A top logistics head is urging logisticians at UK manufacturing businesses across the UK to heed advice, so they’re prepared for the new reality when the Brexit transition period comes to an end.
Chris Mills, Director of Account Management, Transportation at C.H. Robinson Europe, the multi-modal transportation platform provider, said: “Not all UK businesses are prepared for the changes the end to the transition period will bring to their customs procedures and may still wonder what it could mean for their own shipping processes. A major reason for some companies’ lack of preparedness could be attributed to Covid-19 with the pandemic demanding so much business attention that it has left little time for planning for next year.
“With just a few weeks until the transition period with the EU, time is running out. This is why we have gathered critical, up-to-date information, comparing the current trading situation to the landscape as we see it post-the end to the transition period , to help those shipping goods to the EU to stay on top of developments.”
Mills points to a number of considerations manufacturing businesses will need to be taking action on if they haven’t already.
He says: “UK firms that export to the EU will need an Economic Operators Registration and Identification (EORI) number to move goods between Great Britain and the EU. It can take up to one week to obtain one, so companies need to apply now.
“The UK will become a ‘third country’ when the transition period ends which will mean extra administration chores for companies that trade between the two parties. Numerous customs declarations will need to be submitted when trading with EU countries, and relevant duties may have to be paid. Failure to comply may lead to shipments being delayed or blocked.”
Mills added: “Logisticians should immediately familiarise themselves with international commercial terms and conditions, such as Incoterms 2020, which is a standardised and globally-recognised set of rules that cover costs, obligations and risks between trading partners.
Impact of VAT, customs and shipping costs
Mills also warned UK transport companies about the implications of VAT, customs and shipping costs.
He said: “The EU VAT scheme won’t be valid for a ‘third country’ and VAT will need to be paid in the UK when exporting from the EU. The final arrangements on VAT are dependent on the outcome of the negotiations. Whilst UK businesses will no longer have to collect any VAT on products sold to EU customers, which could positively lower prices, they will also no longer benefit from the EU VAT refund system. For UK businesses importing goods, VAT will be levied on imports of goods from the EU.”
Mills added: “When it comes to custom and shipping costs, it’s likely new customs charges and other fees could be introduced when trading between the UK and EU. If costs are passed onto EU customers, it’s important they know in advance. If they’re charged without prior warning, they can refuse to accept the goods. Businesses will then be obliged to cover customs and returns costs. These are all costs companies need to be upfront about with their customers.”
Other European shipping considerations
The UK government will be providing support to ports, airports and rail terminals to ensure sufficient infrastructure is in place. Despite this, queues and delays are likely and clearance times are likely to increase for outbound vehicles.
Warns Mills: “Under current EU law, citizens have the right to return a product within 14 days. This will no longer be mandatory next year for shipments outside the EU. Firms will need a solid strategy, so that all parties are aware of terms and conditions and of any costs that may be incurred, as offering returns won’t be as easy as they have previously been. Having such a strategy in place is very important, especially for the retail industry, since how a retailer handles the returns process influences customers’ perception of their brand.”
He concludes: “Brexit is complex and making preparations can seem overwhelming, but businesses need to plan now so they’re prepared, whatever the outcome, in January 2021.”