Brexit Problems Are Likely to Produce an Exodus to EU

UK – EUROPE – A growing number of British online retailers are seeking to ease the extra customs and tax administration and costs involved in trading with the EU by shifting stock from UK warehouses to storage facilities on the Continent according to one logistics company boss.

Charlie Walker, marketing director of online fulfilment and logistics services specialist, Walker Logistics says that by fulfilling orders from distribution hubs located within mainland Europe, UK exporters are able to avoid the need for their EU-based customers to pay the VAT charges and customs duties which have been effective since 1 January.

The result is a slow bleed of trade across the Channel and Walker also believes that it is not just British companies that are opting to use European warehousing, he believes US and Asia-based traders who export to Europe are choosing to shift stock out of the UK too. He comments:

“The addition of VAT, customs duties, and in some cases tariffs, on shipments sent from the UK to customers across the channel, not to mention delays at ports and increased shipping costs, are prompting many businesses, including e-commerce firms, to reconfigure their European supply chains. The changes to the tax regime are driving many online retailers and their logistics service partners to conclude that they have no option but to invest in distribution networks within the EU.

"[Additionally], under the ‘rules of origin’ criteria that form part of the Brexit agreement, products that are not made in Britain, attract tariffs when re-exported from the UK into the European market. So, by bringing products that are produced outside the EU and destined for the European market directly into the mainland, rather than exporting to the UK and re-exporting to the EU, companies can make significant tax savings.

“The nation has, understandably, been so obsessed with the pandemic that the delays to freight at British ports since the start of this year have not been as big a story as they otherwise would be. It is frankly incredible that despite the long run up to Brexit, since the start of this year the increased bureaucracy involved in servicing customers in Europe, seems to have taken many exporters and courier companies by surprise. Everyone knew Brexit was coming so why didn`t couriers get their act together?”

Walker agrees with the oft heard argument that the government failed in its sworn obligations with regards to negotiating a sensible deal for groupage shipments, pointing out yet again that if just one parcel on a truck is lacking the correct paperwork then the whole truck can be held up at the border and potentially turned around and sent back to the depot.

Prior to suspending its UK-EU services parcel carrier DPD said that 20% of the consignments it was carrying had incorrect or incomplete data attached. To help online retailers and other exporters overcome the tax and customs issues and port delays, a number of UK order fulfilment, warehousing and logistics companies, such as Walker Logistics themselves, are promoting the benefits of warehousing in Europe.

At the start of this year, the company signed a partnership agreement with Dutch third party logistics services provider, RIF Europe. The deal allows Walker to offer its clients the opportunity to hold stock and fulfill orders bound for mainland Europe from RIF’s multi-user distribution hubs, which are located on the outskirts of Amsterdam close to Schiphol Airport.

Logistics companies are by nature fast on their feet and adaptable and in the coming months we may see more UK freight related enterprises quietly shift operations across the water.