The last-minute free trade agreement struck with the EU has been catastrophic for UK businesses and their EU customers. Kate Lester, founder and chief executive of Diamond Logistics, offers an honest evaluation of the challenges and some advice on how to guide clients during this difficult phase.
With so little time to prepare, the UK was plunged into chaos following the conclusion of the EU-UK Trade and Cooperation Agreement on Christmas Eve 2020.
This was despite careful preparation by operators like us, Diamond Logistics, ready for both a no deal and a trade deal exit.
With just one week’s notice of what the new trading conditions would be, it was inevitable that the challenges would be numerous.
Despite organising Economic Operators Registration and Identification numbers (EORI) for our 1,000 clients early last year, we have found that carriers are processing them differently, which is leading to system errors.
Delivering to Ireland is proving challenging because to operate in accordance with the new Northern Ireland protocol, operators need an Irish specific EORI number – called an XI number.
However, due to the HMRC site repeatedly crashing – something we experienced over 20 times this week alone – it’s been difficult to attain this. Whilst this doesn’t officially come into play until April, there has already been temporary suspension of services across some carriers.
There has been service suspensions without notice, and we’re also seeing that International clients – especially from China – only just starting to understand the customs rules (in regards to VAT) and withdrawing goods which require fulfilment from the UK and moving them to the EU.
Most problems stem from the EORI number – which requires the addition of two numbers at the end of a standard VAT number – because (allegedly) the EU thinks it’s too short.
If traders were able to use the EORI number, these problems would not have occurred.
The impact on our clients and their EU customers is catastrophic. Put it this way, EU international deliveries represented 9.9% of our revenue in the weeks before Christmas – and now it’s a mere 1.6%.
Here are the key reasons problems are occurring:
- The deal came too late. Despite logistics and haulage businesses doing as much as they could, ultimately, they had under a week to amend systems and update paperwork. This involves tech development which takes time.
- It is incredibly busy at the ports so road-by-Europe is problematic – with new customs issues and COVID-19 testing slowing things down further – the logistics industry is under considerable pressure.
- International clients have only truly understood the customers’ impact retrospectively – and are either deciding the UK isn’t a worthwhile market until it’s sorted out – or have moved goods to the EU for fulfilment.
How to alleviate the challenges
- Ensure you have your EORI number and apply for your XI now if you deliver to Ireland.
- Send by air, not road.
- Use a logistics supplier which has built in/system led customs documentation. This way, as long as you have your EORI number, you don’t have to worry about the documentation (as it is done for you.)
- Hold more stock if your suppliers are EU based to safe proof against future delays.
- Use logistics providers who use multiple carriers to distribute goods. So if one fails or stops/reduces services, you have multiple alternative choices.
- Communicate with your clients, inform them in advance of potential delays. 24hr delivery to the EU – which was standard – has become a huge challenge.
It’s worth remembering that the UK has traded in this fashion with the rest of the world since ‘day dot’. I think the EU has made it challenging, but any good logistics provider should be able to guide clients through this difficult phase.