A new customs and trade reality for the UK and Europe
On 31st December, 2020, Great Britain left the European Customs Union. For the first time since 1993, shipments between Great Britain and the EU require customs paperwork. Certain products require health certificates, and are also subject to additional inspections and checks.
Three weeks into the new process, and while we have been spared the image of long queues at border crossings, trade volumes are down, and companies are experiencing increased costs of compliance and increased lead times.
Even at lower trade volumes, companies like DPD, DHL and DB Schenker (among others), have suspended elements of their UK services in an effort to deal with the additional customs complexity.
The key pain points that we have noted to date include:
- Lack of clarity between trading partners, on which company is responsible for the export and import declarations, and a lack of readiness of customers and suppliers to fulfil their obligations
- Customs complexities are adding to the administration requirements, and lead-time, for companies using the UK as a hub to import and re-export to the EU. There have also been issues with Non-EU or UK origin products, that do not benefit from free trade agreements.
- Companies shipping multiple products requiring health certificates in a single consignment, which require complex and costly administrative processes, to enable shipments
- Companies shipping to end consumers in a third country are now subject to additional processing fees from carriers, and are subject to more complex VAT requirements
- Shippers and hauliers needing to deal with multiple customs systems and apps that are not integrated, in order to successfully process shipments
- Insufficiently trained personnel at logistics providers, to navigate the new customs processes successfully
- Delays and complexity of shipments to and from Great Britain are making it more difficult to find hauliers that are willing to serve that market
Such is the complexity of shipments through Great Britain, Ireland has seen volumes shipping direct to Europe and bypassing Great Britain increase by up to 500% in the first three weeks, at a time when overall volumes are still down.
While some of these issues will dissipate in time, as companies and logistics providers get used to the new customs procedures, there will remain a large administrative burden and cost for future trade between Great Britain and Europe. It remains to be seen whether benefits will accrue, which can outweigh these costs.
Read more on Brexit and its’ implications on your supply chain.