The F – Word 4 (The B word!)

Yes ! that’s right folks, I’m going to tackle BREXIT and what I think that means for you ! (Just in case you’ve not heard enough about this recently)

I joke a lot about the freight forwarding industry picking up this problem at 4.50 pm the night before a potential “no deal” Brexit, and my theory is that a few of us might go an put on some more tea and then Steve will appear from the kitchen with some biscuits and mumble that he probably has the answer. A few freight forwarders have said that “we would clear up the mess” but hey, that’s our gig really. The thing is, we are in the problem business. We get paid to deal with problems, and quite frankly we’d be a bit bored and at a loss if we didn’t have anything to worry us at night. To paraphrase a USA doctor statement “This is our highway” (or would be if the M6 didn’t close every week)

I won’t include anything here about alcohol as don’t move at lot of that apart from the Christmas party. I won’t include anything about food between EU countries as I’m not qualified to discuss this either. 

The thing is that not one person can know the complete ramifications of EU trade and a potential no deal Brexit, (or even a DEAL Brexit) we all require some faith one way or the other. One company or institution might know about agriculture & dairy and one about importing washing machines. Very unlikely to be the same person. What drives me mad is the examples of potential problems are expanded and extrapolated across the whole trading EU. One story recently was of a truck coming to the UK from EU that had between 700 and 800 lines of product on it. This may be the case, but it’s not “every” truck. But then the public has ringing in their ears that someone will have to do at least 500 customs entries per truck and Chief will melt down. There will always be anomalies and exceptions to shipments across borders. 

In my humble opinion (again) people don’t ring up their governments to ask which countries they should trade with, and which may offer preferential trade deals for. They are much more likely to trade with a company or person they like and trust first and foremost. They are much more likely to buy a product that they like and at a price that is perfect. From a place that they know and can get to (way too much alliteration, I apologise) On the same list, for sure there is politics and trade agreements, but they don’t hold much more sway than any other of the factors.  Sorry guys, you can have as many letters after your name and cite this ruling or that ruling, but trade is done with people you’ve just had a Singha with in downtown Bangkok, not in the patisseries of Strasbourg. 

So, the lack of a great trade deal between countries certainly probably wouldn’t be the kiss of death, but a good FTA wouldn’t exactly be the silver bullet to a countries economy either. 

Worries!

Delays at ports – if there will be a hard border between EU and UK, yes there could be checks at the Channel-ports. However, these shouldn’t be any more than an import of furniture or components from China. (again, I will take the examples of fresh food and dairy out of this as I do not have enough real world experience of this and they are not my clients) 

I know that discussions are still running amok at the moment and this blog may not age well, but I cannot fathom why an impending import to the UK from EU cannot be “pre-lodged” with HMRC for some importers. If your company has the required authority, then I believe there could be a “simplified” frontier declaration (much like CFSP – customs simplified procedures). Large retailers will import on this basis already from China, meaning that they can get a container cleared within minutes of vessel arrival and on its merry way to Bawtry container terminal railhead thereafter. I think it would regressive if a trailer import of the same goods from Lyon would take longer to clear through Dover.

I too think that solutions of “approved traders” via EORI system (existing and later….), and pre-lodgement or supplementary declarations could offer an answer to border issues here. Product depending. Most trade is done on a trust basis now. We import millions of containers through the ports of Felixstowe and Southampton and we (and HMRC) have to trust that the manifests and paperwork is true and honest. Post clearance checks should provide re-assurance that your product meets the required quality standards. 

By the way, nothing grinds my gears more than seeing a picture of a container port on the news to discuss imports from the EU. THIS DOESN’T HAPPPEN!

Behold I see the light !

Please make sure that you have your EORI registered – link here, very easy to do. https://www.gov.uk/eori – it’s free and any freight forwarder (myself included would be delighted to talk you through it) If you already import from outside the EU then you’ll already have this. if you just trade with EU, then please consider to do it now, rather than at 4.45 the day of arrival, as could take a few days. I would also consider looking at Government guarantees on import taxes and duty. There is a very good scheme that isn’t really shouted from the rooftops called SIVA. Simplified import vat accounting. https://www.gov.uk/government/publications/vat-application-for-simplified-import-vat-accounting-siva1

This is where the government doesn’t need you to guarantee VAT on your imports, but duty only. Considering that the vat is by far the larger amount normally, this could really help your cashflow. (DO THIS BEFORE YOU APPLY FOR A DEFERMENT ACCOUNT) – if you need a hand, please let me know as we’ve recently done both!

I’ve heard that the process for setting up a guarantee in place for imports from EU could be MORE simplified that from outside the EU, but only hearsay at the moment. 

Keep statistics!

Keep records of where you ship to or import from. As part of your quarterly vat return, you should already record purchases from EU countries and sales anyway. If there was a duty amount on your imports, would it affect your bottom line in a major way? 

Considering that we’ve recently viewed a 10% reduction in the value of sterling this could be a compound issue. However, on the whole we’ve still got very cheap worldwide freight rates so there are some silver linings. We also have a very competitive airfreight industry where rates are very accessible.

Be flexible and outward looking.

f your customer and/or supplier is based in the EU and then subject to major disadvantages due to Brexit, have you thought about looking farther afield? In my 22 years of international shipping I’ve dealt with lots of different countries, all with their pros and cons. Some are ace at communication and some are not so great on a Friday afternoon or during August. Necessity is the mother of invention, so someone said. I don’t think it was Morgan Freeman.

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