Early problems for post-Brexit supply chain confirm business leaders' fears

Published by Rhys Taylor-Brown on January 13th 2021, 1:01pm

In the September of 2019, Skender Perpepa, founder of building and contracting firm SA Builders and Contractors, spoke of his concerns about the impact of Brexit on the import of materials for the construction sector and how the supply chain may be affected. Following reports already this year that post-Brexit red tape has hit the haulage industry, with supply trucks stranded across the continent, Perpepa’s fears and those of many other business leaders who rely on free trade with Europe may well be realised without the appropriate intervention.

From January 1, 2021, the UK had fully left the EU single market and customs union and began trading with the bloc under the terms of the UK-EU Free Trade Agreement struck on December 24, 2020.

While the deal avoided crippling tariffs and quotas, the terms of the agreement require firms to fill in new forms, ranging from health certificates and declarations, to guarantee free-flowing trade. Others, meanwhile, are subject to new duty regulations over rules of origin for certain goods.

Since Brexit has been fully enacted, a number of haulage industry chiefs have informed the London Evening Standard that post-Brexit red tape has left a several truck drivers with the incorrect paperwork, meaning they have been left stranded at borders across Europe.

The Standard adds that parcel delivery service DPD UK has paused its European Road Service owing to the “increased burden” of customs paperwork for packages going into the EU, while the DFDS shipping firm has warned that lorries have been turned away at Dover, Dunkerque and Calais for not having the correct paperwork at check-in.

Other business owners have claimed that the multi-faceted issue of new paperwork, associated costs, new import-export duties, and lack of clarity over the new trade rules outlined in the UK-EU Free Trade Agreement have seen some businesses temporarily halt their European operations, while others have opted to close them completely.

Traffic flowing through Dover’s port is currently 85 per cent down on the average levels seen over 2019, and Road Haulage Association spokesman Paul Mummery told the Standard that worse was to come.

He said: “We are not trying to be doom-mongers, but this is just the tip of the iceberg.”

Mummery continued: “The volumes for import-export are at the lowest point in the year anyway, and it is probably even quieter than usual, because the feedback we are getting from the industry is that firms were stockpiling before the Brexit deadline.

“When volumes of freight movement get back to normal levels, and they are set to start rising from next week, we will start seeing the real extent of the impact this red tape is having on industry and businesses.

“Everyone thought it was going to go wrong day one, but it’s going to happen later.”

The RHA has called on Westminster to “better prepare businesses for where we are now” and take action to “mitigate these problems as soon as possible.”

Speaking to The Parliamentary Review back in 2019, SA Builders and Contractors boss Skender Perpepa’s concern was that rising manufacturing costs and higher import cost would have an impact on his business, but it is now becoming clear that the potential problems may go well beyond those issues.

Perpepa said at the time: “The big concern [for us] arises from potential material cost increases, due partly to manufacturing cost rises but, more importantly, to higher import costs. Last year, all our suppliers increased their material prices twice and are expected to increase prices again this year.”

As well as higher costs, some firms are having trouble getting hold of their incoming goods at all. Intersped Logistics managing director Ray Murphy informed Bloomberg that a shipment bound for Britain was left stranded in Italy after the UK importer did not have an EORI number, which is one of the requirements for free-flowing post-Brexit trade.

Exporters are not having an easier time of it either. Clive Mills, founder of express haulage business Euro2Go, informed the Standard that he has shut down his European business thanks to the additional post-Brexit costs of transporting goods to Europe.

He added that a journey to Belgium that would have taken several hours last year now takes a day or more, and circumstances have let him with no alternative but to close the export business that previously generated 80 per cent of his firm’s revenue.

He told the Standard: “I’ve decided not to do Europe anymore, as of Christmas. I’ve sold all of my lorries off, I’ve got four lorries left for my UK business. It’s just too much. I know a few other hauliers who are doing the same - it’s just a nightmare.

“I feel really cross that for four years the industry advised [the government], and now it is too late. This is no surprise. You can’t run a business like this. You have to try to pre-empt situations.

“They haven’t put red tape, they’ve handcuffed us, taken us out back, and said ‘get on with it’. What they’ve put in front of us is impossible… The now issue is how do we get out of this? It’s not clear.”

Alex Shannon, the founder of kitchenware supplier Sous Vide Tools that regularly trades with the continent has seen his business temporarily suspend European sales amid the disruption.

Shannon told the Standard that under new rules, firms are required to register for local VAT with every trading country, while it has been affected by its European goods carrier DPD deciding to suspend its services.

According to Shannon, the completion of paperwork has “gone from taking two minutes to book a delivery and sort a consignment to go into Europe, to now taking 15 minutes at least”, while there are new £50 charges required for every haulier to cover customs declarations as well as the new duty over rules of origin for goods.

Shannon elaborated: “When goods come in from China, we pay duty as we did previously, but now when we send goods into Europe, we have to pay duty again.

“The free trade deal isn’t the free trade deal. Unless the government change something, there are basically duties on sending back into Europe.

“People don’t know what is going on. One haulier will tell you something totally different to another about the rules.”

The Standard quotes cabinet minister Michael Gove as having said on Friday that in the coming weeks, the government expects “significant additional disruption - particularly on the Dover-Calais route”, even though issues at Britain’s borders had not yet been “too profound”.

Gove added that the government would “redouble” efforts to “communicate the precise paperwork that's required, in order to make sure that trade can flow freely". A government spokesperson has also told the BBC that ministers have been clear for some time that there would be some disruption at the end of the transition period.

Yet, although some disruption was expected, the news of a trade deal shortly before the New Year had given rise to some hope that Brexit would largely enable business to continue as normal. Based on 2021 thus far, those hopes will be quickly dissipating and business leaders will be waiting on ministers to take action and allow free-trade to continue as envisioned.

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Authored By

Rhys Taylor-Brown
Junior Editor
January 13th 2021, 1:01pm

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