Industry reacts to UK customs check plans
The UK government has confirmed it will introduce import controls on EU goods coming over the border at the end of this year. The announcement confirms what was the widely expected result of the government’s plan to exit the EU’s customs union and single market and strike trade deals.
We look at how retail and logistics trade bodies responded to the news.
Freight Transport Association
Elizabeth de Jong, FTA’s UK Policy Director said: “Today’s announcements about the UK’s future relationship with Europe provide more much-needed clarity for logistics operators, and his assertion that there will be no extension to the transition period gives businesses a finite deadline to which to work. The news of funding to help industry prepare for operation outside the EU is certainly welcome, whatever the outcome of the negotiations.
“Mr Gove put to rest Sajid Javid’s assertion that industry had plenty of time to prepare. It is encouraging for industry that he said he does not underestimate what needs to be done and that he has his civil servants focussed on capturing and providing industry with the details we need, we hope within the timeframes we need to prepare.
“As representatives of the logistics industry, we are naturally disappointed that the promise of frictionless trade has been replaced with a promise that trade will be as seamless as possible but not until 2025, with a more realistic but costly “make do and mend” approach to be employed until then. Industry will need the support of government during this period to Keep Britain Trading effectively.”
British Retail Consortium
Andrew Opie, Director of Food & Sustainability at the British Retail Consortium, said: “Government will need to move fast if it intends to provide the necessary infrastructure to carry out full border controls on imported goods from January 2021.Without the necessary infrastructure up and running from day one, consumers in the UK will see significant disruption, particularly in the availability of fresh fruit and vegetables.
“The Government needs to establish import and export processes along with necessary infrastructure capable of conducting checks on rules of origin, SPS, VAT and more1. Staffwill need to be hired and trained to carry out these checks on the thousands of lorries that enter the UK every day. IT systems must be adapted and tested. Holding facilities for lorries, particularly at Dover and Folkestone, will need to be constructed. It is not enough to announce checks will take place, we must see plans now as to how this will be possible in practice, or it will be consumers who suffer on 1st January 2021.”
Road Haulage Association
In a letter to transport secretary Grant Shapps MP, RHA chief executive called for more information from government to allow businesses to prepare in time for the deadline.
“We need HMRC to clearly define the process so that we can understand how many customs agents will be required to support traders and hauliers.”
He criticised the lack of a firm deadline for when the customs processes would be published and warned that there could be a shortfall of customs agents.
Bobbie Ttooulis, Executive Director at Global Freight Solutions, said:
“Retailers can no longer ignore the impact that Brexit has on their businesses, especially as border control changes the impact on customer delivery. It’s crucial that they forecast for changes to border procedures, documentation, duties, taxes and pressures that will impact their supply chains.
“While Brexit has been initiated, uncertainty still hangs over trade. So, the safest best is to prepare for tough border controls. Long delays at the ports are going to be part and parcel for this new Brexit reality. If your business ships into the EU, and in the event of a backlog at the Channel tunnel for instance, partners will need to be able to divert product from the road to the air to avoid delays to the end customer. Adopting a paperless clearance system will also help minimise delays from reading handwritten documents, plus ensuring you have the right European Union Registration and Identification Number. An 8 or 10-digit HS code (Harmonised Commodity Description and Coding System) will also need to be supplied to support efficient customs clearance and enable accurate duty and tax calculations.
“Delays in the supply chain, caused by custom checks will lead to retailers being forced to hold more stock in their supply chain than they’re used to. This will have a direct financial impact on those businesses, who’ll either need to expand storage capabilities or hire more staff to cope with the increased volume of stock. Ultimately, communication and transparency will be key. Transparency of the resulting duties and tax cost incurred to customers at the checkout, as well as communication at each stage of the delivery journey, will minimise disruptions and keep customers on side.”
Brexit barriers – is your business ready?
By Dan Ennor – CCO at GFS
After a prolonged period of uncertainty, Brexit has happened. And retailers need to be prepared for the changes this will bring. A strong Brexit strategy for retailers all boils down to preparation. However, many businesses are still unsure how Brexit will impact them and the changes they’ll have to make as a result. Which means they need to act fast. But, how can companies plan for what they don’t know?
1. Documentation and procedure
I have no doubt Brexit will surely see the end of free trade movement in the EU for the UK, and when that significant change occurs, alterations to paperwork and procedures will follow. Reforms to trading will be a blow to unprepared retailers and their delivery companies, both practically and within documentation. Post-Brexit legislation will mean they need to update their processes in order to be compliant depending on the EU country they’re delivering to. With that in mind, retailers need to ensure the delivery companies they work with go paperless with their admin to prevent costly clerical errors.
Following the introduction of new laws and regulations, there will be plenty of red tape, and storing this information on paper will create a logistical nightmare for organisation and compliance. By adopting a paperless clearance system, expensive delays caused by misreading handwritten customs documentation are avoided. Submitting documents electronically to customs also eliminates the need to print and manually attach them to shipments, saving paper, time and hassle.
It’s also important for retailers to take note of some of the extra information they’ll need to provide at customs, post-Brexit. For example, customers will need to provide a European Union Registration and Identification Number in order to ship to the EU versus just a UK VAT number. And this will need to be checked and enforced to prevent failed deliveries. An 8 or 10-digit HS code will also need to be supplied to support efficient customs clearance and enable accurate duty and tax calculations are added for all products.
2. Delays to the supply chain
Going forward, when trading with EU nations, retailers will notice additional border checks, and major delays to their supply chain. This is something that needs to be built into every delivery company’s forecasting going forward.
Above all, communication is key. Operating transparently will ensure your consumers receive order notifications, keeping them fully informed throughout the process. This will become increasingly important during the early stages of Brexit, when the concept is new to everyone. Retailers will need their delivery providers to keep them abreast of how long a delivery’s going to take in real-time, so they can set expectations with shoppers accordingly and ensure customer satisfaction doesn’t suffer. Further to that point, eCommerce businesses will need to adapt their delivery promises on their website, as opposed to simply updating customers via SMS. This needs to be calculated accurately so retailers aren’t made to seem dishonest or ill-informed.
Furthermore, delays in the supply chain, caused by custom checks, will lead to retailers being forced to hold more stock in their supply chain than they’re used to. This will have a direct financial impact on those businesses, who’ll either need to expand storage capabilities or hire more staff to cope with the increased volume of stock.
3. Transparent duties & taxes
The most obvious, and perhaps well-documented barrier that Brexit will impose on delivery companies and retailers, is the duties and tax added to product prices depending on the shipping destination. With extra costs now attached to trade goods between EU countries, the overall cost of delivery will go up, and it’s on retailers and their delivery provider of choice to consider who’ll pay that extra fee.
With the cost of delivery in the EU rising, delivery companies will likely need to reflect that in their price, so the added cost doesn’t fall to them. That means that duties and taxes will likely be passed onto retailers, and retailers will inevitably be forced to pass that fee to customers, rather than absorbing it themselves. What will be important in the infancy of new duties and taxes for EU trading, is transparency across the board while everyone gets used to the transition.
Most importantly, eCommerce retailers will need to communicate these new duties and taxes to consumers at the point of checkout so they’re aware of the charge prior to, and at purchase. Unexpected fees will simply lead to cart abandonment worsening or goods being refused at the border. In the grand scheme of things, duties and taxes will make UK retailers less competitive versus those based in the EU, and that will directly impact on export revenues. Something for delivery companies to be wary of as they plan ahead.
The details of what Brexit looks like are still being decided upon. But that doesn’t mean that retailers should sit idle. There are steps brands can take to prepare for the impact of Brexit. What should be abundantly clear is that the choice of delivery provider for retailers, will impact their strategy, and ultimately their success. We know for certain that trading in the EU will change, and this will directly hit retailers’ delivery process. However, only by retailers and their delivery providers being aware and acting on these changes before they hit, can they best prepare their businesses to minimise disruption.