Brexit Shipping Changes – What You Need To Know

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Despite the agreement of a free trade deal, the UK’s departure from the European Union has still affected businesses that trade overseas. 

At HFS, we were always fully prepared for any outcome to Brexit negotiations, but we also recognise that many businesses will now be getting to grips with new customs procedures or trying to understand what Brexit means for their shipments.

Brexit: Shipping & Logistics Updates 

With that in mind, we have collated the key information and announcements to date, so you can stay on top of the latest Brexit developments. Official guidance is also available through the government’s website.

January 2021 – Grace period agreed for ‘rules of origin’ paperwork
December 2020 – UK & EU agree free trade deal
September 2020 – HGV drivers will need permit to enter Kent
September 2020 – Government publishes Internal Market Bill
September 2020 – Trade bodies express concern over government’s Brexit preparation 
August 2020 – Government announces Trader Support Service 
June 2020 –  New border controls to be staged after Transition Period 
May 2020 – Government reveals UK Global Tariff (UKGT) 
February 2020 – Government announces changes to customs procedures
September 2019 – Operation Yellowhammer
August 2019 – Plans unveiled for ten freeports after Brexit

 

January 2021 – Grace period agreed for ‘rules of origin’ paperwork

The UK and EU agreed a 12-month grace period for ‘rules of origin’ paperwork, easing the administrative burden on companies that export into the EU.

The grace period means that businesses won’t have to complete paperwork certifying that their goods are made locally until 2022. However, they will still have to abide by rules of origin during the grace period, meaning goods must be locally sourced or have had sufficient work carried out on them in the UK. Any goods that don’t meet rule of origin requirements will be subject to tariffs.

The government also released guidance on how businesses can claim preferential rates of duty when importing into the UK from the EU (or into the EU from the UK). To apply for preferential rates, importers will need to provide evidence that their goods comply with the rules of origin.

 

December 2020 – UK & EU agree free trade deal

On 24 December, following a lengthy round of negotiations, the UK and European Union reached an agreement that would allow free trade to continue after the transition period.

The deal ensured there would be no tariffs or quotas on goods traded between the UK and EU from 1 January 2021, although it did apply some restrictions to certain UK animal food products.

Trade associations welcomed the deal, but said businesses will need time to adapt to the new customs procedures that came into effect from 1 January.

“What we do know is that there will be no 10% tariff on new lorries, and that is both welcome and a relief,” said Richard Burnett, chief executive of the Road Haulage Association (RHA). “However, it’s essential that we [now] have a six-month implementation period. The British economy cannot afford for UK and EU hauliers and traders to begin 2021 with an ill-prepared journey into the unknown.”

Elizabeth de Jong, policy director of Logistics UK, added: “A deal is great news for the UK economy since it removes the risk of tariffs being placed on almost every item imported from the EU, which would have raised prices and slowed the rate of economic growth.

“Meanwhile, Logistics UK is urging traders to continue to get ready for new trading conditions as they were before, as the new trading relationship will still require many of the same preparations, not least the introduction of customs declarations and additional checks on food and livestock. Logistics UK is advising traders not leave paperwork to the last minute, or ignore it, as this will cause delays to journeys.”

The Border Operating Model, which outlines the rules for importing and exporting between the UK & EU, was also updated in line with the trade agreement.

September 2020 – HGV drivers will need a permit to enter Kent 

The government announced that HGV drivers will need a permit to enter Kent once the Brexit transition period has ended. The move is intended to prevent tailbacks on roads surrounding Dover and the Channel Tunnel.

Michael Gove, the cabinet minister in charge of no-deal planning, said the Kent Access Permit system would be enforced by police and ANPR cameras. Drivers of trucks weighing more than 7.5 tonnes will need to apply for a permit online and ensure they have all the necessary paperwork to transport goods to Europe.

In a letter sent to logistics groups, Mr Gove outlined the “reasonable worst-case scenario” of the UK leaving the EU without a free trade deal in place. He warned that queues of up to 7,000-trucks-long could block the roads leading into Dover and Folkestone, with delays of up to two days for lorries waiting to cross the Channel. 

According to Mr Gove, only a quarter of businesses are “fully ready” for post-Brexit arrangements, which will come into force on 1 January 2021. 

Richard Burnett, chief executive of Road Haulage Association (RHA), said: “For years we’ve been warning government that there will be delays at ports, but with 70 working days to go until the end of the transition period they’re still not engaging with us to come up with the solutions. 

“Government’s promises that the UK will be ready for business on 1 January are just a whitewash, and right now it appears that traders and haulage operators are being left to carry the can.”

September 2020 – Government publishes Internal Market Bill

The government published the Internal Market Bill, which sets out rules for trade between England, Scotland, Wales and Northern Ireland after the end of the Brexit transition period in January 2021.

The bill proposes that there will be no new checks on goods moving from Northern Ireland to Great Britain, and that UK ministers will have powers to modify or “disapply” rules on the movement of goods coming into force from 1 January 2021, if the UK and EU don’t agree a trade deal. 

Controversially, it also says these powers should apply even if they don’t comply with international law. 

The bill has been widely condemned by EU officials and UK politicians, including Conservative MPs, as it would override the withdrawal agreement signed with the EU in January, most notably the Northern Ireland Protocol, which is designed to prevent a hard customs border between Northern Ireland and the Republic of Ireland.

Government ministers claim the legislation will prevent “damaging” tariffs on goods moving between the UK and Northern Ireland if a free trade deal isn’t negotiated with the EU. 

As of 2 October, the Internal Market Bill had started its passage through parliament, with Prime Minister Boris Johnson urging MPs to support it. 

September 2020 – Trade bodies express concern over government’s Brexit preparation 

A number of logistics trade bodies signed a joint letter to Michael Gove, Chancellor of the Duchy of Lancaster, expressing their concern over the government’s preparation for the end of the Brexit transition period. 

The letter, which was signed by organisations including BIFA, RHA and UKWA, requested an urgent meeting with Mr Gove to discuss grant funding for logistics companies, IT and systems readiness and physical border infrastructure, among other issues. “If these issues are not addressed, disruption to UK business and the supply chain that we all rely so heavily on will be severely disrupted,” the letter says. 

On 8 September, Mr Gove agreed to the meeting with industry bodies, reiterating the “commitment of the government to doing everything necessary to help industry prepare.”


August 2020 – Government announces Trader Support Service

The UK government revealed its new Trader Support Service (TSS), providing £200 million of customs support for businesses trading in and out of Northern Ireland.

The free service will effectively see the government acting as customs agents for businesses. This includes completing customs declarations on their behalf. The TSS is designed to ease the administrative burden of adhering to new customs regulations, which will come into force on 1 January 2021 under the terms of the Northern Ireland Protocol. 

A further £155 million was set aside for the digital infrastructure required to introduce and streamline the new customs processes. 

Several trade bodies, including the British International Freight ­Association (BIFA), said the TSS would unfairly distort competition and threaten firms that already provide customs brokerage services to businesses. According to The Sunday Telegraph, BIFA and other trade bodies had threatened legal action over the implementation of the service. 

June 2020 –  New border controls to be staged after Transition Period

The government formally notified the EU that it will not accept nor seek any extension to the Transition Period, which was activated when the UK officially left the European Union on 31 January 2020. 

It also confirmed that new border controls revealed in February 2020 would be introduced in stages at the end of the Transition Period, so that businesses affected by the coronavirus outbreak had sufficient time to prepare. 

In addition, the government unveiled a £50 million support package for customs brokers, freight forwarders and express parcel operators, designed to help such businesses with recruitment, training and new IT equipment for handling customs declarations. 

A further commitment was made to build new border facilities in Great Britain for carrying  out customs compliance, transit and Sanitary and Phytosanitary (SPS) checks, while offering targeted support to ports to build new infrastructure. The government said it will build inland sites for carrying out these checks, if there is no additional space at ports.

The government’s website provides more information on the staging of new customs procedures. It also published the Border Operating Model, which outlines how the border between the UK and European Union will operate after the transition period. 

 

May 2020 – Government reveals UK Global Tariff (UKGT)

The government announced that the EU’s Common External Tariff would be replaced by the UK Global Tariff (UKGT) once the transition period has ended.

According to the government, the UKGT will “support the economy by making it easier and cheaper for businesses to import goods from overseas.” Changes would include scrapping unnecessary tariff variations, removing all “nuisance tariffs” below 2% and rounding tariffs down to standardised percentages.

In order to protect key industries, import tariffs will remain for agricultural products such as lamb, poultry and beef. However, zero tariffs will apply to commodities such as appliances, garden tools, cooking products and materials used for manufacturing in the UK.Businesses can check the new tariff rates on the government’s website.

February 2020 – Government announces changes to customs procedures

HMRC sent a letter to VAT-registered businesses that trade with the EU, outlining how customs procedures will change from 1 January 2021. The letter explained that, for trade between Great Britain and the EU, businesses will need to make customs declarations to import and export goods once the UK is outside of the EU’s customs territory.

To submit customs declarations, businesses must ensure they have an EORI number that starts with the letters GB. Any businesses which don’t yet have the appropriate EORI number can register for one at www.gov.uk/eori. The government advised businesses to prepare accordingly, as well as deciding if they will be making declarations themselves or using a third party such as a customs agent or freight forwarder.

A separate letter to businesses in Northern Ireland confirmed that arrangements for moving goods between Northern Ireland and Ireland in the event of no-deal Brexit no longer apply. These will be replaced by new arrangements that ensure there is no hard border on the island of Ireland, with Northern Ireland remaining in the UK’s customs territory.

On 10 February, HMRC extended the deadline for businesses to apply for customs funding to 31 January 2021. As of that date, businesses had applied for £18.5 million of the £26 million available, meaning there is still around £7.5 million left to claim from HMRC.

At HFS, we already have considerable experience in completing customs declarations from non-EU countries. This means we will be fully prepared for any eventuality, ensuring our customers can continue trading with their overseas partners.

September 2019 – Operation Yellowhammer

Details from a leaked document, ‘Operation Yellowhammer: no-deal contingency planning’, were published by the Sunday Times on 18 August 2019. The document was officially released by the government on 11 September 2019.

It suggested that in the event of a no-deal Brexit, the UK will be hit with a raft of issues, including shortages of fuel, food and medicines, ports jammed with lorries, and the need to establish a hard border in Ireland. Attempts to suggest the report was out-of-date failed, as it was shown to be only around two weeks old.

The Yellowhammer report predicted that up to 85% of lorries using the main Channel crossings “may not be ready”, leading to a three-month “meltdown” at British ports. The loss of frictionless movement could see HGVs facing a delay of almost three days at borders, with customs checks at Dover and the Channel Tunnel likely.

Meanwhile, the imposition of petrol import tariffs could lead to the closure of two UK oil refineries, with fuel shortages following.

The Road Haulage Association’s managing director of policy, Rod McKenzie, warned of a “very, very serious problem with the UK supply chain” in the event of a no-deal Brexit. He added: “… we are calling on the government in the clearest terms to make it clear what traders have to do to trade with the Continent. This, they have failed to do so far.”

James Hookham, the Freight Transport Association’s deputy chief executive, expressed concern regarding interruptions to fuel supplies, adding: “We have been planning for queues at Dover and the disruption of trade with Ireland, but this would be a new order of magnitude.”

Although the UK did depart the EU with a deal on 31 January 2020, negotiations on a new trade deal are still in progress. If no agreement is reached by 31 December 2020, the UK will default to WTO terms from 1 January 2021, meaning tariffs will apply to imports and exports. 

August 2019 – Plans unveiled for ten freeports after Brexit

The government announced plans to establish up to ten freeports around the country after Brexit. The UK last had such zones as recently as 2012.

Freeports, or free trade zones, are areas that are exempt from checks, paperwork and the usual tax and tariff rules. They allow for raw materials to be imported into the freeport zone and used to create completed products, which may then be exported.

The government has established a Freeports Advisory Panel, and ports and airports around the UK will be able to apply for freeport status. Prime Minister Boris Johnson said they could benefit “left-behind areas” while International Trade Secretary Liz Truss claimed they will create “thousands of jobs”.