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One week in: how the new trading relationship between the UK and the EU is working

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Image courtesy of DPD
Image courtesy of DPD
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One week in: how the new trading relationship between the UK and the EU is working

A week since the new trading relationship between the UK and the EU came into force, the reality of what the change means in practice both for leading ecommerce and multichannel retailers is starting to become apparent.

 

How retailers are responding

Marks & Spencer said in a trading update today that while the deal, which was struck only on Christmas Eve, would mean no tariffs added to goods sold in its UK stores, it did have the effect of adding both tariffs and bureaucracy to the goods it exports to the EU. This, it says, “will significantly impact our businesses in Ireland, the Czech Republic and our franchise business in France which we are actively working to mitigate”.

 

Earlier this week, however, Next, said in its own trading statement that there had been no disruption to its business as a result of Brexit. It said: “All our new systems required for Brexit have been implemented and are now operational. We do not anticipate that Brexit will have a material impact on our ability to import and export stock in the year ahead.

 

“Following the announcement of the free trade deal between the UK and EU, we do not anticipate any increase in customs duty costs in the year ahead.” Next already had authorised economic operator status in the UK and its Uk warehousing is already bonded, according to details the retailer previously shared. The retailer’s previous update on Brexit in its results statements was in September 2019, when it said in its half-year results: “We have relatively little of our stock arriving or leaving the UK via the Dover Calais route and as a precaution we have already taken measures to move most of that traffic to alternative ports or airports.”

 

Both retailers are ranked Elite in RXUK Top500 research. Fellow Elite retailer John Lewis, however, took the decision to stop offering international deliveries ahead of Christmas. It said at the time that it had “decided to focus on areas of the business that will deliver products and services for our local UK customers. As such, we are no longer pursuing international expansion and so from the 9th December we have decided to cease our online international delivery service.”

 

Debenhams, which is currently in the process of closing down, has turned off its Republic of Ireland website, and says on its website: "We are sorry but we are currently unable to deliver orders to the Republic of Ireland, due to uncertainty around post-Brexit trade rules. We have therefore made the difficult decision to temporarily switch off Debenhams.ie."

 

Fashion retailer Jigsaw is another RXUK Top500 ecommerce retailer that has decided to stop delivering goods to EU customers, while some smaller EU retailers are also suspending deliveries to the UK, according to reports, in the face of increased complexity in trade between the UK and EU.

 

The effect on delivery

Delivery company DPD has suspended its European road service until next week and says that up to a fifth of parcels for European delivery have had the wrong or incomplete information attached. That means parcels have to be returned to the customer. It expects to restart the service next Wednesday – January 13 – but will give an update the previous day, on Tuesday. It also has a new EU shipping data checklist.

 

“It has now become evident that we have an increased burden with the new, more complex processes, and additional customs data we require from you for your parcels destined to Europe,” it says in a statement on its website. In a statement on its website, it says: “This has placed extra pressure on our turnaround and transit times.

 

“We are seeing up to 20% of parcels having incorrect or incomplete data attached, these will have to be returned to you so that the required data can be provided.

 

“In addition to this we are seeing delays and congestion at UK ports and more rigid requirements for channel crossings.

 

“In view of this unprecedented set of circumstances we believe that it is only right to pause and review our road service into Europe, including the Republic of Ireland. We will use this short pause to validate the data we have in our system, reduce the delay and give you the opportunity to give us the correct data we need in order that we can export, from next week, successfully.”

 

David Jinks, head of consumer research at ParcelHero, says that the initial impact of Brexit on the UK border has been eased by France’s decision to close the border before Christmas in order to protect against the new strain of Covid-19. Companies responded by cancelling cross-border shipments, he says, leaving to “an eerily calm first few days in January”. But now that demand is building, he says cracks are starting to show.

Jinks says: “Senders are clearly struggling to come to terms with tariff codes, proof of origin and a host of other new requirements.”

 

Most express parcels to the EU go by airfreight rather than by surface, he says, and these services do not yet appear to be seeing delays, although the company is monitoring the situation.

 

He added: “The new measures have also increased prices for both UK and EU customers. Because of the new costs and investments required most international couriers have introduced an additional surcharge on all shipments between the EU and the UK. Most have imposed a minimum surcharge of around five euros (approx £4.50) on parcels crossing the EU-UK border, rising at a rate of around 0.25 euros per kg. That will push up the final price UK shoppers pay for purchases from EU sellers and increase costs for UK exporters to the continent.”

 

And he says: “One final concern for everyone is the looming issue of parcels shipped to Northern Ireland from Great Britain. The British Government has granted a three-month grace period on the need to complete customs declarations when sending parcels to customers in Northern Ireland from the rest of the UK. After that, no one seems to know... Some GB retailers have already suspended sales to Northern Ireland in anticipation of further red tape, however, and B2B shipments of goods valued at over £135 are already subject to the new procedures.”

 

Lorry drivers may now be avoiding crossing to the UK from France, thanks to concerns about possible hold-ups. Aidan Coffey, managing director of Danish ferry company DFDS Seaways, which is now running a direct ferry service between the Republic of Ireland port of Rosslare and Dunkirk in France, told the Irish Times that, “it’s not just hauliers who decide which routes the trucks should take. It’s also the manufacturers and producers who are telling drivers not to travel through the UK.

 

“By using the landbridge, some of them risk being subject to veterinary checks, or even having their products contaminated if the trailers are opened and checked.”

 

Background

What the UK/EU deal means in practice for UK and EU retailers

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