With Brexit less than a fortnight away – and the details of the deal or no-deal still unknown – we start the countdown to 1 January’s new trading rules with an ongoing round-up of what is happening around Brexit, how it will impact retailers and, where possible, what you can do about it.
70% OF BUSINESSES STILL TOTALLY UNPREPARED FOR BREXIT
With just over a fortnight to go before the EU transition period ends and discussions expected to go to the wire, a poll of 2000 UK businesses finds that a staggering 70% are still confused about what exactly they need to do to be Brexit ready.
This mirrors a recent warning from the Government’s Border and Protocol Delivery Group, which showed that whilst there are more traders in the UK now border ready, it found that only 26% of them had agreed processes with their EU importers.
The survey, by national courier network Speedy Freight, warns that having enjoyed the free movement of goods to the continent without any specific customs procedures, from January 2021, goods will need to be cleared via HMRC to ensure all necessary duties are paid and goods movement are checked and controlled.
Shona Brown, Network Service Manager at Speedy Freight is heading up the new Brexit team, explains what this means in practice: “ [My] main concerns are how prepared their supply base is, so we have been engaging with customers who import and export goods to ensure we understand their requirements, we have also developed a handy checklist with a list of the things they need to have in place dependent on the deal or no deal scenario’s, for example their EORI number and clarity on their commodity codes.”
Despite one of the most important elements of post-Brexit trading being an EORI number, many businesses have yet to apply. Historically used for businesses which operate between the UK and non-EU countries, an EORI number will be a legal requirement for businesses trading between the UK and the EU. Companies moving goods from England, Scotland, Wales or Northern Ireland to the EU, and vice versa, must apply for an EORI number in order to move their goods safely through customs. Without an EORI number, goods will be held at customs and you may incur increased costs in addition to delays.
“While it only takes minutes to apply for an EORI, it can take up to five days to come through which means expensive delays, maybe total loss of perishable goods if not thought about in advance,” says Brown.
“Our key piece of advice for businesses moving goods in and out of the UK is to be patient, and also get their documentation prepared. We’re ready to support businesses large and small through the process and paperwork, and as a 24/7 business, we’re always on hand for planned freight movement and emergencies.
RETAILERS AND FOOD MANUFACTURERS DEMAND INQUIRY INTO PORT DISRUPTION
With ongoing disruption at UK ports already affecting customers and retailers in the run up to Christmas, the British Retail Consortium (BRC) and the Food and Drink Federation (FDF) are calling on MPs to launch inquiry into how shipping costs have risen by as much as 25% week-on-week due to logjam.
The BRC and FDF have written to Lilian Greenwood MP, Chair of the Commons Transport Select Committee, and Angus Brendan MacNeil MP, Chair of the Commons International Trade Committee, to request an urgent inquiry into the ongoing disruption at UK ports and across the shipping market.
The impact of Covid-19 on global shipping schedules and the shipping workforce along with a shortage of empty containers has created significant disruption at many of the UK’s key ports in the crucial run up to Christmas. This has meant retailers face “major challenges in building up stock for the Christmas period and for the end of the transition period at the end of December.”
The letter points to the significant impact that disruption is having on shipping-related costs, noting that “container spot rates have jumped considerably – in one instance, by 170% from this time last year. Others have noted week-on-week cost rises of 25%. In addition, congestion charges are being levied by carriers for imports into Felixstowe and Southampton.”
Food manufacturers have been badly affected by the delays. “Food manufacturers now face additional cost to source key inputs elsewhere, whilst also losing sales due to missed retail promotions in the run up to a key seasonal period – one company has lost over £1 million in sales due to the delays.”
The BRC previously wrote to the Secretary of State for Transport on the 20th November to call for action. At the behest of the BRC and other organisations, the Government temporarily relaxed the enforcement of EU drivers’ hours rules until 31st December to help delivery of essential items and reduce the backlog in some ports.
Retailers and their supply chains are working tirelessly to build stock ahead of the festive season and the end of the transition period, including redirecting consignments to other ports. However, some delays are inevitable. Once the Brexit transition period ends, UK ports will be placed under even greater pressure.
The letter requests the Transport Select Committee holds a joint-inquiry with the Commons International Trade Committee on Port Disruption and Functioning of the Shipping Market. Such an inquiry would give affected businesses the opportunity to set out how the disruption has impacted their operations and could help support planning and troubleshooting of this crucial issue.
Helen Dickinson OBE, Chief Executive of the British Retail Consortium says: “The lead up to Christmas is the most important time of year for retailers; ordinarily accounting for up a fifth of the entire year’s sales and generating a large part of annual revenues. After a tremendously challenging 2020, many firms’ cashflows are under severe pressure, and so businesses are in no position to absorb these additional shipping costs.”
Dickinson adds: “As a result, consumers will pay the final price. Christmas orders could be delayed, and retailers might be left with no option but to increase product prices. These issues must be addressed urgently; an inquiry would provide the scrutiny needed to help get our ports flowing freely again.”
Tim Rycroft, Chief Operating Officer of the Food and Drink Federation, concludes: “Food and drink manufacturers are extremely concerned about the delays we are witnessing at the ports. Our members are incurring costs totalling tens of thousands of pounds, and in some cases hundreds of thousands. In some cases, it is directly impacting on the ability of businesses to build up stockpiles of products and ingredients ahead of the end of the transition period.”
UK TRADER SCHEME LAUNCHED TO SUPPORT BUSINESSES MOVING GOODS FROM GREAT BRITAIN TO NORTHERN IRELAND
All UK traders are being urged to consider whether they need to sign up to the new UK Trader Scheme (UKTS) to ensure traders don’t pay tariffs on the movement of goods into Northern Ireland from Great Britain where those goods can be shown to remain the UK’s customs territory 1 January.
From Monday 14 December, businesses can apply for a UKTS authorisation, allowing them to self-declare goods not ‘at risk’ of moving on to the EU after entering Northern Ireland. This means they will not be subject to EU duties on goods being sold to or used by consumers after entering Northern Ireland from Great Britain, regardless of the outcome of the UK-EU FTA negotiations.
Businesses who do not sign up could have to pay tariffs on their goods, unless they are eligible to claim a waiver.
The scheme is open to traders of all sizes and across all industries who operate under the Northern Ireland Protocol (NIP).
Traders who want to declare goods not ‘at risk’ from 1 January will need to apply for authorisation by 31 December. Traders will be granted a provisional authorisation for a period of up to four months whilst HMRC processes their applications.
The government’s £200 million Trader Support Service (TSS) also provides education and guidance on ‘at risk’ goods for NI and GB businesses. To register for the TSS visit https://www.tradersupportservice.co.uk/tss.