Content provided by XPO Logistics.
On 31 December 2020, the UK left the EU and ended its membership of the single market and customs union. As such, a whole range of new customs rules and regulatory standards have been introduced — and it’s vital your business understands how they impact everything from supply chains and warehousing, to product assembly and sourcing raw materials.
For example, some goods now require customs declarations, which has caused longer delivery times, and impacted the flow of goods between the UK and the EU. Plus there are also new rules and tariffs for goods moving between Great Britain and Northern Ireland.
In this article, we’ll dive into the details and explore some of the key challenges faced by businesses, reveal what the new rules could mean to you, and run through some of the steps you can take to ease the pressure on your logistics.
Overview: The Challenge
If you’re a cross-border ecommerce business, you may well have customers on both sides of the Channel. That means you’ll need to fulfil orders and transport goods across the UK–EU border, and deal with any new customs requirements. Customs paperwork can often be fiddly and time-consuming, so it makes sense to plan and optimise your supply chain in advance, rather than risk any additional delays.
The new post-Brexit rules
Does your business import or export physical products? If so, you’ll need to provide customs declarations and pay taxes, depending on the origin of your goods.
Let’s run through the essentials:
To trade between the UK and the EU, you’ll need an Economic Operators Registration and Identification (EORI) number. This number is unique to you, and should be used whenever you’re dealing with customs administrations.
- UK-based businesses that move goods between Great Britain and the EU need an EORI number that starts with “GB”. If you move goods to or from Northern Ireland, you’ll need an EORI number starting with “XI”. If you’ve not done so already, don’t worry — you can apply for these numbers via the UK Government website.
- Businesses based in the EU can apply for an EORI number by visiting the relevant customs website for their country.
Before Brexit, most goods didn't require forms or tariffs, so they could move fluidly between the UK and the rest of the EU. However, since 31 December 2020, there have been big changes to the types of goods now requiring customs declarations. If you’re new to the world of customs processes, it may be useful to work with either a registered customs agent or third-party logistics provider.
If you’re an EU-based business and would like more information on how the UK’s withdrawal from the EU affects your goods, head over to the European Commission website.
Trader Support Service (TSS) supplementary declarations
From 1 January 2021, businesses must make declarations and, where appropriate, pay tariffs when bringing goods into Northern Ireland from Great Britain or outside the EU.
The Northern Ireland Protocol says that goods which are shipped from Great Britain and not considered to be at risk of leaving the UK customs territory don’t have to pay tariffs. However, goods ‘at risk’ of entering the EU’s single market are liable for EU tariffs. The exact definition of ‘at risk’ goods is a little complex, but essentially describes goods which are headed for the EU, or where there is uncertainty or genuine likelihood of onward movement. It’s also worth mentioning that if a tariff is charged on your goods, but they were subsequently proven to have stayed in Northern Ireland, then your business would be reimbursed.
To help businesses understand and apply these new rules, a free-to-use Trader Support Service (TSS) has been created. This tool can also help complete declarations on your behalf.
Looking ahead, it’s important your business understands the declarations and information required throughout the process, so the information is prepared in advance and any delays are minimised.
Logistics planning in a post-Brexit world
Before Brexit, many businesses used just-in-time (JIT) delivery of goods to avoid having to pay for warehousing either in the UK or Europe. While things are quite different today, there are still some steps you can take to smooth the process and keep your supply chain flowing.
1. Stockpile or import direct:
Some businesses are choosing to stockpile goods as a way to avoid delays at the border and ensure they can meet customer demand. Bear in mind though, maintaining the additional warehouse space required can be expensive. One alternative and potentially cheaper option is to import directly from the country of origin (e.g. China) to the UK or mainland Europe — although this may well require some rethinking of your distribution model.
2. Outsource your warehousing:
Another option is to hire additional warehouse space, especially if your current storage is almost full or you’re expecting consumer demand to spike in the coming months. Again, you may want to consider using a third-party logistics specialist. They will have a network of warehouses in the regions where most of your consumers are based, which will help you keep customer delivery times to a minimum.
Some third-party logistics providers offer additional services too, like inventory management, shipping, and order tracking — which can be customised to your specific operation. Depending which provider you go with, they can also offer a reverse logistics service, which will make it easier for customers to return products to you.
Remember though, if your order levels tend to fluctuate sharply throughout the year, you may end up paying for storage space that occasionally remains unused.
3. Allow extra lead time for customs processes:
The customs clearance process varies for different goods being imported or exported, so building extra time into your logistics chain might be wise. This will ensure all regulations and other formalities are completed before the goods arrive at the port of entry or exit, and any easily avoidable problems have been dealt with up front.
4. Assess your transport and route options:
If you’re an importer/exporter, you may already know that capacity within the trucking market can vary greatly, depending on the availability of trucks and drivers. Since Brexit, potential problems have become more acute, with drivers spending an average of 3% to 5% longer crossing UK borders as a result of new red tape. This situation could improve in the future, of course, but for now you may want to consider a combination of ground, air, and sea transportation to avoid bottlenecks. Likewise, if you ship goods from the EU to the UK and then on to Ireland, it may be easier and faster to ship them directly from Europe to Ireland instead.
Checklist for transportation and logistics
Managing your own logistics can be a fiddly and time-consuming process. Use this handy checklist to make sure you’ve covered the basics:
- Do you have your Economic Operators Registration and Identification (EORI) number(s)?
- Do you know which duties and taxes apply to your goods?
- Do you have all the right customs declarations and VAT paperwork?
- What’s your back-up plan to avoid delays at the border?
- Have you considered a warehousing and distribution strategy in the UK and Europe?
- To avoid delays, could you potentially use a combination of transport methods? i.e. not just trucks.
- Do you need to reroute goods to Ireland?
Whether you’re a seasoned importer/exporter or just starting out, understanding your company’s post-Brexit position for moving goods between the UK and the EU is critical. While working with a third-party logistics service provider can potentially save you time, money, and hassle, you should still familiarise yourself with all the different customs regulations now in place, and be aware of your transportation options to ensure minimal operational disruption.
While the range of new rules, tariffs, and processes are too vast to cover fully in one guide, what’s vital is that you reassess your company’s supply chain and ensure it’s flexible enough to deal with most eventualities. For example, that could be through outsourcing all or part of it to a specialist provider, or by stockpiling, importing directly, or investing in more storage space of your own.
Content provided by: XPO Logistics
XPO Logistics is a leading global provider of transport and logistics solutions, and offers the largest outsourced ecommerce fulfilment platform in Europe. With a highly integrated network of people, technology, and physical assets, XPO is strategically positioned to help all types of companies and omnichannel retailers on both sides of the Channel succeed.
Note to the readers: This article was created in collaboration with XPO Logistics. Due to the nature of the regulation and technical approaches information contained is correct at the time of publication but may be subject to change.