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Exporters bear the brunt of what’s to come for importers

On January 1st 2021, everything changed for those trading with the EU.  Whilst importers have had a relatively easy ride so far (see end), exporters were left with an immediate hard border erected overnight.

All the preparation in the world couldn’t have covered everything you needed to know as details were still emerging only a few days before January 1st.

In the end it was UK exports that bore the brunt of the problems which much was predicted, but not exactly how it played out in the end.

Throughout January the exporters pain was clear to see as imports rattled through, the exporter was stood frozen to the spot.  Few loads were moving as it dawned that this was not only going to be difficult to trade, bit for some nigh on impossible.  Loads sat in warehouses as logistics teams dare not send them for fear of getting customs formalities wrong and the goods being stuck.

So queues at ports did not materialise as the loads remained stored.  Dover bound hauliers, quick to notice this only took cargo to the UK if they were paid back out empty.  East coast un-accompanied services were fully booked with lead times stretching into weeks, where their trailers began to block quayside space with uncleared goods.

Now in month 3, what were and still are the problems facing exporters?

Well, being a little bit blunt, for many it was a lack of preparation.  A common occurrence was that incoterms weren’t agreed or understood.  This led to the exporter often being given the responsibility for everything on DDP terms.  However, the importer would have to still do some leg work and this is where the fun began.  Because many didn’t want to.  This left many exporters having to charter clearance agents in the EU, which most were either full or not interested.

To be fair it is a hassle as each country has its own set of rules, as opposed to working as a bloc.  As we know, your goods should go through the best port for the destination.  No more is this easy to do as you will need one of these agents at each port, and set them up to work on behalf of the importer.  Not simple by any means.

The time spent explaining many of the issues we faced also came into play.  How about a T1?  Well, many agents pulled these in the first few days, but even so, who’s going to discharge them?  Again, the importer would need to take action as they are importing the goods.

These are just some of the very basic problems you find with general cargo.  We haven’t even talked about rules of origin yet.  And if you had more specific cargo, like foodstuffs, you may need additional resources such as certificates and port representation.

All these new ‘hassles’ put commercial contracts at risk as EU importers consider whether it’s worth buying from the UK (which is now like buying from the USA) when you could get something with similar standards within the EU.  Ultimately we opted out of the single market and customs union giving us 3rd country status, and its uneasy relationship with road freight is only just beginning to show itself.

Over the last few years we have worked extensively with exporters to set up systems and transport flows that thankfully work.  We had teething problems in January (not HMG defined teething problems), but these have since been ironed out.  Some systems that started in January are now working very well, but it needs both consignor and consignee to work together.  It also needs an understanding from both parties that things have changed, time frames are longer and new costs have been introduced due to the extensive administration now required.

Once all these points are understood and accepted, we can get on with rebuilding the European supply chain for a life outside the EU.  It will look like something we’ve seen before…

On a final note, importers shouldn’t get too comfortable because in April and July things will change significantly as HMRC brings in tight controls to create a hard border flow coming the other way.  Prepare now.  You have been warned.

 

02/03/2021
Author: Jon