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Transport & Logistics

This is the latest update from Santander’s transport & logistics team on how the coronavirus pandemic is affecting our clients and the sector as a whole.

Transport & Logistics

Santander is continuing to work with clients and partners across the transport and logistics sector as they manage the impacts of the coronavirus pandemic.

Many of our partners are also providing invaluable support. For example, the Freight Transport Association (FTA) has set up a new portal to help logistics providers distribute work and connect drivers (read more). The FTA has also launched the #LogisticsHelpsLogistics campaign on LinkedIn and Twitter, which aims to help those working in the sector to find opportunities. Operators are using the campaign to find drivers, for instance. The campaign is open to all businesses, both in logistics and in broader industries.

Another initiative, launched this week by the British International Freight Association, is a useful guide on how to plan for a return to work. Aimed at businesses forced to close temporarily because of the pandemic, the guide goes through the actions that businesses should take as they prepare to reopen. If you'd like further information read more.

New VAT rules for key pandemic supplies

In March, the government announced personal protective equipment and medical devices and equipment would be exempted from customs duties and import VAT. The Customs Declaration Service (CDS) and Customs Handling of Import and Export Freight (CHIEF) customs declaration systems have now been updated to take account of these changes, with VAT no longer charged on exempt goods. However, officials are emphasising that companies must include the correct VAT codes on declarations or risk their goods being rejected or charged the full rate of import VAT.

Assuming shippers submit the right codes, CDS and CHIEF will automatically apply the temporary zero VAT rate on these goods. For further guidance, see the details published on the government website.

IATA seeks to ease air freight disruption

The International Air Transport Association (IATA) has published new guidance detailing measures introduced to help those who use air freight services amid the disruption caused by the pandemic. These measures include:

  • A grace period of up to 10 days for Worldwide Cargo Account Settlement System (CASS) payments (though this depends on the jurisdiction where the payment is due). Overdue payments can still be made in CASS within the grace period before IATA is required to take default action, though the association says it’s vital that payments to airlines are made in a timely manner to make sure air cargo keeps flowing.
  • The publication of new guidance – Temporary Extension to Dangerous Goods Training Validity – based on updates from governments worldwide. This details how different governments are supporting businesses struggling to complete essential dangerous goods training in line with the normal rules and deadlines.
  • Temporary free access to online versions of IATA’s Air Cargo & Tariff Rules manual and the Dangerous Goods Air Transport Manual. The former is available until 31 October while the latter is free until 30 June. See the links for details.

Freight remains challenging

More broadly, with significant capacity issues ongoing, air cargo rates remain at record highs across most key markets. While more airlines have started to run freight-only flights, capacity cannot keep up with demand and priority is being given to essential items. For example, demand for personal protective equipment from China is causing delays at Shanghai Pudong Airport, with delays and backlogs expected to continue until at least late May.

Shipping lines are also still being impacted, with 38% of planned Asia to North Europe scheduled sailings cancelled last week. Continued blank sailings could impact capacity on Europe-to-Asia routes just as the former starts to come out of lockdown. Rates remain relatively stable on Asia-to-Europe trade lanes, though the spot rate increased slightly last week and with fewer sailings, customers will have less choice. This may mean higher costs for using alternative ports or for port storage charges.

Some leading shipping lines are also re-routing vessels on the Europe-to-Asia trade route amid the continuing fall in demand on backhaul shipping from Europe. Vessels are travelling around the Southern Cape of Africa, rather through the Suez Canal. Although this is a longer journey it reduces costs overall for shipping lines – but it will add at least a week to sailing time for some clients exporting to Asia.

Santander works with a wide range of clients and partners across international supply chains. For any clients facing specific supply chains, our partners are happy to provide impartial advice and guidance. Don’t hesitate to get in touch if you need help.

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