post-brexit-red-tape-for3e-trade

Post-Brexit Red Tape for EU Trade

Despite the lack of lorries at borders since the UK left the EU Single Market and Customs Union, various sources have highlighted significant disruption to goods being transported citing post-Brexit red tape as the cause. This is having a significant impact on the trading of goods with plant or animal origins.

The Scottish fishing industry have been struggling with confusion and uncertainty following the implementation of the deal agreed on Christmas Eve between the UK and EU governments. Some firms have seen major delays with some of their shipments being halted until 18th January due to issues with health checks, computer systems and customs paperwork which is leading to a big backlog as reported by the Guardian. As a result of this, many seafood shipments heading to France and Spain have been rejected because of the delay.

Due to backlog, the DFDS, the UK seafood industry’s largest logistics provider has suspended its groupage export service which allows exporters to group their shipments together in one consignment. This was decided only a week after the new trade deal was implemented. DFDS are expecting to resume deliveries next Monday but are warning that the service would be expected to take a lot longer than what it would before Brexit and is highlighting the importance of correct and accurate paperwork.

Other companies such as Danish ro-ro shipping and logistics operator have said that they endeavour to fix IT issues and provide more training to their staff to help customers complete the required customs paperwork and achieve a smoother process.

DB Schenker Faces Challenges

DB Schenker has highlighted the significant challenges it has faced relating to the introduction of the new customs formalities that now apply to shipments as a result of Brexit. Following the suit of many other providers, they have also placed a hold on all shipments being sent to the UK.

The provider has found that only 10% of customs documents submitted with shipments have been complete and free of errors. To try and manage this situation effectively the company have redeployed staff from their Brexit Task Force that was established over a year ago.

In a statement, they said: “DB Schenker expects shipping volumes to increase further in January. Logistics service providers can only process consignments quickly if the share of correct and complete customs documents also increases significantly. Both shipper and consignees need to ensure that compliant documents are provided.”

Cross border e-commerce trade expert, Hurricane Commerce warned that the struggles faced by UK businesses in the first few weeks of the new regulations being implemented are the “tip of the iceberg” and that severe challenges should be anticipated.

This comes as parcel carrier, DPD, was also forced to pause its road service from the UK to Ireland and Europe until the end of last week due to customs clearance issues with post-Brexit parcels.

Customs Clearance Staff Shortages

Another challenge that firms have desperately tried to mitigate before 31st December was the sourcing of a sufficient number of customs clerks to be trained up and ready before the implementation of the new trading regime. Speaking last Autumn, Barney Weston, managing director of Oceanic Resources International warned that serious shortage was unavoidable.

On the current situation, he said: “I think most (firms) managed to get the bulk of their teams in place before the end of the year, but training and ‘filling the gaps’ continues. In most cases a Customs and Compliance Manager/ Brexit Head is in place (in firms) giving the strategic lead on how to handle the UK’s new trading relationship.”

He went on to say: “I know that in many cases training and upskilling is on-going, and there is still high demand for people to fill customs clerk positions, but it’s hard to accurately quantify this in numbers. Certainly, anyone who has ever sniffed a customs clearance in their career history is still worth their weight in gold!”

“I think the whole industry will have a clearer picture on the situation by the end of the month; so much was unknown heading into Brexit. I think that shortly people will know if they can handle demand with the current staff levels or if more will be needed.”

“One positive; I spoke with a top 5 UK supermarket earlier this week who we have been assisting in building their customs teams, and so far, everything is working.”

 

British International Freight Association have confirmed that its freight forwarder members appear to be managing the challenges with a spokesperson for the association saying, “(Members) are learning the new systems as they go – (there were) hard lessons learnt but they are getting to grips with the situation in exceptionally difficult circumstances. BIFA has always said that the preparing and lodging of customs declarations was the relatively easy part of the new procedures, and the bigger issues would be with non-tariff matters such as safety and security entries and SPS controls. That has already been seen.”

BIFA director general, Robert Keen commented, “We receive calls asking technical questions on procedures but so far as we can gauge the members are very busy but coping.”

Another source close to BIFA said, “(Evidence) suggests that cross border trade last week was very quiet; probably because of pre 1st January stockpiling and companies waiting to see how things pan out. The people I have spoken to expect increased volumes this week, but nowhere near normal. So, we probably won’t get to see the true picture for some time. And who knows what the new normal will be?”

 

Hauliers wanted

Hauliers Warned of Tougher French Customs Controls

Since the UK’s departure from the Single Market and Custom’s Union, the predicted delays on Kent motorways have thankfully been avoided.

Unfortunately, this is set to change with haulage companies being advised to brace for tighter controls at French border control which could potentially see the first significant post-Brexit border disruption. The warnings were shared during two conference calls between British Industry bodies and UK government agencies on the 7th January.

Shane Brennan, CEO of logistics body The Cold Chain Foundation told the BBC that it could take months for the new trade agreements to settle in: “Trade levels are very low. It’s growing from 10% on the 1st January to not yet 50% of the traffic flows that we would normally expect and even at those levels we are experiencing high levels of confusion, delays, businesses….. not being turned back, but being told if they come back with the same level of preparedness next time they will be turned away. So the feeling is that we are building to quite a significant potential disruption.”

Reports suggest that cross-Channel HGV traffic through the Port of Dover and Eurotunnel have been significantly low over the past week and is most likely a result of supply chains stock piling items. Despite low traffic passing through, the Department of Transport advised that only 1% of lorries arrived with the correct paperwork with a further 3% being sent to Manston for testing as drivers arrived without having the necessary negative COVID test result. The Road Haulage Association advised that one in five lorries were being turned away citing both reasons with only 2000 lorries currently crossing the border compared with normal numbers of 5000-6000. Based on these reports, it is clear that the border has not been used at its normal capacity and will be scrutinised in the preceding months as to how it copes.

Failing to Prepare

Chief Economist for the Chartered Institute of Personnel and Supply, John Glen, told BBC news that he was hearing from customs clearance agents in Dover that there was a distinct lack of preparation from businesses and their custom brokers. Whilst he expects this to change over time, he is aware that the people involved are “worried that demand will increase faster than capacity does.”

Elsewhere, the BBC have been reporting disruption at the Irish border with Andrew Kinsella, managing director of Gwynned Shipping, advising them of a backlog of 60 lorries waiting to be shipped to Dublin. He explained that many hauliers are discovering that their customers are not able to generate the special declarations that are required for their goods to cross the border.

“Whilst you don’t see queues at ports and terminals the reality is that these queues are developing elsewhere in our depot at Holyhead, in our depot at Deeside and in our depot at Newport in South Wales and lots of hauliers have depots in the proximity of ports.”

“There are a lot of issues about demarcation about who is going to arrange the export declaration with the UK revenue authorities, who’s going to arrange the import declaration, the hauliers then trying to arrange the import safety and security declaration to create an ENS number which helps you generate a PBN number so there has been a lot of everyone finding their feet.”

Trade Barriers

UK retailers expressed concerns that the new UK-EU trade deal has created trade barriers that are believed to have had a direct impact on cross-Channel and FMCG logistics. Traders now believe that they will be required to pay tax on imports and exports of specific goods including food and clothing that are not completely made in Britain. With so much confusion over paperwork regarding this, some parcel companies have made the decision to suspend their road deliveries to Europe.

The UK-EU trade deal was billed as preserving its zero tariff and zero quota access to the bloc’s single market; however, some major retailers using the UK as a distribution hub for European businesses could face possible tariffs if they re-export to the EU. This could see businesses concentrating on time-consuming workarounds or relocating hubs to the EU.

The British Retail Consortium is seeking short term resolutions for the challenge’s businesses face and is seeking dialogue from the government and the EU to mitigate the long-term challenges new tariffs will pose.

A Perfect Storm of Brexit Disruption

Scottish seafood exporters have described their situation as a, “perfect storm” of Brexit disruption with their industry on the brink of sinking. Donna Fordyce, chief executive of Seafood Scotland speaks on the subject:

“These businesses are not transporting toilet rolls or widgets. They are exporting the highest quality, perishable seafood which has a finite window to get to markets in peak condition. If the window closes these consignments go to landfill.”

According to Fordyce, the sector had already experienced difficulties as a result of COVID-19 and the French border closing at Christmas as well as “layer upon layer” of problems associated with Brexit. Without exports it is feared that fishing fleets will have little reason to go out.

“In a very short time we could see the destruction of a centuries-old market which contributes significantly to the Scottish economy,” adds Ms Fordyce.

Parcel Traffic Affected

Elsewhere DPD, the parcel delivery service has told the BBC that it has suspended its European Road Service due to the “increased burden” of customs paperwork required to be completed on shipments for the EU including the Republic of Ireland. Increased paperwork has seen 20% of parcels identified as “incorrect or incomplete data attached” causing them to be returned.

In a communication with their customers, the business has spoken of a “challenging few days” for the international operation and is planning on restarting the service pending a review on 13th January.