freight-forwarders-in-covid19

The Key Role of Freight Forwarders in the COVID-19 Crisis

According to Robert Keen at the British International Freight Association (BIFA), the COVID-19 crisis has put emphasis on the importance that freight forwarders play in delivering vital commodities through our international supply chains. After spending many years being the “invisible hand of international shipping” Keen speaks of freight forwarders as, “the important role……taking centre stage and being recognised.”

With BIFA seeking to influence the UK government on all issues surrounding international shipping, they have been pleased so far with the pragmatic solutions that have been made. These include the easing of opening hours at temporary storage facilities rather than going through the formal process of a change in legislation, that could have held up the change. Currently, BIFA are looking for the government to ease VAT on import tax as they have done with domestic VAT.

Keen spoke of the official statement made in Parliament recently that the government acknowledged that international freight services are, “vital for ensuring the continuity of supply chains.” The government recognised the individuals working in this sector as key workers. Keen added it was important to recognise that the key worker title didn’t just extend to the obvious employees such as drivers and warehouse operatives but also people working behind the scenes such as customs data entry clerks.

 



COVID-19 and Freight Forwarding

As we consider the potential impact, COVID-19 will have on sea freight and supply chain management, it is important for freight forwarders and logistics operators to take vital steps to prevent the unnecessary spread of the pandemic which at present, continues to disrupt the movement of goods. Whilst this will undoubtedly cause significant delays to shipping and put a stop to many companies shipping altogether, the following provides some guidance on the potential risks to freight forwarders and how to combat them.

 


Impacts on Freight Forwarders and Logistic Operators

Social Distancing – Sea freight supply chains include many physical and clerical processes, many of which traditionally involved people interacting with each other in large groups. Similarly, this extends to physical cargo packing operations. All of these processes are usually executed in large offices and warehouses where constant interaction is necessary. Despite the increasing levels of digitalisation, the industry still heavily relies on transferring and dealing with physical documentation. With the introduction of social distancing now being implemented in all industries to kickstart the economy. Freight forwarding and logistics must find its own way of implementation.  

Commercial Impact – Any reduction in the amount of goods handled and shipped will inevitably have an impact on the customers of any freight forwarding company. Potentially, freight forwarding companies could see key customers lean on them to create expensive “workarounds” and use non-core ocean service providers to make voyages to ensure that their items are shipped.

Furthermore, as business travel has been restricted for the foreseeable future, it will be important for freight forwarding companies to keep lines of communication open and accessible to them through the use of remote conferencing applications.

 


Legal Implications for Freight Forwarders

Special Contracts – Whilst many freight forwarders operate to standard trading conditions in terms of the contracts that they hold with their customers, there are a number that hold special contracts with their key customers. With regards to these, it has been questioned whether these special contracts need to be reviewed and identify the obligations of the supplier to perform in contexts such as COVID-19. Specifically, such questions as, Is the forwarder or the its agent required to issue a Forwarders Cargo Receipt (FCR)? Is the operator required to undertake consolidations? As well as obligations, it may be necessary for forwarders to impose force majeure clauses in their contracts whereby the problems in China may be a reason for the contract to be terminated and their obligations to be discharged.

Industry Standard Terms – For freight forwarding companies that operate to standard trading terms, it is recommended to look into whether imposing force majeure clauses into existing contracts with your customers may be an option. In terms of taking on new transactions relating to a supply chain reliant on China, scrutiny on its logistics and legal advice will probably be required.

Communication with Customers – It is imperative that freight forwarding companies keep customers updated of all issues that arise in the supply chain whether this from the vendors, hauliers, lines, agents or terminals. To be able to claim a force majeure clause or discharge the company’s obligations there needs to be sufficient evidence that customers losses were caused by matters genuinely outside of their control. Companies will also be required to consider any alternative workarounds that could be implement with a moderate additional cost to the customer.

Communication with Supply Chain Stakeholders – Freight forwarders and logistics operators need to maintain good communication with the other stakeholders of the supply chain to evidence that they did everything that they could to avoid customer losses. A high level of detail and accuracy should be maintained when explaining the steps that were taken and problems encountered.

freight-forwarders-in-covid19

How to Choose a Freight Forwarder

Whether you’re a large company shipping many products internationally or a small business looking to make their first international shipment, deciding on the right freight forwarding company for you is a vital part of the success of your shipment. Ensuring the smooth transit of your goods is an important investment of your company’s time and money and it is worth researching freight forwarding companies to ensure that you pick the right company for the job.

 

What is a Freight Forwarder?

A freight forwarder assists companies in the process of transporting goods from one place to another. They use the most cost-effective methods with a suitable shipping company to ensure that every point of the journey goes smoothly.

Supreme Freight forwarders contract with a number of companies covering sea, air or road to transport goods on behalf of their clients. Although some freight forwarders have their own warehouses and vehicles, they aren’t necessarily the ones to carry out the transportation. Usually, they are the experts that are able to lead on the logistics and arrangements that will enable a smooth process giving companies piece of mind that their goods will be delivered.

Freight forwarders are seen as a necessary extension to many businesses. Mistakes made in shipping processes can be costly and delay goods getting to the places they need to go.

The wealth of knowledge and expertise they have on the process of importing and exporting is invaluable to companies and saves them both time and money. Even large Beneficial Cargo Owners such as Marks and Spencer work with freight forwarders in parts of their businesses. They are seen as a necessity and even regarded to some as an outsourced shipping department.

 


 

Important Questions When Finding a Freight Forwarder

With the freight forwarding Industry growing at an increasing rate, there is a lot of options for businesses to choose from. Many of these options will have varying experience levels and offer different services. It is important for companies to consider exactly what it is they want their freight forwarding company to do for them and to trust that this will be done correctly. With this in mind, it may benefit businesses to find out the following information when looking for a reputable freight forwarder:

Accreditation – Trustworthy firms such as Supreme belong to at least one trade association such as the British International Freight Association (BIFA). Members of BIFA trade to a collective set of trading standards that are backed by the insurance sector. Going with a company that is a member of one of these trade associations will give you peace of mind that your goods will be in the right hands.

Clarification of Services Offered – Different shipments require different services. It is important that you clarify with your potential freight forwarder that your goods will be transported the way that you require them to be. If you are unsure of the services that you will need it may be helpful to ask other businesses for advice. A good freight forwarder will give you a run down of the services that they offer and will be able to advise on the best course of action for your shipment.

Experience – Freight forwarding is a complicated and intricate business. Experience in the industry is key to ensure that everything runs smoothly. It may be even more pertinent to ask about experience if you are transporting cargo that requires additional needs such as specialist transport.

Shipping Process – A good freight forwarder should give you a run down of their shipping process with a clear explanation of how your shipment will reach its final destination, costs and transport plans.

Insurance – Checking a freight forwarder’s insurance policy is imperative. It is important to ensure that your goods will be insured for all of their journey, particularly if they are of high value.

Paperwork – It is important to know upfront what is expected of you and what the freight forwarder will handle in terms of paperwork, particularly with regards to customs. Mistakes with customs paperwork can lead to long and expensive delays.

Shipping Network – Good freight forwarding companies will have an extensive shipping network. An extensive network means good relationships with partners and demonstrates that they have local expertise in the places that you want to ship to. It is important to check that your destination is a place that they cover.

 


 

What are the Advantages of using Supreme Freight Forwarder?

The main benefits of a freight forwarder include

• The transportation of goods can be a logistical nightmare especially when you are dealing with importing or exporting to countries that you have not dealt with before. Different countries have different customs regulations, shipping restrictions and fees and a mistake could not only be costly in terms of fines but could delay your shipment reaching its destination and have a dramatic impact on your business. It’s important that companies get this right first time and the only way to do that is working with somebody that has had previous experience with the logistical side. Not only will this save you a lot of time, freight forwarders provide you with the peace of mind that your shipments will arrive in the desired place, in the desired time in a method that meets your needs and is cost-effective.

• Freight forwarders that have a lot of experience working with the same shipping companies on an international level are going to have a lot more leverage over buying costs than a company that they have never heard of using them for the first time. There is always a deal to be had and shipping companies know that if they strike a deal with a freight forwarder there’s a potential for a lot more business to come their way.

• With the logistical side of shipping being taken care of externally, business owners have the time to focus their time and efforts on other parts of the business that require their attention. If importing and exporting goods is something that is happening quite regularly this could result in a significant increase in productivity.

• As a company that deals with freight services all the time, freight forwarders are going to have gained a lot of contacts and experience that will be invaluable to companies with different needs. This knowledge and expertise will ensure that freight forwarders will be able to tailor their services to your specific requirements.

• Working with a freight forwarder can open opportunities to businesses they didn’t know were possible. With extensive knowledge of the different markets internationally, it could see your business being taken to places you had only dreamed of.

HMRC

UK Tariff Changes announced from 1st January 2021

From 1 January 2021, the UK will apply a UK-specific tariff to imported goods.

This UK Global Tariff (UKGT) will replace the EU’s Common External Tariff, which applies until 31 December 2020.

The new tariff is tailored to the needs of the UK economy. It will support the economy by making it easier and cheaper for businesses to import goods from overseas. It is a simpler, easier to use and lower tariff regime than the EU’s Common External Tariff (EU CET) and will be in pounds (£), not euros.

The UKGT also expands tariff free trade by eliminating tariffs on a wide range of products. The UKGT ensures that 60% of trade will come into the UK tariff free on WTO terms or through existing preferential access from January 2021, and successful FTA negotiations will increase this.

This will lower costs for businesses, ensuring they can compete on fair terms with the rest of the world, as well as keeping prices down and increasing choice for consumers.

The Government is maintaining tariffs on a number of products backing UK industries such as agriculture, automotive and fishing. This will help to support businesses in every region and nation of the UK to thrive. Some tariffs are also being maintained to support imports from the world’s poorest countries that benefit from preferential access to the UK market.

The UKGT was designed following widespread engagement with businesses across the UK. As it will come into force on 1 January 2021, it’s important that businesses can familiarise themselves with the new tariff regime ahead of this date.

The Government are backing UK industry by:

Maintaining tariffs on agricultural products such as lamb, beef, and poultry.
Maintaining a 10% tariff on cars.
Maintaining tariffs for the vast majority of ceramic products.
Removing tariffs on £30 billion worth of imports entering UK supply chains. 0% tariffs on products used in UK production, including copper alloy tubes (down from 5.2%) and screws and bolts (down from 3.7%).

UK consumers will also benefit from more choice and lower costs on numerous goods thanks to zero tariffs. These include, for example:

Dishwashers (down from 2.7%).
Freezers (down from 2.5%).
Sanitary products and tampons (down from 6.3%).
Paints (down from 6.5%) and screwdrivers (down from 2.7%).
Mirrors (down from 4%).
Scissors and garden shears (down from 4.7%).
Padlocks (down from 2.7%).
Cooking products such as baking powder (down from 6.1%), yeast (down from 12%), bay leaves (down from 7%), ground thyme (down from 8.5%) and cocoa powder (down from 8%).
Christmas trees (down from 2.5%).

The Government will promote a sustainable economy by cutting tariffs on over 100 products to back renewable energy, energy efficiency, carbon capture, and the circular economy. The following are all dropping to zero tariffs:

Thermostats (down from 2.1%).
Vacuum flasks (down from 6.7%).
LED lamps (down from 3.7%).
Bike inner tubes (down from 4%).

Almost all pharmaceuticals and most medical devices (including ventilators) are tariff free in the UKGT. However, some products used to fight COVID-19 maintain a tariff. To ensure those working on the frontline can access vital equipment easily, the UK has introduced a temporary zero tariff rate on these products. This relief waives the tariff and VAT for personal protective equipment (PPE), medical devices, disinfectant and medical supplies from non-EU countries.

The UKGT will apply to all goods imported into the UK unless:

An exception applies, such as a relief or tariff suspension
The goods come from countries that are part of the Generalised Scheme of Preferences
The country you’re importing from has a trade agreement with the UK

It only shows the tariffs that will be applied to goods at the border when they’re imported into the UK.

It does not cover:

Other import duties, such as VAT
The precise details of trade remedies measures
Other restrictions on imports, such as anti-dumping, countervailing or safeguards

Goods covered by a tariff-rate quota:

Some products are covered by a tariff-rate quota. This allows a limited amount of a product to be imported at a zero or lower tariff rate.

The limit may be expressed in units of:

weight
volume
quantity
value

If this limit is exceeded, a higher tariff rate applies.

If there is a tariff-rate quota on your product, you can apply to import a limited amount at a reduced rate of customs duty.

Some tariff-rate quotas are only applicable to products imported from a specified country.

Please follow the below link to check the tariffs that will apply to goods you import from 1 January 2021.

https://www.gov.uk/check-tariffs-1-january-2021

If you need any help or support please contact us.

NHS charter

PPE Equipment to arrive today for the NHS

We are very proud to announce that we have arranged a full charter of vital PPE equipment directly for the NHS to arrive today. Flight number F79540 landing into London Heathrow at 13.30 from China.

Our thanks as ever go out to the NHS and all those working to keep us safe.