For more than two years since the Brexit vote, the European supply chains to Europe are beset by ambiguity and uncertainty . The intense negotiations of the U.K. and EU have resulted in an extended period of unease with the prospect of “no deal” being “The deal.” The ambiguity of Brexit is forcing a change in European supply chains for American, Canadian and Asian firms.
American. Canadian and other non EU companies need to rethink their "Britain first " strategy when selling to the European Union. Companies using Britain as their European hub are actively planning post Brexit strategies. A soft Brexit seems increasingly unlikely as the March 29 deadline approaches.
- Brexit will affect companies who move goods to the EU via the UK.
- March 29th was expected to start a transition period but could be the date of actual Brexit where the UK free access EU abruptly ends.
- See notes below on things to be aware of regarding the changes on March 29th, 2019.
Brexit is a de facto reality for EU parcel logistics
While The UK will remain a major trading partner with North America and other non EU countries, it will no longer serve as a major gateway to The European Union.
BREXIT: A BRIEF OVERVIEW
- UK voted to leave the EU in 2016
- UK notified EU of their intention under Article 50 to leave the EU in March 2017
- Effect date of UK departure from EU (based on article 50) is March 29, 2019. There is the expectation that this date may be delayed but shippers should be prepared for a March 29 deadline with no agreement* (see below).
- UK benefits of EU membership would remain in effect for 20 months during the transition period.
The process of The UK giving up their border free access of goods to and from The EU will go ahead even as some are pushing for delays in the official departure date.
American, Canadian and indeed all non EU companies are facing new challenges to Europe as they research new continental gateways to the European market. Companies on both sides of the channel are adjusting to Brexit, including slower growth. No matter the ultimate political outcome, the trend of establishing direct EU access for e-commerce companies is irreversible.
Jet assists American and Canadian logistics firms who are seeking parcel logistics solutions within the continent of Europe to ensure EU “Euro-domestic” access.
The global e-commerce community is worried about growth on both sides of the channel. The uncertainty of the Brexit negotiations has resulted in a shift in investment from the UK to The Netherlands, France and Germany. Companies outside the EU are extending capabilities beyond the UK to ensure continued Euro-domestic parcel delivery capabilities.
For many North American companies, The UK serves both as their largest single European market and as a base for their deliveries to The European Union. Within the parcel logistics industry, it is generally understood that H.M. Customs is easier to deal with than other European customs authorities.
Brexit has now disrupted the traditional UK centric flow of goods from North America, India and Asia to Europe.
To ensure free movement of cross border parcels, shippers are increasingly searching for solutions on the European continent. The leading contenders for clearance, warehousing and logistics infrastructure include France, The Netherlands and Germany.
Will the final Brexit deal embrace the benefits of free EU trade?
Although European countries stand to benefit from the movement of people and parcels from The UK, there is also the concern of lost trade opportunities with a leading European economy. There is hope that the political leaders will do all they can to maintain The UK's place as a leading trading partner of Germany, France, The Netherlands and all EU countries.
Through the English port of Dover, for example, thousands of trucks with countless commodities transit from The EU daily. The worry is how these large volumes of cross channel shipments will be affected by customs and immigration processes.
The Advantages of EU locations
The ability to move freely across borders within the EU is essential. Despite all the concerns about the Euro and unresponsive bureaucracy, the benefit of open borders is the often overlooked value of EU. Contact our team for information on parcel delivery solutions within the EU. Even companies with relatively small parcel flows can benefit from EU parcel delivery access.
The benefits of free movement of cross border goods within the EU has been an extraordinary and often under appreciated benefit. The inability of British companies to sell and transport freely across EU borders is a very real possibility. Our team can assist with introducing EU parcel delivery solutions.
The UK will remain a major market but without easy EU access.
While the UK will certainly experience slower growth (confirmed by recent economic data) as a result of Brexit in the short term, Britain will remain a major market itself for goods from North America and Asia. Many Canadian and American companies are seeking complimentary warehousing and euro-domestic distribution capabilities on the continent. France, The Netherlands, Germany and others are actively recruiting firms wishing to move capacity from The UK.
All major countries in the EU are working to ensure they do all they can do to attract volumes that are looking to move from The United Kingdom.
Brexit uncertainty or conditions could have a moderate, major or worse effect on their company’s revenue. Jet assists companies to minimize the Brexit risk by preparing new post-Brexit warehousing and distribution capabilities in The European Union.
American and Canadian companies are being pressed into securing their European supply chains from being UK centric. The outcome of the U.K.’s exit from the EU will test of the agility and resilience of global supply chain models based in Britain.
The Netherlands has traditionally served as the Europe Union’s logistics hub. With major ports and airports, this role will certainly be enhanced by Brexit.
France is actively trying to promote their capabilities to serve the EU market. With massive air cargo capabilities, CDG could become the new Heathrow like gateway to France, Germany, Italy, Spain and all EU countries.
Jet Worldwide assists companies in establishing euro domestic parcel distribution solutions to The Netherlands, France, Germany and the entire European Union.
The leading city for attracting UK firms seems to Frankfurt. Being based in Europe’s largest economy with easy access to France makes sense for parcel logistics solutions to Europe.
Brussels and the surrounding region serves as the traditional cross roads of Europe. Some say the leading contenders for euro-domestic post Brexit is between Lieges, Belgium and Frankfurt Germany.
No deal is The Deal. Uncertainty is certain.
As mentioned above, the challenge of Brexit is no longer theoretical. There is hope is that the pragmatic benefit of free EU trade will prevail in the new agreement but the extended period of uncertainty has already made its mark. Trading with the UK is now firmly recognized by Canadian and American companies as separate and apart from trading with the EU.
Jet helps companies compliment your UK supply chain by adding cross border EU parcel delivery capabilities.
* Brexit: What your need to know about the March 29 deadline
Without a transitional period (as tabled in the Withdrawal agreement) or a definitive arrangement, trade relations with the UK will be governed by general WTO rules, without application of preferences, as of 30 March 2019.
- Customs formalities will apply for all shipments from the UK to the EU
Customs duties will apply to parcels entering the EU from the United Kingdom
Import and export licences issued by the United Kingdom will no longer be valid in the EU (EU27).
Authorizations for customs simplifications or procedures issued by the United Kingdom will no longer be valid in the EU (EU27).
Authorized Economic Operator (AEO) authorizations issued by the United Kingdom will no longer be valid in the EU (EU27).
EU countries will charge VAT for goods entering the EU from the United Kingdom. Exports to the United Kingdom will be exempt from VAT.
Rules for the declaration and payment of VAT (for supplies of services such as electronic services), and for cross-border VAT refunds will change.
Movements of goods to the United Kingdom will require an export declaration. Movement of excise goods to the UK may also require an electronic administrative document (eAD).
Shipping between "non EU UK" and The EU: Things to consider with Brexit
An Economic Operator Registration and Identification number (EORI number) is mandatory for exporting and importing goods to/from the UK.
Shippers should apply for an EORI number via their local custom's websites if you do not already ship goods outside the EU. Registration and approval can take up to a week.
EORI Number = Country code + unique national number
Commodities (HS code)
The HS codes / Harmonized Codes - will be required to determine the eligibility and duty rate for cross border goods needing parcel clearance.
- 1 to 6 are worldwide identical (except some countries)
- 7 to 10 : details of the commodities
- 11 to 14 : additional code at import impacted the duty code
A commercial or pro forma invoice will be needed between the EU and UK
A commercial invoice is used when the goods are related to a commercial transaction or for resale
A pro forma invoice is used when sending goods without any commercial value (for example samples)
Data transfer of shipping and manifest data:
For shipments done either via API (Application Programming Interface), an integrated system or EDI (Electronic Data Interchange), there will be necessary IT updates to be done in preparation for Brexit to ensure that data such as descriptions, values or HS codes are included and on a carrier specific format.