The impact of Brexit has been deeply felt by several industries since January 2021. It goes without saying that it will also affect the logistics industry in Europe and beyond. This is because of the high volume of cross-border trade between Britain and the rest of Europe. In this week’s blog, we will briefly discuss a few ways in which Britain’s exit from the UK is affecting our industry.
Brexit and logistics industry: What has changed?
The rule of origin provision has led to a bit of confusion among logistics companies and suppliers. Exporters in Britain will now have to pay levies on outgoing cargoes bound for any country within the EU. This rule of origin is probably the worst consequence of Brexit. This is because any cargo will now depend on customs duty if it comes to the UK from another country and then exported to any country in the EU.
For the first time in the last four decades, companies in the EU will need to submit customs declarations. They will have to cope with SPS (sanitary and phytosanitary) requirements, too. Meanwhile, the logistics companies have to expect delays. Furthermore, the pandemic has added to the problem of shipment hold-ups.
The TCA
The TCA (Trade and Cooperation Agreement) aka Free Trade Agreement is applicable to items made either in Britain or the European Union. It is also applicable to tax-free imports into the UK. In case the cargo is originated outside of UK and EU, the duties will be applicable. Retailers in Britain selling items to consumers in countries of EU right from the country where the items were produced are sending individual parcels to the customers. Those who are not sending individual packages will now have to provide a declaration in order to pass the UK customs. However, normally the responsible professionals for carrying out this activity are freight forwarders or customs agents.
Things to keep in mind:
Since 1st January 2021, the movement of cargo between the UK and the EU is being subject to export and import customs procedures. As per the Trade and Cooperation Agreement, no duty will be involved for the movement of goods originating from the EU and UK. For instance, goods from India or China will have to pay duty for entering Britain but goods made in Britain can be imported into France without the payment of duties. An origin statement of the good will be required to determine whether or not you need to pay a duty.
Britain to European Union
While exporting cargo from Britain to any country in the EU, the EORI number issued by the seller for their EU client will henceforth be required.
European Union to Britain
While exporting from the EU the exporter needs to provide a statement of origin only when the net value of the cargo is within 6,000 euros. When the shipment value exceeds 6000 euros, the EU exporter needs to provide a REX (Registered Exporter) number.
Statement of origin
Shippers will now be required to provide the statement of origin on their invoice. It also needs to be included in any other commercial documents except the bill of landing. This statement should enumerate the details of the goods so that they can be identified easily.
Increased reliance on European logistics companies
To quote Robert Keen, the Director-General of BIFA, an UK based trade association, “Businesses trading with the EU that have not had to worry about the free circulations of goods between the Great Britain and EU will need to seriously consider partnering with a freight forwarder that is experienced in complying with the customs and excise rules for trade moving to and from Great Britain and countries that are not in the EU.”
In other words, now more than ever the importance of freight forwarders will come into play. “They should concentrate on their own core business and let their freight forwarder provide the services that they need to move freight between Great Britain and EU,” continues Mr. Keen. Therefore, now is the opportunity for European Logistics companies to play a more proactive role and ensure the smooth movement of cargoes for the benefit of all the stakeholders and of course the customers.