As we move into the festive months, the forwarding world has seen several key events that could potentially impact the way in which we do business. Our minds are cast, once again, to how Brexit will affect the way in which exporting and importing goods from the UK to Europe will eventually change whenever we finally leave the European Union in just over a year.
I can almost hear a collective groan from anybody reading this and saying, ‘We know, Brexit will affect the forwarding world, but not for at least another year and a half. Change the record!’ And whilst I would love to concentrate on any of the other issues that are affecting the industry, Brexit – regardless of how far away our departure may be – is still the major issue on which we should be fixated. Customs clearance and bonded warehousing are considerable factors in the UK’s economic growth, and many would be affronted if paperwork and prices started to rapidly change.
With the focus of FORWARDER magazine on customs clearance and bonded warehousing this month, it would be remiss of me not to explain exactly how Brexit is going to affect these issues both on UK soil and further afield. I feel it’s time to point out a few observations which could affect your business.
If the UK were not able to immediately strike a trade deal with the EU, import duties negotiated at the WTO (World Trade Organisation) would have to start to be implemented. For example, if £10,000 worth of products or cargo were imported from a neighbouring EU country, the UK border agencies would charge roughly £800 as import duties and collect £2,000 as VAT on the imports.
To put this into perspective, the fact that 20% VAT would need to be paid at the UK border, and the importer would no longer have the convenience of combining this with domestic VAT payments, means an increase for freight forwarders in the UK. This increase is something that nobody particularly wants. However, by keeping an eye on the current negotiations we expect that key members and officials within certain governing bodies will guide the talks in a favourable direction for the UK.
Alongside the financial consequences, if negotiations where to swing in an adverse way for the UK, this would also lead to a significant administrative burden connected to the importation of goods. This would lead to mandatory submission of export declarations, leading to significant practical issues which may also apply to VAT. More lethargic paperwork is the last thing any freight forwarding company within the UK needs. We hope that there will be plenty of opportunity to design and implement new systems to mitigate this.
I really should stop being negative when it comes to Brexit’s effect on customs clearance and bonded warehousing. There are a few positives to take out of the whole situation. The flip-side of less favourable trading terms between the UK and EU members could be an increase in trade outside of the EU, as the UK is freed to negotiate its own bilateral trade agreements with important partners such as China, India, the US, Canada, Australia and South American countries.
Another upside to all of this is that even without an agreement all these import/export costs can be regulated via the existing globally accepted agreements, most likely adding a few per cent to the cost at most. This is music to many ears – however, with nothing set in stone, it is best that most freight forwarders keep watching to make sure that no deals are put in place that may lead to harder – and more expensive – customs clearance for their operations.
Moving away from the uncertainties of Brexit, we have seen plenty of goings on within the UK that are not down to Brexit, yet do still affect many of us working in freight forwarding. In the UK the congestion around Heathrow has led to many questioning what is being done to prevent vehicles being turned away.
BIFA director general Robert Keen says that congestion at the so-called Horseshoe Road area of Heathrow ‘is as bad as it has ever been, and the local police are now turning away vehicles, leading to a huge rise in complaints from our members’.
Many businesses using the airport as a main source of distribution have called for a more cohesive collaboration between the police and the airport staff to create less congestion. There have been talks around using innovative ways to clear this up, such as cloud-based apps, upgrading cargo infrastructure and building a new cargo village to reduce vehicle movements.
This may seem a little uncertain for many. The brighter side, though, is that many freight forwarders are using innovations to showcase its practical uses and make their lives easier. For example, Rainham-based Forest Freight, which operates more than 60 vehicles clocking up more than 8.5 million miles a year, is rolling out the Manifest app from transport management technology specialists Mandata Ltd.. A device like this will be able to help migrate to an advanced digital POD solution in a move designed to improve customer deliveries and add further value to existing distribution services. It is as simple as drivers being equipped with new smartphones, which will allow them to click into the app at the touch of a button to confirm that deliveries have been completed before sending a confirmation to the customer. Perhaps this is one for Heathrow to think about, and finally end the annoyance over congestion.
Matt Dailly, Editor, FORWARDER magazine