Manufacturers are experiencing significant disruption when trading with the EU, due to Brexit-related changes, including new paperwork and checks at borders and new rules of origin requirements. While the current conditions are challenging for importers and exporters, by taking action now, they could gain a competitive advantage as the situation begins to stabilise.
Despite securing a post-Brexit trade deal, the level of disruption at UK/EU borders has intensified since the start of the year. In some cases, goods are being held up at border controls because customs declarations are incomplete or have been completed incorrectly. Some transport operators are reporting that there have been cases of entire containers being stopped simply because a single consignment contained a minor error in the documentation. Some retailers and couriers have been forced to suspend deliveries altogether due to concerns about the new border controls and costs that might be incurred.
For SME manufacturers exporting smaller shipments to the EU there are particular frustrations, because even if the new paperwork is completed correctly, their goods could still be held up as part of a larger groupage consignment, if some of the documentation is incorrect or incomplete. The freight forwarder is responsible for completing the customs declarations on behalf of their customers, and this can only be done properly if they have been passed the right information in the first place.
While the border disruption is largely out of their control, it is important that manufacturers do everything they can to mitigate the risk of delivery delays by providing the right information to their logistics partners. They can do this by keeping a check list of the information needed for the new customs declarations and assisting the freight forwarder as much as possible. For example, if parts or raw materials sourced from overseas are used in the manufacture of goods bound for the EU, a tariff could be payable at the point of entry to the single market under new rules of origin requirements. However, if the manufacturer can evidence that there has been enough processing under the new origin rules, tariffs should not apply.
To assist logistics partners in completing customs declarations accurately and minimising the impact of tariffs, manufacturers should also aim to stay as close as possible to their suppliers and ensure they have access to detailed information about any goods or raw materials sourced from overseas. This is particularly important for manufacturers with complex supply chains that might be sourcing goods from more than one country.
Among the reasons for the current level of border disruption is stockpiling ahead of Brexit and transport operators attempting to push orders through before the end of the transition period. For this reason, it seems likely that the situation will improve as the new paperwork and procedures become more established. Despite this, some manufacturers shipping large volumes or multiple shipments to the EU may need to lease additional warehouse space where goods can be stored when they are ready to ship. This additional capacity could help to alleviate pressure at borders in the short term. In some cases, manufacturers affected by new product-specific rules, such as food and drink producers, may also need to weigh up whether continuing such export activity is viable.
For SME manufacturers or those shipping a lower volume of goods to the EU, it is still important to act, as minimising disruption could protect customer relationships. Stockpiling goods that are ready-to-ship may not be necessary, but it is important to consider whether additional costs will be incurred and who is liable for them.
Close management of supply chain relationships is vital and working with logistics partners who can support them in understanding the impact of the new paperwork and rules of origin could give them a competitive advantage. Training for staff involved in the dispatch of shipments is also important to ensure they have access to the information they need.
While the situation is expected to ease, manufacturers know that the new procedures and legal requirements are here to stay. By adapting their processes now and ensuring they have access to the advice and support they need, it will be possible to continue trading profitably with customers in the EU in the future.
