Dan Ennor, commercial director at Global Freight Solutions, discusses the three trade barriers Brexit will impose on delivery and the role delivery companies will play
Brexit, in whatever form it takes, will undoubtedly create challenges for delivery and impact the way delivery companies go about their business. The uncertainty surrounding Brexit was encapsulated last month when Karen Wheeler, director general of Her Majesty’s Revenue & Customs Brexit border delivery group, resigned from her post. Many businesses are still unsure how Brexit will impact them and the changes they will have to make as a result. But how can companies plan for what they don’t know?
We have identified three trade barriers that Brexit will impose, and the role delivery companies will play in addressing these issues.
1. Documentation and procedures
Brexit will almost certainly see the end of free trade between the EU and the UK, and when transformative change occurs, alterations to paperwork and procedures is bound to follow. The reforms to trading will have a direct impact on delivery companies, both practically and in terms of documentation. Post-Brexit legislation will mean that delivery firms will need to update their processes to be compliant when they deliver to each country in the EU. With that in mind, delivery companies need to make sure they are paperless in their admin to prevent costly clerical errors and to help smooth the delivery process.
With the new laws and regulations, there will be a sizeable amount of red tape to contend with, and storing this information on paper will create a logistical nightmare in terms of organization and compliance. Adopting a paperless clearance system will ensure that expensive delays, caused by misreading handwritten customs documentation, are avoided. Electronically submitting documents to customs eliminates the need to print and manually attach them to shipments, saving time, paper and hassle.
It is also important for retailers to note some of the extra information they will need to provide at customs post-Brexit. Customers will be required to provide a EU Registration and Identification Number to ship to the EU rather than just a UK VAT number. This will need to be checked and enforced to prevent failed deliveries. An 8- or 10-digit HS code will also need to be supplied to support efficient customs clearance and enable an accurate duty and tax calculation for all products.
2. Delays to the supply chain
Trading with EU nations post-Brexit will bring added border checks and major delays to the supply chain. This is something that will have to be built into delivery companies’ forecasting.
Communication will be key to ensuring that end consumers are receiving order notifications so that they are kept fully informed throughout the process. This will be particularly important during the early stages, when the concept is new to everyone. Retailers will need to be kept abreast of how long a delivery is going to take, throughout the delivery, so that they can set expectations with their shoppers accordingly and ensure that customer satisfaction does not suffer. Further to that point, e-commerce businesses will need to update their delivery promises on their website, and these need to be calculated accurately so that the retailer is not made to seem dishonest or ill-informed.
Additionally, delays in the supply chain, caused by customs checks, will result in businesses needing to hold more stock than they’re currently used to. This will have a direct financial impact on those businesses, who will need to find space to store that extra stock.
3. Duties and taxes
The most obvious and perhaps well-documented barrier that Brexit will impose on delivery companies and retailers is the duty and tax added to the price of products. With the extra costs now attached to trade goods between EU countries, the cost of good and delivery will go up overall and companies will have to consider who will pay that extra fee.
With the cost of goods in the EU becoming more expensive, delivery companies will need to reflect that in their price, so the added cost doesn’t fall directly on them. Duties and taxes will be passed onto retailers by their delivery companies, and retailers will almost certainly pass on that fee to their customers, rather than absorbing the cost themselves. What will be important in the infancy of duties and taxes for EU trading will be transparency across the board, while everyone gets used to the transition.
E-commerce brands will need to communicate these new duties and taxes to consumers at the point of checkout so that they are aware of the charge in advance of purchase. Unexpected fees will lead to cart abandonment increasing or customers refusing goods at the border. In the grand scheme of things, duties and taxes will make UK retailers less competitive in comparison to those based in the EU, which will have an impact on export revenues – something for delivery companies to be wary of as they plan ahead.
The uncertainty that looms over Brexit has led some businesses to believe that they cannot possibly plan for the future, but this is not true. We know for certain that trading in the EU will change and this will impact the delivery process. Delivery companies and retailers need to be aware of these changes and prepare as best they can now for the issues they can do something about – paperless legislation, supply chain delays, and duties and taxes.
About the author
With a logistics career spanning 15 years, Dan Ennor has lent his extensive knowledge and experience of the carrier, parcel and e-commerce industries to hundreds of retailers, helping them to use delivery to their competitive advantage in an increasingly demanding market. After several years at DHL, Ennor began working with GFS in 2006. Since then he has led the sales, customer care and account management teams to successfully implement GFS’s Enterprise Carrier Management solutions for well-known brands and brand-new startups, giving him first-hand insight into how optimized delivery can drive sales and support business growth.