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Brexit

Post Brexit Supply Chain execution – managing disruption, testing resilience

By Elanders

The supply chain operational challenges caused by Brexit, compounded with the COVID-19 pandemic, have really tested the effectiveness and resilience of some current supply chain solutions. Managing the extra customs documentation; working out now what UK operational supply chain solutions are best for an organisation, the cost of getting things wrong – these and more challenges are raising the importance today of effective and agile supply chain operations.

Many market surveys in recent weeks constantly seem to report back that supply chain solutions and effectiveness post Brexit have the strong possibility of impacting overall business performance. For some organisations post Brexit, maintaining the customer market promise and service support when things go wrong for some has been a massive challenge. What was thought to be an effective supply chain solution pre-Brexit (and COVID-19) – for some, has rapidly been exposed. Global economies and extended supply chains are now seriously being challenged and recreated:

  • Brexit itself has been a one-off challenge for organisations to understand, navigate and maintain business continuity in the short term. 
  • Brexit for many has now identified that today’s supply chain solution needs a complete rethink, with a revised strategy now required that has an agile operational solution behind it. 
  • Brexit may be a unique challenge to manage today – but supply chain change and disruption will be a constant part of every business’s focus from now on. 

Elanders UK Supply Chain solutions provide businesses with an alternative. Global coverage but delivered locally to the specific customer needs. Managing the post Brexit challenges on documentation, visibility and movements; working out for your business what the new storage strategy and the associated operational solution should now be all requires a combination of executional capability, practical experience and business partnership. 

Our bonded warehouse solutions in mainland Europe and in the UK with dedicated customs experts; our end-to-end global supply chain execution solutions – these all combine to support many leading global organisations create and maintain their post-Brexit supply chain operational solution for today’s needs – but we are also agile and innovative to meet tomorrow’s challenges. 

To find out more please visit www.elanders.co.uk/brexit-services/ or contact us at addingvalue@elanders.com.

Early preparation ‘remains key’ to avoid Brexit & COVID supply chain disruption

43% of businesses have been impacted negatively by Brexit in 2021 – but 19% of businesses are thriving in a post-Brexit world.

That’s one of the conclusions of Descartes Systems Group’s latest Brexit research report: Beyond Brexit: The Realities of Brexit for UK-EU Cross Border Trade.

Following its 2020 research on Brexit preparedness of UK companies, this latest report analyses how business has been affected by both Brexit and the COVID-19 pandemic and the level of uncertainty around the future.

Undertaken by SAPIO Research during March 2021, the interviews with supply chain managers assessed the specific elements of EU trade that have been affected, the resulting disruption and the expected performance of supply chains in 2021.

Key findings include:

  • Mixed performance: 43% of businesses have been impacted negatively by Brexit in 2021 – but 19% of businesses are thriving in a post-Brexit world.
  • Disruption reality: 90% of businesses have faced disruption since the end of the Brexit transition period.
  • Economic impact of Brexit: 53% expect their 2021 turnover to be lower than if the UK had remained in the EU – and the average reduction is 29%.
  • Pandemic impact: 76% had their Brexit response disrupted by COVID-19.
  • Early preparation has proven key to success, with those businesses that started their customs filing preparations in 2019 (24%) and early 2020 (33%) thriving most.

As predicted in Descartes’ 2020 research, Brexit has had a negative impact on both business and the economy. Of the companies surveyed, 90% have experienced disruption in their ability to trade in and out of the EU in 2021 – with 20% experiencing significant disruption since the transition period ended. Despite the high level of concern revealed in the 2020 survey, 40% of companies have actually experienced worse-than-expected EU supply chain performance, according to Descartes’ latest report. Additional key findings include:  

  • 80% of businesses reported disruption to their cross-border trade with the EU or Northern Ireland (NI), rising to 93% for medium and large enterprises 
  • 40% have experienced delays in their supply chains 
  • 37% have experienced increased cost of imports
  • 36% have had to manage customs declarations 

The combination of COVID-19 on top of Brexit created unprecedented challenges for businesses of every size, in every market. Confidence has been affected. Three quarters (76%) of companies confirm that COVID-19 disrupted their Brexit response. 

However, a significant finding is that almost one fifth (19%) are actually thriving in a post-Brexit economy, with 35% of electronics, computer and telecommunications companies enjoying a positive outcome. Preparing early proved essential, allowing these companies to take a holistic approach by working closely with experts who understand the complexities of global trade and by putting solutions in place for customs declarations.

The research findings underline that with the next phase of Brexit changes – an end to deferred import declarations from July 2021, and safety and security filings required from 1st January 2022 — there are lessons to learn about the value of preparation and acting ahead of deadlines. When it comes to successful global trade, planning is not just essential for compliance – it makes a tangible difference to successful business operations. 

“Brexit has thrown many businesses into a spin, but the companies that prioritised Brexit preparation are thriving and provide a best practice blueprint that the rest of the market can now follow,” said Pol Sweeney, VP Sales and Business Manager UK, Descartes. “Our research highlights that with the changes due from July through to January 2022, early preparation is, once again, crucial to avoiding expensive disruption.”

For the full research findings, see Descartes’ Brexit Realities Report and for additional Brexit resources visit Descartes’ Brexit Resource Centre.

5 Minutes With… Hazel 4D’s LEE ARMSTRONG

In the latest instalment of our supply chain industry executive interview series, we spoke to Hazel 4D Marketing Director Lee Armstrong about the company, it’s products & services, the ongoing challenges of COVID-19 and Brexit, and upcoming opportunities…

Tell us about your company, products and services.

At Hazel 4D, we provide a wide range of innovative products that help you save time, money and the planet, but know from experience that the packaging process isn’t simply about the supply of materials. It also relies on having the right equipment, and on carefully training staff and monitoring performance, to ensure that packaging is always applied as efficiently as possible.

That’s why we offer our unique service, where we partner with you to improve your business performance and profitability – typically you will end up spending significantly less on packaging. 

What have been the biggest challenges the Supply Chain industry has faced over the past 12 months?

Partly due to the time of the year, and partly due to the situation that Covid and Brexit have brought upon us, lead times of packaging products are extending every day at the moment. Here at Hazel 4D we are working hard to ensure that we continue to meet your needs. We have increased stocks substantially to ensure that we can support you with covering your Christmas/seasonal trade, as well as the additional pressures of panic buying and the huge increase in E-commerce.

And what have been the biggest opportunities?

There’s been exponential increase of end users buying online has created huge demand for effective packaging.

Investing in PPE products at the request of customers. The company has helped multiple businesses by supplying these products and has even taken on new customers as a result of this. Successfully pulling through a difficult time.

We took the opportunity to help out the community as much as possible. We donated cardboard boxes and E-tape free of charge to our local Burberry site that was producing PPE for the NHS – Read article here: https://www.hazel4d.com/en/page/550/hazel-4d-news-ppe-for-the-nhs

Hazel 4D donated a number of poly bags to a local seamstress hoping to put a smile on the faces of frontline workers. Read article here: https://www.hazel4d.com/en/page/551/hazel-4d-news-polythene-bag-donation

What is the biggest priority for the Supply Chain industry in 2021?

Ensuring that business can continue without interruption whatever the outcome of Brexit.

What are the main trends you are expecting to see in the market in 2021?

An increase in online shopping and e-commerce – We’re expecting the economy will improve and consumer confidence will rise making B2C suppliers even busier.

What technology is going to have the biggest impact on the market this year?

We expect to see a huge focus around recycled products into plastic products such as stretch film, driven by the Plastic Packaging tax coming in 2022.

In 2022 we’ll all be talking about…?

Looking back on 2020 and how the pandemic has changed the world for forever, with more of a focus on e-commerce and sustainable packaging alternatives.

What’s the most surprising thing you’ve learnt about the Supply Chain sector?

Just how resilient, adaptable and flexible it’s proved itself to be during the turmoil of 2020.

What’s the most exciting thing about your job?

The people that I interact with on a daily basis and the work that we do together to solve challenging packaging requirements. We’ve worked with a multisite printing company this year to significantly improve their pallet wrapping process whilst saving them around 70% on the cost of every pallet they wrap. One happy customer!

And what’s the most challenging?

Taking on a new role of Marketing Director for the company and writing a marketing plan for 2021.

What’s the best piece of advice you’ve ever been given?

You progress faster when you’re working outside your comfort zone.

Retailers to on-shore £4bn of products to the UK as COVID-19 ‘resets’ supply chain strategies

More than £4.2 billion of products will be on-shored to the UK by retailers in the next 12 months in a move that would represent a significant fillip to manufacturing, being equivalent to the country’s entire current clothing manufacturing output.

That’s according to a new report by global professional services firm Alvarez & Marsal, in partnership with Retail Economics, that estimates that COVID-19 has created new pressures on retailers, exposing weaknesses in global supply chains and leading many to rethink strategies for the future to remain resilient.

Nearly three quarters (70%) of Europe’s largest 30 retailers say they have conducted a review of their supply chains as a direct result of the pandemic.

Of the same group of retailers, more than half (55%) have already begun to diversify their suppliers, with 29% planning to do so within the next 12 months. 14% are already sourcing more from domestic economies, with almost half (42%) planning to do so in the next 12 months.

Erin Brookes, Managing Director and Head of Retail and Consumer, Europe, A&M said: “COVID-19 has brought about a fresh set of financial and logistical challenges which retailers must overcome while accommodating permanent shifts in consumer behaviour. Our research shows that despite these new pressure points, most retailers are responding at speed, creating new growth opportunities within their domestic economies and protecting against future risk.

“This Christmas will be a major test for this new operating environment. The structural shift towards online will place extraordinary pressure on distribution and in some cases, we are likely to see supply not meeting demand. Meanwhile, new lockdown measures which prevent most physical retail from opening over key sales moments like Black Friday will only exacerbate these challenges. In the next few weeks, retailers will need to deliver a steady flow of online sales to contain the usual last-minute rush.”

The report says retail businesses are being forced to reassess the future of their supply networks and how they can not only meet COVID-19 related challenges, but simultaneously address underlying structural changes to ensure they are future-proofed.

Now the initial shock of the pandemic has resided, businesses and governments are considering how to build back better, with sustainability playing a major role. As European retailers come under increasing pressure to create visible ESG commitments, 70% of the retailers surveyed have already begun changing the way they source products to help meet their goals – with the remaining 30% planning to do so in the future.

Part of these plans also incorporate on-shoring, with 46% stating they already source more from their domestic economies to help meet ESG targets, while 39% suggest they intend to in the future.

Retailers are also increasing their focus on sustainability in response to growing consumer demand for ethically sourced goods. A third (32%)³ of U.K. consumers say they would be prepared to pay more for products sourced from Britain to help meet carbon emissions targets, while a further 35% would if there was no impact on price.

The COVID-19 crisis has put even greater emphasis on using technology to build more resilient supply chains and accelerated trends towards digital trade and e-commerce. Technological innovation and adoption will shape the future of supply chains, helping to streamline operations and drive efficiencies.

Of the retailers surveyed, the majority recognise the need for continued investment into technology, with 77% who are considering investing in digitalisation, 63% in automation and 23% in artificial intelligence.

Tim Waters, Managing Director and European Supply Chain Practice Lead, A&M said: “The impact of the pandemic has been felt throughout retail supply chains across the world. Despite significant distress and disruption, COVID-19 has also acted as a catalyst for change for retail businesses, with evolving consumer behaviour, ESG commitments and technological potential leading new strategic thinking. 

“Across all sectors, businesses are looking for ways to rebuild for the better, with sustainability swiftly climbing agendas. Our research highlights that on-shoring operations is already underway for many retailers. Not only will this help to create more ethical supply chains, it will help to manage future risk.”

Away from the pandemic, the uncertain outcome of the ongoing Brexit negotiations will have significant repercussions for UK retailers and their supply chains, with no-deal creating costly delays and interruption. According to A&M’s analysis, a no-deal scenario would create new tariffs of £7 billion for UK businesses, with most of the burden placed on food (17.1%) and clothing (10.6%).

As such, A&M’s research suggests that European retailers are reluctant to commit to any permanent changes to their supply chains until a Free Trade Agreement (FTA) is negotiated between the U.K. and the EU.

OPINION: UK Business ill-prepared for post-Brexit Customs Complexity

2020 was meant to be the year of ‘Brexit Preparation’. When the UK left the EU on January 1st2020, firms involved in trade with the EU were set to spend 12 months on robust planning, maximising the 12 month Brexit transition period to understand the new trade and customs requirements. The transition period provided time to put in place the systems and expertise required to manage trade and the customs declarations that will be required with the EU. 

Since March, however, Covid-19 has wrought unprecedented change throughout every supplychain – and many firms felt they had no option but to shelve Brexit planning, and in many cases also use cash and stock initially reserved for Brexit-related disruption, simply to survive. With the deadline fast approaching, however, and the option of a ‘no-deal’ Brexit on the table, the lack of preparedness is beginning to raise concerns. 

As Andrew Tavener, Head of Marketing at  Descartes, argues, UK businesses are largely ill-prepared for the customs complexity post-Brexit. Companies need to take action now, or potentially risk supply chain disruption at a level far greater than that experienced during the onset of Covid-19.

Brexit readiness assessed

During July 2020, Descartes commissioned independent research to ascertain supply chainmanagers’ general expectations around the impact of Brexit. The findings were stark:

  • Two thirds of businesses have had their Brexit preparations disrupted by COVID-19.
  • Less than a quarter (23%) have high confidence in their ability to cope with the extra administrative burden of Brexit.
  • Two thirds (67%) of large firms are very or extremely concerned about longer delays in their supply chain impacting the business post-Brexit.
  • Fewer than one in five (18%) of UK businesses are prepared for a ‘no deal’ Brexit.
  • Almost three quarters (72%) are concerned about the customs brokerage market’s capacity post-Brexit.
  • Two fifths (40%) are concerned about customs declarations impacting their business post-Brexit.

With just a few months until the the end of the Brexit transition period, the lack of certainty surrounding the deal still under discussion between the EU and UK is undermining business certainty. Just over half (52%) think a UK-EU trade deal is unlikely to be achieved in 2020 and only one in ten (10%) supply chain managers claim to have total certainty regarding the impact of Brexit on their business. Furthermore, despite the consensus regarding the likelihood of a ‘no deal’ Brexit, fewer than one in five (18%) are prepared for a ‘no deal’ exit from the EU.

Delays to the supply chain (45%) are the biggest concern regarding the impact of Brexit on cross border trade. However, the larger the organisation, the greater the concern regarding supplychain delays: 56% of supply chain managers in firms with over 1,000 employees are worried about delays to the supply chain. The impact of such delays also raises serious concerns: two thirds (67%) of larger firms are very or extremely concerned about longer delays in their supplychain. Over two thirds (68%) of supply chain managers within healthcare are also concerned about supply chain delays. Tariff payments (40%) and customs declarations (40%) are the next highest concerns. 

These findings underline a key fact: those organisations and supply chain managers with existing experience of customs declarations are far more worried about the implications of Brexit on the business than those who have yet to discover the complexity of customs processes. Significantly, with consumer behaviour having fundamentally changed during COVID-19, this inexperience is likely to catch out many smaller sole traders who have moved to an ecommerce model and rely on trade with the EU during the pandemic.

Understanding Customs Complexity

For any organisation hoping for a last-minute reprieve, customs declarations will be required regardless of whether the UK strikes a free trade deal with the EU. Even companies that opt – and are allowed – to defer import customs declarations for six months must still maintain detailed records of goods brought in. Furthermore, many smaller organisations appear unaware that Brexit affects every import or export with the EU: it will no longer be possible to simply load up and drive to another country to deliver and sell goods without paperwork, or for e-commerce traders to simply post goods to a consumer in Paris or Cologne as if it were Birmingham or Manchester. Customs declarations will be mandatory.

There are essentially two approaches that companies can consider: complete declarations in-house or use an intermediary – a customs broker or freight forwarder – to handle the process.  Relying on the latter option, however, could be difficult given the expected huge increase in demand due to Brexit. Government figures suggest that British companies trading with Europe will have to fill in an extra 215 million customs declarations a year post Brexit – with a potential cost to businesses of around £7bn a year. There are simply not enough third-party providers to support this huge increase in demand – a fact clearly recognised, with our research confirming almost three quarters (72%) are concerned about the customs brokerage market capacity after Brexit.

Yet when less than a quarter (23%) of companies have confidence in their ability to cope with the extra administration associated with Brexit, and 40% are concerned about customs declarations impacting their business post-Brexit, the options if customs brokers are not available are limited.

It is possible to file directly with HMRC – but how confident is the business in its ability to check the classification and valuation of goods to ensure the right commodity codes are used? Determine the need for licences for restricted or hazardous goods? Prepare and submit the correct documents to ensure there are no delays at the border? And what about taking advantage of customs authorisations, including Inward Processing, Customs Warehousing, Transit and Customs Freight Special Procedures that could simplify the paperwork requirements for importers trading heavily with the EU or moving goods through multiple territories? Any firm wanting to use these procedures will need to be authorised by HMRC. What about the option of a six-month deferment for import declarations, which will require the business to open a deferment account with UK customs?

Taking Control

Any company deciding to self-file should consider a software system that can streamline the process, from data consistency to the use of templates to speed up the creation of documents for routine product import. The Government’s Custom Grant Scheme provides support for businesses needing to invest in both technology and training. Combining a Software as a Service (SaaS) customs solution that ensures all regulatory changes are automatically updated and available, with staff training to achieve in-house expertise, provides a strong foundation not only for handling the complexities of post business activity but also future business development.

One of the key aspects of self-filing is the ability to immediately understand and manage landed costs. Import and export duties and tariffs create a new cost model that businesses need to understand rapidly. With different tariffs applied based on a range of factors, from place of origin to method to transport, the ability to monitor landed costs will provide companies with the chance both to manage the new cost models and take strategic sourcing decisions. With over a third of firms confirming they have or will by the end of 2020 looked for new sources of goods (35%) and imported goods early to protect supply chains (34%), factoring in the landed costs will be key to creating the correct customer pricing model and retaining margin where possible.

For ecommerce businesses, immediate insight into landed costs will be essential to provide customers with accurate pricing. No business wants to risk shipping individual items cross border, all the way to the customer’s door, only for the item to be refused when the courier demands the additional £20 customs duty payment, for example. Being able to integrate customs solutions into the ecommerce platform will support accurate real time pricing information.

Software can also support firms that decide to use customs authorisations, including Inward Processing, Customs Warehousing, Transit and Customs Freight Special Procedures; as well as providing the detailed record keeping required for companies that have deferred import customs declarations for up to six months. Essentially, the software will create the declarations without submitting them, providing a detailed declaration report to the business to deliver essential insight and take control over the new import/export cost model post the Brexit transition period.

Conclusion – Preparing for Change

Growing numbers of organisations are beginning to recognise the implications of the Covid-19 pandemic extend far beyond the extraordinary supply chain challenges faced over the past few months: consumer behaviour has changed fundamentally. Retailers estimate the shift from bricks & mortar to ecommerce has massively accelerated, achieving a change within three months that was previously expected to take at least three years. While companies may have recognised the increase in customs declarations that will be required as a result of Brexit, the shift towards ecommerce and direct to consumer delivery will not only increase those numbers, it is also likely to catch a number of the smaller sole traders by surprise.

With 30% of organisations experiencing major uncertainty with regards to the impact of Brexit on the business and its supply chain, and the end of the Brexit transition period fast approaching, the onus is on business to take action today, and make the changes that can enable firms to become 100% confident with regards to customs declarations from January 1st 2021.

5 Minutes With… Matthew Hopkins, BoxLogic

In the latest instalment of our supply chain industry executive interview series we spoke to Matthew Hopkins, Director at BoxLogic, about his company, industry opportunities, the challenges posed by COVID-19 and Brexit, plus some Netflix favourites…

Tell us about your company, products and services.

BoxLogic is a consultancy that supports our clients transform their supply chain operations, usually when there is a change in volumes, sales mix or cost base; or if additional capacity is required in the network. The key areas that we add value to our clients are by designing efficient distribution networks, designing or redesigning new warehouse facilities, evaluating the feasibility of warehouse automation and WMS selection.

We are a team of four and setup our own business in late 2018 after working together for several years at a previous specialist logistics consultancy. Now we set our own direction for working with clients. It has been very exciting so far and I’m looking forward to it continuing.

What have been the biggest challenges the Supply Chain industry has faced over the past 12 months?

It has been fascinating time for supply chain with some very important issues in the news agenda. It shows how important the function is and it’s hopefully going to attract many young people to the industry who are excited about answering these questions.

You cannot look past Covid-19 as the biggest challenge, managing the supply issues, starting and stopping the supply chain has shown incredible adaptability. There has been plenty of other challenges though including the need for better visibility of how goods are sourced and the ethical integrity of those products. That applies as much for paying workers in garment factories fairly, as it does for the sustainability of soy production on deforested land.

The small matters of Brexit, the demise of the high-street and the increasing adoption of automation on top of that!

And what have been the biggest opportunities?

Ecommerce. To have an effective, efficient online fulfilment platform has been integral over the last six months for many businesses to keep trading. Town centres are quieter than ever and the ONS data shows that the lockdown and social distancing is encouraging an even greater proportion of spend to shift online. Operations that have invested in warehouse technology to reduce the reliance on labour have been well placed to benefit from the pandemic and I think a lot of companies are playing catch up.

What is the biggest priority for the Supply Chain industry over the next twelve months?

I think there are going to be two priorities. Firstly, keeping the operation going through the pandemic and maintaining social distancing in the workplace to prevent outbreaks in the operation. The financial and even reputational impacts of an operation going down because of an outbreak could be significant.

Secondly, the supply chain industry still doesn’t know what terms the UK will be trading on after we exit the Brexit transition period and there isn’t a lot of time for the industry to prepare for whatever the future looks like. 

What technology is going to have the biggest impact on the market this year?

It seems that the UK is facing into a few different economic headwinds at the moment, so I think any technology that takes cost out of an operation quickly is going to do well. That could be good for anyone offering Robots-as-a-Service (RaaS), which will probably suit Autonomous Mobile Robots (AMRs).

In 2022 we’ll all be talking about…?

How good or bad drone deliveries work, I imagine. It’s one of those supply chain developments that will really make an impression on the general consumer and probably create a bit of a buzz. It will be interesting to see who is driving the technology; the traditional parcel carriers, who have been growing rapidly over the last decade and developing their infrastructure or the tech companies. Will it be a VHS vs Betamax moment or not?

Which person in, or associated with, the Supply Chain industry would you most like to meet?

I’m always interested in meeting anyone with an interesting perspective or challenge that needs to be solved. As I’ll be attending the Total Supply Chain Summit in October, I’m hoping to achieve just that.

What’s the most surprising thing you’ve learnt about the Supply Chain sector?

Last year I attended a conference and the audience were asked to raise their hand if they deliberately set out on a career in supply chain. Only 10% of the room had!! It’s such a fast-paced and exciting area to work, I am always surprised by the lack of pathways from education into our industry, when compared with finance or marketing.

You go to the bar at the Total Supply Chain Summit – what’s your tipple of choice?

I’m a tee-total so it’s usually a Coke!

What’s the most exciting thing about your job?

Working in projects always brings great variety but as a consultant, you tend to see even more as you get to work across different businesses and sectors.

And what’s the most challenging?

Starting new projects are always exciting but it’s also very hard to absorb so much information so quickly. It’s like continually starting a new job! But I wouldn’t swap it for anything else.

Peaky Blinders or Stranger Things?

Neither, my favourite Netflix show is Bojack Horseman or Better Call Saul.

www.box-logic.co.uk

Freight association calls for greater clarity and detail on new cross border trade systems

BIFA, the trade association for UK freight forwarders, says the devil will be in the detail when it comes to the raft of recent announcements by the government in regards to various aspects of future cross border international trade.

Robert Keen, the trade association’s Director General said: “The sooner the government puts some meat on the bones of the various announcements, the better it will be for members of the British International Freight Association (BIFA), which manage a significant proportion of that visible trade.

“With less than 100 days to go before the end of the transition period, we share the concerns of our members whether there will be sufficient time to make the necessary preparations to facilitate and implement the revised arrangements.”

When the Border Operating Model was revealed, BIFA welcomed the fact that the information contained in the documentation suggests a more cohesive approach to managing the UK’s trade flows and regulatory procedures with the EU.

The announcement gave some clarity on the timing of increased controls; the overall processes that need to be followed; investment in infrastructure; as well as grants for training and new IT infrastructure.

Keen added: “Set within the overall Border Operating Model, a pattern is emerging of announcements with attention-grabbing headlines, but minimal detail that doesn’t appear to have been thought through.”

BIFA says it has significant concerns about the recent announcements concerning the Smart Freight System; Goods Vehicle Movement System, as well as the Trader Support Service for Northern Ireland, in particular, which was announced last week.

Whilst the new systems have been announced, it says consultation with the trade has been minimal and some of the practicalities of implementing the new systems in regards to freight forwarding, and other supply chain responsibilities, as well as document flows, do not appear to have been taken into account.

Keen says: “Clearly, in regards to the Trader Support Service, if businesses wish to remain compliant they will have to implement new processes and train staff, which will mean investment at a time of huge uncertainty.

“We appreciate that Northern Ireland is a special case, but BIFA members are disappointed with certain elements of the announcement, including the fact that the Trader Support Service will include Rest of the World customs entries, which will actually lead to them losing business and revenue.

“The decision to include Rest of the World trade with Northern Ireland in the range of the Trader Support Service activities has come as a complete surprise and we have already had members advising that their customers will  be cancelling the customs clearance services performed on their behalf. 

“There are also significant gaps in detail regarding key customs responsibilities, such as direct and indirect trader status, which can carry significant liabilities.

“BIFA members on both sides of the Irish Sea that have been encouraged to invest in employees, new IT systems; sign contracts and make other financial investments could find themselves out of pocket with the introduction of the Trader Support Service.

“BIFA remains concerned that many of the details concerning the new systems  still appear to be at the conceptual stage. We urge the government to provide urgent clarification as many questions remain unanswered for businesses in the UK, and in particular in Northern Ireland, where both the EU and UK customs rules will be applied, depending on the final destination of the goods.”

“Even with the further financial commitment that was announced alongside the news of the Trader Support Service last Friday, the time frames for consultation; procurement, and then devising the appropriate IT and other operating systems seems extremely challenging.”

BIFA welcomes new customs declarations processing system

The British International Freight Association (BIFA) notes that the implementation timetable on the new computer system that will replace an existing system used for processing Customs declarations is under review by the programme implementation board.

BIFA Director General, Robert Keen says that speculative comments on social media have caused further uncertainty among its members that are responsible for processing Customs declarations and moving much of the UK’s visible trade.

Keen stated: “In 2019, when HMRC announced its proposed plan for completing delivery of the new Customs Declaration System (CDS) and migrating traders from CHIEF to the new platform, we expressed the view, shared with CSPs and other software developers, that the timetable would be challenging.

“Having made further representations via the programme board seeking clarifications on behalf of our members, we are reassured to hear that it is HMRC’s intention to implement dual-running of both systems until the Department is confident that the new system is fully developed, stable and tested. HMRC appears intent on having IT systems and Customs processes in place that will not compromise the integrity of the border, or the flow of international trade.

“However, we don’t think that it would be appropriate to comment further until there is an official government announcement on the matter with regard to the changeover from CHIEF to CDS and the appropriate timeframes.”

BIFA says that from the forwarder and customs agent’s viewpoint, the key statement made by the Chancellor of the Duchy of Lancaster, the Rt Hon Michael Gove on the 10th February was that frontier customs and other regulatory checks would be reintroduced on EU trade after the end of the transition period lasting until 31st December 2020.  This would mean that importers bringing goods from the EU and exporters sending goods to the EU would have to submit customs declarations and face goods checks at the UK border.  The inevitable consequence is that similar requirements would be imposed at the EU frontier,

Keen added: “The Chancellor of the Duchy of Lancaster, Michael Gove has clearly stated that full import Customs declarations would have to be submitted – there is to be no differentiation between regulatory procedures for imports/exports between the UK and EU and Rest of the World.” 

BIFA reiterated comments made by others that there is insufficient infrastructure and information in place at present to support the lodgement of import safety and security checks.  In fact, BIFA members regard this as the most significant customs-related issue to facilitating the flow of goods to and from the EU

BIFA is also seeking clarification on whether postponed VAT accounting will be introduced on import consignments, as this is another area that is causing concerns for its members due to the need to fund the increased guarantees required to underpin duty deferment accounts.  This change will help make the UK more competitive in international trade and improve our World Bank ratings.

Keen added that with the UK now outside the EU, and the transitional period which ends on the 31st December 2020 underway the development of the new core Customs Declaration System is only one part of what is now a much bigger jigsaw.

Whilst having significant concerns regarding certain elements of the outcome of Brexit, BIFA says it is glad that there is now clear outline clarity with regard to Brexit and will work via its Member Institutions with Government to ensure as successful an outcome as possible.  Regarding CDS, there has been clear progress recently and HMRC is now fully engaged with key stakeholders, a development that is to be welcomed.

RHA implores Gove to act on ‘no deal’ Brexit safeguards

The Road Haulage Association (RHA) has called on the Chancellor of the Duchy of Lancaster, Michael Gove, to act urgently so that goods can continue to flow across borders in the event of a ‘no-deal’ Brexit.

In a letter to the cabinet minister in charge of Brexit arrangements, RHA Chief Executive, Richard Burnett set out the measures he says would ensure high volumes of freight could continue moving if customs controls are introduced on 31 October.

He urged Gove to press government departments to:

  • Produce clear guidance on how the whole end-to-end journey will operate
  • Open and authorise new and substantial customs facilities for transit
  • Introduce consolidated and simplified import safety & security declaration system
  • Launch emergency and free online customs training for traders
  • Make lorry holding facilities such as Operation Brock fit for purpose
  • Abolish the 22 percent tariff on new trucks

Burnett said that the Association is frustrated with the previous government’s lack of progress in its Brexit preparations and believes that Whitehall officials have underestimated the complexities of international road haulage.

“We need to focus on the immediate action required for our industry to be prepared… the priority is very simple – to maximise the number of freight vehicles that can cross the border quickly to ensure the supply chain everyone is reliant upon can continue,” added Burnett.

Quick progress on the RHA’s six actions would minimise delays in the supply chain as customs sites and logistics firms face overwhelming bureaucracies, the Association said.

Freight forwarders ask: Is the government listening?

Few companies have registered for a new government online system designed to protect value added tax revenues on foreign parcels in the event of a no-deal Brexit, leading the UK representative body for freight forwarding and logistics companies to question whether Government is listening to advice from industry experts.

Robert Keen, Director General of the British International Freight Association (BIFA), said: “We are not surprised that few companies have signed up for the scheme.

“In principle, the UK’s VAT policy on small parcels, relative mainly to e-commerce trade, expatriates the liability for UK import VAT to businesses that are not established in the UK, thereby significantly reducing HMRC’s ability to enforce VAT compliance and revenue collection; potentially forcing freight forwarders and customs agents to become indirect representatives liable for import VAT and other import charges.

“BIFA and its Customs Policy Group advised HMRC that this would not work in practice, but that advice appears to have been ignored.

“This is not the first time and several recent policy announcements have caused us significant concerns relative to the UK’s Brexit preparations.

“Earlier this year we expressed our concerns privately about the contradictory information on the use of EORI numbers when completing customs entries post-Brexit. The initial guidance was that they could be used, late in the day the decision was reversed, and trade was advised that this was not possible and that EU traders would have to register and obtain a UK EORI number.

“We have also aired our concerns publicly about Transitional Simplified Procedures (TSP), the Government’s flagship policy aimed at alleviating the congestion at the frontier and facilitating the work of customs agents. We are still lacking detail of the data required to complete the supplementary declaration despite the fact that the original Brexit date has long since passed.

“We are still uncertain whether the proposed TSP procedures will work, post October 31st, when systems are largely untried, communication links between the parties involved on the processes are not established, many remain unaware of their responsibilities, and the freight forwarding companies that are at the heart of international trade movements appear to be excluded from them.”

As an apolitical body, BIFA’s says its policy for many years has been to work positively with government departures and provide constructive criticism and practical suggestions as to how to improve policies, where it is deemed appropriate.

However, it says Brexit has highlighted differences between government policy and the sector of the economy that is responsible for managing the supply chains that underpin the UK’s visible international trade, sometimes straining the relationship and, on occasion, resulting in Government consultation that has been rushed and led to some public policy announcements being made before they have been fully thought through.

Keen concluded: “To date, BIFA has refrained from publicly criticising Government departments. However, recent policy announcements have caused us significant concerns relative to the UK’s Brexit preparations and we feel it appropriate to highlight areas where planning needs considerable improvement.

“We echo the recent words of the Public Accounts Committee chair Meg Hillier and agree that with less than four months to go before the UK is expected to leave the EU, momentum appears to have slowed in Whitehall. Departments must listen to trade associations such as BIFA, urgently step up their preparations and ensure that the country is ready.”

Image by koon boh Goh from Pixabay