To understand the full impact, we need to look back to the end of 2020. Combined with the impact of Coronavirus on global supply chains, the end of the Brexit transition period has dealt a double blow to the UK shipping industry.
Fears over what would happen after the transition period meant that there was a significant increase in imports towards the end of 2020. This surge in demand meant heavy congestion at UK ports and a lack of empty containers. This led to delays across the UK and Europe. Following this, further complications arose after a new strain of the coronavirus was identified in the UK and travel between Britain and the EU was compromised.
In the final week of 2020, Bloomberg reported that the cost of moving freight from France to the UK rose to more than four times the standard level.
Fast-forward to 2021 and a government spokesperson told the BBC that the latest data showed “overall freight volumes are back to their normal levels”. However, what the headline claims don’t show is that actually there is a much larger number of lorries returning to the EU empty in 2021 – suggesting the value of freight exports will have fallen.
Overall things are looking up – as businesses and shipping companies adapt to the changing rules and regulations. Let’s take a look at some of the new tariffs and red tape for trading with Europe.
Exporting Goods from the UK to the EU
Following the end of the Brexit transition period, the UK is not part of the EU VAT regime and customs union meaning new VAT and customs procedures should be followed. The UK government has detailed specific guidelines to follow if you are a business in England, Scotland or Wales exporting to the EU.
One of the most important things to do if you are exporting goods is to obtain a UK EORI number – this is a UK Economic Operator Registration Identification number from the HMRC. This number is used on export and import paperwork – UK businesses should already have had one issued in 2019 but if not you can obtain one. If you export certain goods such as chemicals, livestock or food products you may need a specific export license – all of which can be applied for through HMRC.
As mentioned earlier, it is UK exports to the EU which seem to be seeing the biggest impact when it comes to cross-border shipping – a lot of this comes from the red tape that is preventing the fishing and agriculture industry from exporting their goods to Europe. British fishermen and livestock farmers are facing customs declarations and export health certificates as well as specific tariffs relating to the origin of foods.
Whilst the Financial Times reported, in January, that the flow of exports to Europe had improved – it was only from a ‘standstill’ to a ‘trickle’. The latest government figures support this narrative – with exports remaining low.
Importing Goods from the EU to the UK
As with exporting goods from the UK, the process of importing goods, particularly from the EU has changed. As they did with exporting, the UK government has provided a step-by-step guide on how to import goods to the UK. As mentioned by the BBC, imports to the UK are picking up – however that does not mean it is running smoothly.
It is British consumers who have realised many of the implications associated with not being part of the EU. Imports from EU retailers have been met with additional friction and costs.
EU online orders up to £135 are supposed to have UK VAT added at the point of sale however because of the extra time and paperwork associated with registering for this many EU small businesses have scrapped it and decided not to supply UK consumers – and on the other hand some have continued to trade as before leaving consumers to pay VAT on arrival. Above £135 goods attract import duty ranging from 0% up to 25% of the product value.
Arguably the biggest impact of Brexit can be felt in Northern Ireland – with images of empty supermarket shelves making the headlines in the new year. The protocol associated with these emptying shelves had significant red tape meaning supermarkets did not have access to many of their regularly stocked items.
In January, the ‘grace period’ on items such as animal and plant products was extended – in agreement with the EU – to 1st April. However, there were multiple calls from supermarket chains, and others, to extend this period or relax the rules. Following this, the UK has ‘unilaterally’ delayed the new processes for food and parcels going from Great Britain to Northern Ireland. However, the EU has said it will launch legal action in retaliation to this extension.
In July, more grace periods end. From 1st July products of animal origin will have to enter through designated border control posts – this is so physical inspections can be carried out. With the grace periods, and delays to new processes changing rapidly – it is important to ensure as a business you are keeping up with the changing rules.
We are still in a period of adjustment when it comes to Brexit, and it will take a while for businesses, hauliers and consumers to get used to changing regulations and rules. With expertise in supply chain management and global logistics, at Trident we are here to help. We have an expert team of customs advisors who can help you prepare to ship across the EU, ensuring you have the right documentation. We can provide advice and tangible solutions to supply chain disruption caused by Brexit – whether that be by shipping through our global network or making use of our flexible warehousing solution.