Business, Forwarding, Freight News, Logistics

Boris becomes PM: Freight industry reaction

[ July 26, 2019   //   ]

The UK Major Ports Group has called on Boris Johnson’s new government to reset the short-term border measures that were put in place for the original March Brexit deadline to 31 October to give industry more certainty in its preparations. The group is also calling on the measures to apply all ports, not just ferry prts.

It also called on the  government to deliver upgrades to customs IT systems to handle substantially higher volumes of declarations and to step up the public information campaign on getting ready for Brexit and look at proactively issuing international trader registration numbers.

UKMPG said it seems likely that the new Government will substantially step-up no deal planning.

It also said that free ports could be a potentially transformational opportunity for locations with the right conditions and strong local support. They have proved to be successful in stimulating investment and jobs in a range of locations around the world. However, they are not a silver bullet for all locations nor the only way of boosting the UK’s main global gateways as Britain prepares for Brexit.

ParcelHero’s Head of Consumer Research, David Jinks suggested that in an apparent off-the-cuff remark, new Prime Minister, Boris Johnson had suggested that the UK would create six new free ports if Britain leaves the EU without a deal This would however depend on a No Deal scenario rather than the UK continuing to be in a customs union with the EU.

It is possible that the new PM might pursue a free trade agenda after Brexit, but that might mean heavy tariffs being place on UK goods by the European Union.

Meanwhile, the Freight Transport Association urged logistics businesses and international supply chain managers to recognise the change of Government policy and accelerate their preparations for a No Deal Brexit.

“Logistics businesses need to take the prospect of a No Deal Brexit seriously and speed up any preparations which can be made,” said deputy chief executive and head of Brexit readiness, James Hookham. “While there are still areas of uncertainty for those tasked with moving goods and services between the UK and Europe, most of the requirements that will kick in in the event of No Deal have now been published and are freely available.

FTA is urging the new ministerial line ups to prioritise extending or re-establishing the necessary measures to ensure that trade can continue to flow freely to and from British industry.

FTA has also written to Michael Gove, the new Chancellor of the Duchy of Lancaster and responsible for co-ordinating No Deal preparations, urging rapid completion of the outstanding procedures and extension of the concessions.  FTA also urged high level co-ordination with the logistics sector to protect the economic health of the UK and the welfare of consumers.

Hookham added: “We would still much rather the UK leaves the EU with an Agreement that assures the continuity of frictionless trade but if this is not possible, then as an industry we will need to be ready for the challenging and complicated task of navigating the requirements that will apply.”

Adam Johnson, director of Leeds-based Tudor International Freight, said businesses should review contracts they have in place. He said: “Perhaps the most significant change to consider is that contracts between British businesses and companies in the EU will probably need to specify who is liable for paying customs duties, including tariffs, after a no-deal Brexit. These don’t apply to goods traded between the two areas now as the UK is part of the bloc’s customs union.

“The government announced in March that, following any no-deal Brexit, it would immediately bring the proportion of goods we buy from the EU attracting tariffs roughly into line with that applying to our imports overall. This percentage could increase in the future, however, as that would be a temporary arrangement lasting up to a year. The EU has also said it will apply customs duties to our exports from day one.”

Mr Johnson said another important area to reconsider was who was responsible for transporting items across frontiers and meeting the associated costs.

He said: “After a no-deal Brexit, this role could be onerous. The organisation holding it is normally required legally to deliver orders ‘within a reasonable time’, but this could be more difficult because of border checks on goods passing through locations such as Dover and the Channel Tunnel.”

Mr Johnson said businesses seeking to amend contracts should bear in mind Incoterms which aim to reduce misunderstandings and conflict between traders and help specify issues such as who is responsible for the arrangement and payment of shipping, insurance and customs duties.

He said: “Buyers of goods are usually liable for customs duties, but if a UK exporter contracts with a foreign customer to deliver on a DDP (delivery duty paid) basis, they assume this responsibility and that of carrying out any other tasks needed for the items to receive import clearance.

“Conversely, if the contract is made on an EXW (ex-works) basis, the customer would have to take delivery at the exporter’s premises and then be responsible for shipping, insurance and customs matters, such as duties.”

Mr Johnson said incoterms did not cover all relevant issues so contracts still needed to contain additional key provisions, such as parties being unable to fulfil their duties due to unforeseen circumstances.