populous Americas.

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Further Christmas

A British departure from the customs union would put a spanner in this smooth-running machine. The UK would become an export location from Lapland, like any other, and Santa would need to employ his usual export strategy of pre-positioning Christmas presents in a local warehouse three days earlier, in order to clear customs in time. 

Rather than his usual North Sea dash after Denmark, Santa would now have to deliver through Scandinavia, Germany and France before unloading his EU consignment in Calais, flying his empty sleigh to a secret UK depot, picking up and delivering to British children, flying back to Calais and resuming EU operations. That’s quite a detour, especially since his European leg now finishes with a bumpy ride over the Bay of Biscay from Portugal to the Irish Republic. Goodbye mince pie break! 

Pre-positioning to maintain his ‘just in time’ supply chains creates another difficulty: Santa won’t have real-time data on children’s behaviour, meaning naughty children will have less time to redeem themselves, while normally nice children can make merry hell for three days with complete impunity. British parents would have to decide if Santa should call, risking multiple legal challenges from their disgruntled offspring. Santa is now duplicating his legal elves at the European Courts of Justice (ECJ) with another team at the UK’s Supreme Court. 

And what if the UK leaves the Single Market? Would UK regulations on toy safety diverge from European, and if so would Santa have to hold special inventory or have alternative production lines?  He has beefed up his compliance team to monitor changes in regulation. Meanwhile, his head of Elfin Safety is worried the UK might relax air quality standards and allow city dwellers to burn coal in their fireplaces again. He is taking no chances and has packed extra pairs of flame-retardant trousers in the sleigh. 

Unlike Santa, I hope you can take a little time to put aside all thoughts of Brexit over the festive season. We all need a breather and a moment to digest what has just happened. We will be back in the New Year full of fresh musings and ideas on what is sure to be a seminal period for British business … and for Britain itself.

Seasons Greetings.

 

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK. You can register for the email subscription list of this column and expert views from our Brexit leaders.

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