Brexit: Experts warn companies to prepare their supply chains

With many businesses in the region still reeling from the impact of COVID-19 on their supply chains and their business, there’s another major wave coming on the horizon – Brexit.

The Government still plans to introduce import controls on EU goods at the border after the transition period ends on 31 December 2020.

Production planning and lead times mean many businesses can’t afford to take chances – importers and exporters need to take action now to prepare for the worst say Simon Dixon, Founder & CEO of supply chain and logistics advisors, Hatmill and Craig Poole, Managing Director of logistics provider, Cardinal. This will mean ‘traders in the EU and GB will have to submit customs declarations and be liable to goods checks.

Brexit will expose approximately 150,000 UK based traders to customs formalities for the very first time. HMRC estimates a five-fold increase to the annual number of customs declarations currently required, that is an additional 200 million customs declarations a year.

Pre-COVID the Government stated that any ‘policy easements’ for a potential no deal Brexit, such as extra time to pay VAT, will not be reintroduced as they believed businesses had adequate time to prepare.

Simon Dixon, Founder of Hatmill said, “With less than four months to go until Brexit, don’t underestimate what’s involved in terms of compliance and paperwork, or the knock-on impact this will have on your supply chain and stock management. If you’re an importer or exporter, then you must take immediate action to continue trading after 31 December 2020 and prepare for the impact on your supply chain. This is particularly important for those many Yorkshire businesses that will have to deal with customs formalities for the first time.

Logistics details so far include:

• From 01/01/2021, Goods coming to the UK from the EU will face import controls at the port of entry
•  Customs Duty / VAT may have to be paid
• Importers in the UK will need to register for an EORI (Economic Operators Registration and Identification) to trade with the EU
• Tariffs will apply to goods moving across the border from the UK to EU and vice versa, subject to discussions between the UK and EU
• Commercial documentation, such as Commercial Invoices, will need to be raised for Customs Declarations
• Potential changes to cabotage regulations that could limit UK HGV drivers from completing multiple activities in the EU, leading to increased freight costs

The admin – what you need to do now:

• Decide whether you will handle Customs Declarations in-house or through a 3rd party
• Check if you are eligible for Simplified Customs Procedures
• Check for updates to tariffs that apply to your goods and consider using duty relief schemes
• Confirm if you need licences or certificates to bring goods across the border
• Ensure any drivers involved in transportation are aware of documentation required at the border
• Register for AEO (Authorised Economic Operator) status. AEO gives ‘trusted trader status’ and is internationally recognised
• Start planning for goods delays at the border and potential disruption to current freight routes and activities

Instead of trying to navigate the unknown and deal with the additional volume of administration, businesses can outsource their customs procedures to a 3rd party Customs Bureau like Cardinal, that has CFSP accreditation from HMRC and can handle and facilitate import/export declarations to/from Europe.

Craig Poole, MD of logistics provider Cardinal added, “We know that there are going to be knock-on impacts, so you need to plan now and minimise disruption to your supply chain.

“The controls, checks, processes and procedures that take effect after the 31 December 2020 are likely to add at least a day, and potentially more than a week, onto lead times, so it’s time to think about how you’ll build in extra flexibility so your business can cope with the disruption and additional lead-time as a new norm

“Another key consideration is your pricing policy. New import controls might increase your administration and warehousing costs, but it’s essential to get advice and plan now for how duty imposed on imports might affect the end-price of your product. And this is not as simple as it sounds. It can pay to seek advice about preparing your supply chain and fulfilling your customs paperwork.”