On January 1, the United Kingdom (UK) officially left the European Union (EU). Since then, goods are no longer allowed to move freely to Great Britain and are subject to a prior customs declaration. Focus on the repercussions in terms of logistics, transport, import and export.
30,000 French companies exporting to the United Kingdom, 3,000 of which are directly established in the United Kingdom. Nearly half of the UK’s trade is with the EU. The figures speak for themselves. They reflect the shock that Brexit represents for Franco-British and wider European trade. It is essential to properly measure the problems that arise from this. In terms of goods transport, to anticipate the transition as well as possible and thus serve its customers efficiently. This is why DDS Logistics is taking stock of the consequences and points of vigilance arising from Brexit.
Brexit: consequences on logistics and transport
Clearly identify its customs nomenclature, check its commercial contracts and Incoterms, understand the risks for its subsidiaries in the United Kingdom, validate its transport and logistics choices… The logistical stakes related to the exit of British citizens from the EU are numerous. And although an agreement was reached last December 30, after several months of negotiations between the United Kingdom and the European Union, the issues of quota limits and customs duties may have worried the players in the supply chain and more particularly the road transport of goods (TRM). And for good reason: 70% of transport between the United Kingdom and the EU is by road.
After an arm wrestling for several months, the new agreement that came into force at midnight on January 1, 2021 defines the intra-European rules applicable to relations between the two territories. It extends the current commercial situation on a transitional basis until 2026 – except for fishing.
Import & Export: the main lines of a new logistic organization
In concrete terms, the United Kingdom is now a third country, not subject to European law, without access to the internal market and the Customs Union. These changes have given rise to some complex issues for carriers and their shippers to integrate. Even if many points have already been clarified :
- The customs rules for entry into the EU relating to third countries apply.
- Sanitary and phytosanitary controls are re-established for the transport of goods
- The free movement of persons is no longer applicable between the EU and the UK.
- No customs duties between UK and EU
- No quotas (except for fishing)
Understanding customs issues
For customs purposes, if the duties remain zero and only an intra-Community VAT number was previously required to ship to or export from the United Kingdom, only an intra-Community VAT number was required. Since midnight on January 1st, there are no more free borders. Intra-European companies working with the United Kingdom are now required to complete their Single Administrative Document (SAD) for export (EXA) electronically and to be in possession of their EORI number (Unique Community Identity Number). At each border crossing, they will have to comply with this regulatory and customs obligation. Above all, they should not neglect a few points of vigilance:
- Clearly indicate the elements of the customs nomenclature and verify its conformity
- Establish a link with a freight forwarder accustomed to the UK market who has correctly integrated the smart border procedure. This one allowing via a bar code on the EXA to pass without being controlled.
- Verify commercial agreements and in particular possible penalties as well as incoterms, the nature of which could change.
- Reevaluate its stocks to face possible “traffic jams”.
- Follow the exchange rate between the pound sterling (GBP) and the euro. And be able to assess margins and profitability accordingly.
- In the case of subsidiaries in the United Kingdom, assess the risks in terms of taxation, social security charges and employment contracts, the nature of which is likely to change in the coming months.
Finally, the agreement also provides that a French carrier wishing to establish itself in the UK is not obliged to have its professional capacity recognized. Nevertheless, for British carriers wishing to establish themselves in the EU, the provisions allowing them, as “Community carriers”, to establish themselves in France will no longer have effect. Finally, the transport services of British service providers in the European Union or vice versa will also have to be redefined.
Focus on Transportation and the Smart Border
Set up on January 1, 2021, the so-called “intelligent” border is thus divided into two lines, the green and the orange. It is valid for air, sea, rail and road transport. The goal? To reduce waiting times and blockages at the exit of the ferry.
On the green line, after saving its export, a barcode is assigned. It allows the recognition of the truck, the goods and thus to pass immediately at the border. On the orange line, a contrario, the truck TIR (international road transport), ATA (Temporary Admission) or in case of invalid formalities, must go to the customs. The truck is therefore selected for control. Be careful, however, vehicles passing through the green lane can also undergo random checks.
The importance of digitalization to anticipate and understand change
While the contours of a new international trade and new transportation rules are taking shape around the United Kingdom’s exit from the European Union, trends in terms of trade between the two territories remain difficult to anticipate. The health crisis, the new regulations to be established and the temptation to become a “European Singapore” for the United Kingdom require us to remain vigilant. In order to understand these changes and optimize transport and logistics with this new third country, tools are available to shippers and their carriers. Better still, DDS Logistics, through its DDS Academy, offers dedicated support to players in the sector who wish to be guided through this transition.
Do you encounter problems related to Brexit? How can you adapt your commercial contracts and logistics systems?
DDS Academy offers you training sessions on the choice of Incoterms and the customs trilogy that will help you live Brexit well and avoid any impact on your company’s commercial activity.