The Government has now published details relating to the UK’s departure from the post-Brexit transition period on 1 January 2021. The European Union has now been formally notified that Britain will not seek any extension to the transition, and a number of new border controls and procedures will come into effect next year.
However, in recognition of the challenges that are likely to be presented by the coronavirus pandemic and its aftermath, the new system will be introduced in three stages.
- From January 2021, traders importing standard goods will need to prepare for basic customs requirements, such as keeping records of imported goods. Businesses will have up to six months to complete customs declarations. While tariffs will need to be paid on all imports, payments can be deferred until the relevant customs declaration has been made.
- From April 2021, all products of animal origin and all regulated plants and plant products will also require pre-notification and the relevant health documentation.
- From July 2021, traders moving all goods will have to make declarations at the point of importation, pay any necessary tariffs and complete full safety and security declarations.
The Freight Transport Association (FTA) has welcomed the Government’s decision to stagger these changes, saying they provide welcome clarity to logistics firms. The FTA’s head of international policy, Alex Veitch, said ‘Government has listened to our concerns and made allowances to enable our sector to recover from the coronavirus pandemic and plan effectively and in good time for a new trading relationship with Europe.’
Meanwhile, the FTA is asking ministers to continue its extension of permitted delivery hours, in particular given the recent reopening of non-essential stores in England. The FTA’s policy director, Elizabeth de Jong, said: ‘We are urging Government to continue the relaxation as the nation emerges from lockdown to support economic and societal recovery from coronavirus. With non-essential retail units permitted to open, we expect to see demand for products increase significantly. Continued flexible delivery hours will allow logistics businesses to stock shops safely and efficiently while keeping up with demand.’
De Jong added that, given the Government’s plans to reallocate road space to cyclists and walkers, it will be even more important for logistics firms to be able to make deliveries outside of normal hours.
Warehouse capacity under pressure
As ecommerce booms in response to the pandemic, warehouse capacity is likely to be strained around the world as businesses attempt to protect themselves against supply chain issues. In a new report, Prologis and CBRE estimate as much as 200 million square feet of extra space will be needed in the United States alone.
Sailings continue to be cancelled
Despite many countries starting to relax lockdown policies, we’re still seeing many scheduled sailings cancelled. 23% of sailings between Asia and Northern Europe have been cut so far this month. These cancellations allow shipping lines to maintain high rates, with costs on US to Asia routes up 26% last week following falls in May.
The crisis has accelerated the take-up of digital solutions to replace more labour-intensive activities. In India, for example, the Government has given the go-ahead to the introduction of digital bills of lading in a blockchain-based pilot scheme on the CargoX platform.
As demand for personal protective equipment in Europe eases, air cargo capacity from key locations in China has started to become more readily available. Allied with an increase in passenger flights freight rates have started to fall, a trend that we expect will continue for the foreseeable future.
Rail as a viable alternative
Rail routes connecting China to Europe have seen a strong rise in demand as air and sea capacity has fallen. In May, the volume of freight going from Germany to China rose by 44%, largely driven by shippers looking for consistency of supply. According to statistics from the China State Railway group, eastbound volumes reached 43,000 TEU in May, with 477 trains departing, a 37% increase over April’s figure.
How Santander can help
All of the issues covered in this week’s update have the potential to impact our clients’ international supply chains. We work with a number of logistics partners with specialisations in particular markets or sectors. We’re especially keen to hear from any clients facing supply chain difficulties. Our partners are happy to provide impartial advice on a range of potential solutions that might help you overcome such challenges.