01/12/2020 – Medium-sized companies neglect preparations — auf Deutsch lesen
Setlog: Brexit and the customs clearance
Medium-sized companies neglect preparations for customs clearance. Ralf Duester, SCM expert at Setlog, advises shippers to take care of this issue.
With warehouses full and goods not picked up yet, the situation that companies will face with not yet addressing the issue of customs clearance between the EU und UK will be of utmost concern in the wake of Brexit.
If customs documents are missing, the goods will be left behind.
Topics such as free trade agreements and third country customs duties are still unresolved.
Ralf Duester, member of the board of the Bochum-based SCM software provider Setlog:
“It doesn’t matter what the politicians decide in the next few weeks or not: the Brexit has been completed, the transition period ends on December 31. This is why the issue of customs clearance is relevant for both shippers and recipients of goods between the EU and the UK. Anyone who has not yet prepared for this, must take action in the coming weeks. Just wait and see is the wrong motto in this context.”
Duester knows from conversations with many customers who manage their supply chains with Setlog’s SCM software OSCA that they have built up their own expertise in the area of customs or rely on logistics service providers who have an IT infrastructure for efficient customs clearance.
However, in addition to numerous well-prepared companies, there are also some late bloomers in smaller medium-sized businesses that need to act now.
Especially those small companies, which have so far only operated within the European market, are lacking knowledge in the customs area, according to Duester.
As a first step, Duester advises companies to check to what extent their supply chains are affected by Brexit. In a second step, the necessary information and documents for customs clearance must then be compiled so that logistics service providers can carry out the import and export customs formalities.
Part of this information includes the Economic Operators’ Registration and Identification (EORI) number.
In addition, importers must also have a power of attorney from the importers for shipment processing to and from the UK.
Many forwarders have prepared checklists for their customers regarding customs clearance. Only when all information and documents have been prepared, can the transport of goods begin. Otherwise, the majority of forwarders will not even start moving the goods.
“The fact is that from January on, there will be no exceptions or transition periods. Missing information and documents cannot be provided retroactively either.”
The following also applies to well-prepared companies: Because of the necessary customs clearance, the movement of goods between EU countries and the UK will be more complex, time-consuming and therefore more expensive from 2021 on. B2C shipments will become more expensive due to customs regulations, even if simplifications apply up to a certain product value. “Every shipper must answer the key question of whether all business models still make sense under these conditions,” says Duester.
From 2021, supplying the EU countries from the UK will also be more time-consuming and costly
Some UK companies have already shifted their distribution activities to the European mainland. Export-oriented EU companies are also plagued by uncertainty about the UK’s outstanding trade agreements with other countries. The British are working to turn the EU trade agreements into new, bilateral agreements.
Among the countries with unresolved agreements are Mexico, Singapore and Turkey.
Questions also remain to be clarified with Switzerland.
The issue of third country customs duties is also still open.
An example: If a company from the EU imports goods from a third country and pays the third country customs duty when the goods are cleared for free circulation, it is not clear whether customs duty must be paid again for the transport and shipment of these goods to Great Britain. “To be on the safe side, this can mean that goods that are to be brought from third countries via the EU to Great Britain are better stored duty unpaid in an open customs warehouse first and then transported further,” says Setlog board member Duester. A similar procedure would also be advisable for transporting the goods in the other direction. “If some British politicians, in particular, continue to act slowly, companies on both sides of the Channel may be threatened with millions in costs and fees.”