Friday, March 12, 2021

Brexit Freight Flow Summary Can Be Perfectly Described as Lies, Damn Lies and Statistics

Government Rejects Criticism from Logisticians but Somewhere the Truth is Out There
Shipping News Feature

UK – The latest arguments surrounding the success or failure of Britain's exit from the European Union contains more eddies and undertows than the fabled Maelstrom of Saltstraumen. In a week when comments flowed over the government decision to extend the deadline for introducing checks and customs formalities on imports, the Cabinet Office fought back at criticisms from the road haulage lobby.

New checks on products of animal origin and plants, as well as full customs declarations at the point of importation for goods coming from the EU are to be postponed by six to nine months, something welcomed by the bulk of the UK freight and logistics community. First though to that spat with the Road Haulage Association (RHA).

In September 2020 the RHA, along with all the major industry representative bodies, BIFA, Logistics UK, UKWA, CILT, BAR, BVRLA and the Cold Chain Federation, wrote to Chancellor of the Duchy of Lancaster, Michael Gove MP, casting doubt on the country’s preparedness for Brexit. The RHA then followed up with a survey, the contents of which the government has now hotly disputed.

The full government response can be read here, but in essence the statistics vary wildly. While the RHA says exports via British ports fell by 68% in January 2021 compared to 2020, the retort is that In the last full week (30 Jan to 5 Feb) both outbound and inbound flows (across all UK ports) were close to normal, at 95% outbound and 96% inbound, in spite of the impact of Covid lockdowns on trade.

Richard Burnett, Chief Executive of the RHA told the Observer that in addition to the 68% fall-off in exports, about 65%-75% of vehicles that had come over from the EU were going back empty, while the government says the figure is circa 50% and entirely normal in terms of traffic. So we turn to the Office for National Statistics (ONS), perhaps a more reliable source of facts which this week said:

Exports to the EU fell by 40.7% in January 2021, equivalent to £5.6 billion less trade with the bloc. Imports from the EU also suffered, declining by 28.8% or £6.6 billion and particularly big declines in imports of cars, medicines and pharmaceuticals have been recorded, while the declines were the biggest monthly falls in both imports and exports from the EU since records began in 1997.

The controversy continued with the government rejecting Mr Burnett’s comments in a letter to Michael Gove on 1 February that offers to facilitate a round table with affected businesses was ignored. The reply came that discussions had been in progress for ‘many months’ via the Duchy led Brexit Business Taskforce, with talks ongoing.

And so it continues, one side saying there had been lack of clarity, a paucity of trained customs agents, insufficient IT and infrastructure, the other denying all saying that all was clearly explained, the customs agent numbers were an arbitrary figure and the IT systems and infrastructure were ready in time and are operating effectively.

Funny that, an arbitrary figure, yet that estimate of 50,000 extra staff was one that Michael Gove himself was happy to quote in Parliament on Thursday 27th February 2020 when he told the House of the number as calculated by the RHA, however this week his office said ‘it is not and never has been a government target’.

In a clear snub to the RHA, Michael Gove’s office says it established a separate working group on the Northern Ireland Protocol and created a ‘very successful groupage pilot on which DEFRA and DAERA partnered with Logistics UK’.

Moving to that change of pace regarding delays to customs formalities, initially, the government intended to phase in new sanitary and phytosanitary import formalities for a large number of products of animal origin on 1 April. Full customs declarations for all imports without any deferment option were to be required from 1 July, as would physical checks at border control posts on so called agrifood products.

This has now all been delayed with Michael Gove saying the process will be delayed ‘six to nine months’, so not exactly absolute clarity there then. The announcement has received a generally warm reception, despite the fact it seems to give the lie to the previous statements that everything in the garden is just rosy. Robert Keen, director general of the British International Freight Association (BIFA) was hardly enthusiastic in his reaction, saying:

"It’s no surprise that the government has extended the deadline for the introduction of checks and customs declarations on imports to the UK from the EU. The experience of our members since January 1st 2021 has clearly shown that large sectors of the trading community have not been prepared for the changes in processes brought in by phase one of the Border Operating Model.

“As the trade association that truly represents the UK’s freight forwarding businesses that manage a large proportion of that trade, we have expressed significant concerns regarding phases two and three of the Border Operating Model; and various Government departments have been unable to provide satisfactory answers to many of these.

“One of the most significant unresolved problems to date relates to Delayed Declarations, something that BIFA has repeatedly warned is a regime that invites non-compliance. Extending the option to use the deferred declaration scheme, including submitting supplementary declarations up to six months after the goods have been imported, to January 1st 2022, just adds to the real danger of non-compliance. It was no surprise to hear that Government was considering the unilateral application of grace periods by the UK on EU to GB trade, so today’s decision is welcome, but equally not surprising.

“The news that government will continue to engage extensively with businesses to support them to adjust to the new requirements already in place and to prepare for the new requirements to come is also welcome. But, actions speak louder than words, and of late, other than departments that BIFA deals with on mainly operational matters, Government has not been talking to trade and the Border Protocol Delivery Group has not held any meetings recently.

“Today’s announcement is clear evidence that political decisions have been made previously that, as we have repeatedly stated, have paid no regard to how visible international trade and the frontier works and what can actually be controlled. It is also proof that the uncertainty caused is of no use to anyone involved in managing the UK’s visible international trade.”

Whilst the RHA obviously concerns itself with the problems experienced by the country’s haulage community, the view of BIFA is the most relevant as regards the documentary concerns, that is the nuts and bolts of preparing and lodging the essential paperwork to keep the supply chain moving. BIFA membership, and the ability to trade under the organisation’s terms and conditions, is essential to give credibility to any freight forwarder.

Others were rather more enthusiastic regarding the delays, with Logistics UK for example issuing a statement from Sarah Laouadi, European policy manager, saying:

”“Alleviating pressures on the supply chain caused by the current pandemic remains the priority for our sector. [This] announcement acknowledges the challenges and mounting compliance pressure created by multiple Covid-19 lockdowns and regulations across different European nations.

”By moving the deadline for the introduction of extra import formalities on goods coming to the UK, the government is providing more time for businesses and authorities to adapt to the upcoming extra requirements, for example by training staff, designing robust business processes to interact with new IT systems and agreeing a new allocation of roles and responsibilities with their supply chain partners. This will protect the UK’s highly interconnected supply chain to keep the nation supplied with the goods and services it needs.

“It is imperative that governments and industry now work hand in hand to make the best possible use of this extra time, to raise the level of readiness for checks both in the UK and in the EU. In particular, Logistics UK is pushing the UK government for a much bigger focus on end-to-end provision of guidance to ease the import process and enhanced engagement with traders, but also hauliers, on both sides of the UK’s border. Today’s announcement will mean that businesses have an extra six to nine months, depending on products, to prepare for these two deadlines while fast-moving Covid-19-related rules hopefully stabilise and are phased out.”

One outfit with a vested interest is, a company which helps forwarders automate their documentary processes and makes the point that paperwork such as Bills of Lading have hundreds of years of history, and supply chain documentation in a faster age might benefit from a facelift. CEO James Coombes expressed views which many in the logistrics industry will share, saying:

“The latest figures show the severe disruption that still exists in the supply chain as a result of Brexit. It’s been more than two months since the UK officially left the EU yet businesses continue to struggle to adapt to the new requirements. As a result, these businesses are experiencing long delays at ports and, in some cases, they are seeing perishable goods go to waste. This is damaging their business and, quite frankly, it’s killing business morale in the supply chain too.

”Indeed the government has already responded to businesses’ concerns around cross-border trade with the opportunity for traders to apply for a grant of up to £2,000 each, which will help them pay for practical support for importing and exporting. These grants are expected to help businesses prepare for the extra import controls for food and agricultural products which come into force later this year. But this isn’t likely to be anywhere near enough.

”If anything, the grant suggested is like applying a plaster to a wound. It doesn’t negate the fact that businesses still need to process the swathes of customs paperwork which demands hundreds, if not thousands, of employee hours. And, right now, there is a huge skills shortage that is yet to be filled. The government promised it would recruit 50,000 custom agents to help with post-Brexit paperwork but only 10,000 have been recruited so far.

”Our own customers are bearing the brunt of the increased form filling too. One freight forwarder has had to hire 40% more staff since the start of the year. For them, the £2,000 grant doesn’t even cover a fraction of the cost. Businesses can’t be expected to just get on with it alone. We need to acknowledge the archaic processes that still exist in the supply chain which are slowing down trade.”

Photo: Beware the vortex that is Saltstraumen.