Customs complexities and worries over fines causing EU exports to plummet, says Dan Culverhouse, UK&I managing director of supply chain experts Customs Support Group
Red tape has been blamed for UK exports of clothing and footwear to the EU nosediving since Brexit, but I feel the basic human fear of getting things wrong might be playing an equally big role in these worrying figures.
A report from Retail Economics and Tradebyte said complexities at the border were a significant contributor to the 18 per cent fall in non-food goods being shipped into the EU, despite the burgeoning success of the eCommerce market.
In simple terms, if your parcel is over a certain value, you need to pay import taxes at destination. Businesses selling footwear and clothing can very easily go over the €150 threshold for B2C shipments and as soon as they do, the process becomes complicated.
Barriers which didn’t exist pre-Brexit are now one of the biggest hurdles for exporters, adding complexity to what they do. Crucially, many fear getting things wrong and being fined by HMRC – which also carries a danger of negative media coverage and reputational issues.
For many businesses, the reputational damage this can cause isn’t worth the risk. One damning example is a clothing manufacturer we had discussions with – a successful business worried about leaving itself exposed to risk, which simply decided it was doing well enough in the UK market to stop exporting to Europe altogether.
Our aim as a business is to take away this complexity, which doesn’t stop at paperwork. There are a number of opportunities to make this process much smoother.
For example, holding goods in the UK but not paying duty. If you’re importing goods you plan to sell overseas, you can hold them in suspension in a customs bonded warehouse and re-export them without paying duty. As well as being a cashflow benefit, it gives you much greater flexibility with your inventory and prevents the double duty payments if you simply import then re-export.
Stock held under bond used to have to be segregated from the rest of the stock, but that is now virtual – all the stock is in the same place. When you work with an experienced broker, they can handle the complexity of the customs warehouse transactions based on your recorded activity.
This is a solution companies either aren’t aware of, don’t have the resources to action or applying for accreditation and running the process is too difficult and complex.
In many cases, companies simply don’t consider the customs aspect alongside the logistics aspect. There are risks involved for companies which don’t see customs as a value-added exercise and simply throw it in with their logistics provider, as the service they receive may be very basic.
If customs is separate from physical movement of goods, companies are free to move between providers and choose one with the experience and skills to optimise and simplify processes that enable value-adding cross-border activity.
The wall that went up after Brexit has turned exporting into a huge bureaucratic process for fashion retailers, for whom logistics is not a core competence. Customs is something of a black hole, only talked about it when it isn’t working.
Added to that, small businesses are focusing on one thing – selling goods, often in very niche areas. It can often mean their systems are not up to scratch and documentation isn’t ready to face down the myriad of rules around exporting.
Despite all the complexities in the way, there are solutions. Companies like ours can manage that border process and offer a frictionless border. It opens the doors to global exports which many fashion retailers clearly consider has been closed by Brexit.
For more information about Customs Support Group, visit www.customssupport.co.uk.