Wednesday, 6 February 2019

Finally, a ray of hope from HMRC for EU importers post-BREXIT


For months, many of us in the logistics world have been watching the twists and turns of Westminster politics, and becoming increasingly concerned about potential chaos at ports like Dover who handle the lion's share of shipments being transported from the EU, over 7000 vehicles per day (see below). Many of us have probably been shouting at the TV over BREXIT, because we really don't think the government or politicians have a clue about how things work (and therefore aren't best qualified to talk about solutions to things like a post-No Deal scenario).


I went to a very well-attended BREXIT presentation at a major forwarder in November who gave the audience the low down - queues around Dover could reach 80 miles - yes 80 miles, so that's clearly a catastrophe as it wouldn't just delay deliveries of incoming shipments, it'd block the regional road infrastructure in the process, no wonder the troops are on standby. Yes, we saw the 88 trucks doing the exercise around Ramsgate for the Transport Minister, Chris Grayling recently but for most of us in logistics, it seemed like window dressing to show the UK was ready for "no deal", and it wasn't at all convincing.


Of course, we're in the single market for another 50 days and today, it's a slick operation and the key thing is that the most trucks flow through cursory checks at Dover in 2 minutes, so that's great. And if you're an importer, you'll take delivery of your shipment from Europe a couple of days after that, so everyone's happy.

One thing the media and government seem to have failed to realize is that many of the incoming vehicles are operated by so called "groupage operators", which means that a truck may contain 40-60 shipments for various UK customers and in a no-deal scenario, that would mean that each and every shipment would need to be Customs cleared as each shipment would be treated just like a shipment from the USA or China and so import duty and VAT would need to be paid.


Interestingly, we have customers ourselves who import from the EU, where the goods have been held by their Asian supplier in a Customs bonded warehouse in the Netherlands. These goods have what's known as T1 status (they're not in Free Circulation within the EU) and so a Customs entry is completed for that shipment and duty and VAT is paid in the country of destination, but it delays the shipment by a day or so.

Now imagine what would happen if every shipment had to be cleared....if just 25% of the 7000 vehicles are groupage trailers, then we're talking almost 93,000 Customs entries per day, and because we've been in the Single Market since 1993, there aren't enough qualified Customs brokers at road freight operators or Customs officers to cope with this workload.

Clearly, HMRC knew it was going to be a potential car crash on 30-Mar. And so, finally, a ray of hope appeared yesterday in the form of a pretty low-key announcement from HMRC (who would of course be concerned about the thousands of new Customs declarations required should we leave the EU on 29-Mar in a No-Deal scenario) although they claim to have written to all of 145,000 companies who import from the EU.

Here's the thing, HMRC have recognised that a No Deal scenario would cause chaos and so they have announced a new regime called "Transitional Simplified Procedures" and what it basically does, is take away the need for clearances at ports like Dover so shipments can continue to flow freely, and they'll place the onus on importers to pay any duties and VAT the month after arrival. They'll need to set up a direct debit to do this, sounds like a simpler version of a Customs deferment account to me. How it'll work operationally isn't clear because of course, the freight forwarders will need to know who is and who isn't approved for the Transitional Simplified Procedures when one of their trucks arrives at Dover but this will hopefully be worked out in the next 50 days...talk about last minute!

So here's what I recommend that you do.     
1.     

Step 1

Check first that you have an EORI number (Economic Operator Registration & Identification). If you're an established small-mid sized business, you will have a VAT number, and the EORI is just an extension of that. So your VAT number may be 123456789 but your EORI number would be GB123456789000. To confirm if you have an EORI, enter the longer sequence into the EU database as one string using the below link and it will tell you if that EORI is valid. You will see that I have entered an erroneous VAT number GB123456789000 and the result shows invalid. If it's valid, then you can apply for the Transitional Simplified Procedures, go to step 2. If not, you need to apply for an EORI number, and this will be worthwhile even if you don't apply for TSP as I am seeing several road freight operators asking clients for this info in the last month so get ahead of the curve. In section 3 below, I will provide instructions below on how to get an EORI number.


 Step 2 

Apply for Transitional Simplified Procedures. This is a new regime, fresh out of the box and the website only opens tomorrow, Thursday 7th February so I can't tell you much more than to check this link from Thursday onwards and get your application in.

https://www.gov.uk/government/news/hm-revenue-and-customs-simplifies-importing-from-the-eu-as-part-of-no-deal-preparation


Step 3
1.      So you don't have an EORI number? Don't panic, but don't hang around as many companies will start realizing the implications in a week or two as the fear factor ramps up. Here's the link to apply for an EORI number.

https://www.gov.uk/eori

We're keeping a very close eye on BREXIT developments as you can imagine so I'm sure there'll be more we can share over the next few weeks, and hopefully we won't go over a Cliff edge pardon the pun!

One last thing, we are carrying out this process for all of our existing customers, even though we don't focus on EU road traffic and tend to be far more involved in air and ocean traffic to/from Asia or North America - it's best to be prepared I always think, especially right now.
If you need any more guidance or support, just drop me a line, I'll try to help.


Kind Regards




Andy Cliff






















Tuesday, 24 July 2018

A perfect storm is brewing in UK logistics - and it's not BREXIT

A dramatic headline, and for good reason. For those of you who import and export, you quite understandably just want to ship your exports and take delivery of your imports in a timely and cost-effective way, and for this you will use the services of a freight forwarder (or logistics service provider as we like to say these days). The LSP does quite a lot behind the scenes to ensure your shipments move as smoothly through the various channels, be they physical (deliveries and collections, ports and airports, warehouses) or electronic (declarations made to HMRC or bookings made with shipping lines and airlines) and it all works, because LSPs live in that world and become very adept at making it happen, and hopefully keeping you as a customer, happy.
So that's all good. So when it comes to Customs, there's a lot of engagement between LSPs and Customs on your behalf, most of it unseen and very often not fully understood. Let's take an import from the USA or China for example. The goods need to be Customs cleared at the port/airport of arrival and a declaration made to the Customs IT system (which is called CHIEF - Customs Handling of Import and Export Freight) via a software package they will use. This is what's known as a Customs entry and once processed, a calculation is made to arrive at the appropriate amount of import duty, VAT and any other duties which the importer must bear. The entry could be a simple one, where goods are destined for UK/EU clients (so called Home Use) with just one commodity code (say a hydraulic pump) but it can also go the other way, with up to 30-40 tariff headings relating to various products and different procedure codes (some goods Home Use, some goods for re-export (Inward Processing) so then it gets more complicated - but still very do-able by a seasoned Customs broker at your freight forwarder.
Why all that detail you may say? I am trying to create some context here because CHIEF is being replaced by a new IT platform, CDS (Customs Declaration Service) from August-18 (yes next month) on a phased launch. I had heard a little about CDS and understandably wanted to know more, and so I went to a seminar in Warrington in late June , along with around 100 others from the Northern logistics community to learn about CDS and how it will impact everyone involved, and more importantly, what we need to do to prepare. I should add here that Customs call freight forwarders or logistics service providers CSPs (Community Service Providers) just to confuse matters more!
The seminar was very professional but within 30 minutes, people who work in the front line, and know the current systems extremely well were clearly concerned about the breadth and depth of the proposed changes, and when a HMRC presenter said "with CDS, these changes will be quite profound" this confirmed people's concerns.
The upshot here is that this phased launch starts Aug-18 and is planned to be fully implemented by Jan-19 so the timing isn't ideal, as if we make a so called "hard BREXIT" and leave the EU without a deal in March 2019, we will have to cope with two major changes around the same time, the so called perfect storm in my title.
CDS and the new tariff will need to cope with that. Even if you disregard BREXIT, the problems many of us saw at the seminar was that despite a huge amount of work going into the project within HMRC:-
  • The new system seems to be unnecessarily complicated from a declaration standpoint - for example, a Customs entry will go from 54 completion fields to around 80 (and up to 130 in some cases).
  • It will require considerable training to take place so that the whole community is aligned and ready, and it seems so far that there has been only limited engagement with a handful of "test" freight forwarders and almost none with UK importers and exporters apart from a vague letter in March which is attached below.
  • The Customs tariff (library photo of ours shown above), which across its 3 volumes is the bible for UK import and export Customs procedures, classifications and duty rates, and has been well understood for many years will also be replaced and we still await a draft version which will be another major change to digest and incorporate into the new procedures
  • Software providers are still working with HMRC to create packages which will allow forwarders to make declarations in the new environment, but I imagine the lack of engagement with stakeholders and ongoing EU negotiations will cloud the issue and cause more delays and confusion
  • There are 145,000 companies who purely trade with the EU and in the event of a "no deal" scenario, these companies would suddenly have to become conversant with formal Customs entries - and CDS. So far, Customs haven't engaged with this group.
  • Compliance - we carry out Customs compliance work for many customers and for this, we need supporting shipment and Customs entry documents (C88/E2 etc) to confirm accuracy of declarations. When we asked whether CDS would be able to continue generating these Customs documents, no one could confirm if it could, a major concern
  • Many questions were put to the panel with several from myself however most of these were take aways "we'll have to look into this", another concern for the audience
To summarize, I saw a report from the National Audit office the other day, which was rather worrying in itself, as it said that the CDS project is behind schedule and HMRC are unlikely to deliver the project on time.
I quote from their report in late June "Significant challenges remain and there is a risk that CDS will be unable to fully replace the existing CHIEF (Customs Handling of Import and Export Freight) system by January 2019".
Furthermore, they will be developing and testing the system at the same time as it migrates users (alarm bells now ringing...). They also won't know if CDS actually works in a live environment until it has implemented all the functionality in December 2018, more cause for concern.
I also attach a letter one of our customers received from HMRC which warned them about CDS but in truth, it doesn't tell you much at all!
So my advice to you is to start talking to your freight forwarder or Customs broker so they can tell you what stage they're at, what preparations they understand that you will need to make (such as updating commodity codes for your products) and hopefully we won't have to deal with logistics delays and disruption in early 2019, although I have to say that today, along with many other professionals at the seminar, I remain extremely concerned that we will.

Tuesday, 13 June 2017

Andy Cliff joins the judging panel for the prestigious 2017 BIFA Freight Service Awards in London!

Good afternoon All

It's been a while since our last blog however there's a good reason - we've been extremely busy with two new customers who have significant volumes of air and ocean freight traffic from Asia and the USA. We're currently in the initial review stage for a food importer and following an RFQ process, in the implementation stage for a company in the printing industry, where we've revealed annual freight savings of around 27% / £ 130,000 and as you can imagine, they are extremely pleased with the results!




Back to the reason for this latest blog post. For the last 2 years, we have been on the judging panel for the Lloyds Loading List Global Freight Awards which we've thoroughly enjoyed, however this year, we've been invited by BIFA to join their judging panel for the prestigious 2017 BIFA Freight Service Awards in London.

Naturally, we're really pleased to be part of this process, especially as the British International Freight Association (BIFA) is the leading industry body for the UK logistics industry and most reputable forwarders regard membership as absolutely vital, given that BIFA often lobby government on transport and logistics issues and ensure that our industry has a professional voice.

Please do take a look at our Straightforward Consultancy website, it’s straightforward, clear and concise, we wrote it in plain English as there’s enough confusing logistics/industry terminology out there and it makes the task of managing your international logistics even more daunting!



Andy Cliff is an industry professional who launched his own logistics consultancy, Straightforward Consultancy Ltd (SCL) after a 30 year career in international logistics, working for companies such as DB Schenker, Kuehne & Nagel and DHL Global Forwarding in operational, sales and management roles.

Andy felt that in an increasingly complex and confusing world of logistics, UK importers and exporters needed a company alongside them which could help them to reduce costs, lessen their workload and provide expert advice and support day-to-day.

Andy was part of the judging panel for the 2016 Global Freight Awards, his second year in this prestigious role and now joins the judging panel for the 2017 BIFA Freight Service Awards in London. The awards recognize quality, innovation and performance in the field of international logistics.


Tuesday, 2 May 2017

Straightforward Consultancy makes the front page of leading logistics publication, Freight Business Journal!

It's always a pleasure to meet up with Chris Lewis, the editor of leading logistics newspaper, Freight Business Journal, and when we arranged to meet in March 2017 as part of their feature on logistics and the freight marketplace here in the North West of the UK, we had plenty to catch up on. 


This was actually the second time Chris had interviewed me, the last time being in Spring 2016 for a similar feature. 



One of the main talking points this time was the double whammy which has hit UK importers from China in particular, as we had the large fall in sterling against the dollar (-20%) following the UK referendum in June 2016 and also a continued rise in ocean freight rates, which accelerated after the large shipping line, Hanjin Shipping collapsed last Autumn. I have attached a photo of the front page and please let me know if you would like a copy of the full article, it's well worth a read, with other contributors featuring too.
If you recognize the scenario that I describe, rising costs and a feeling that you’ve lost control of your logistics costs and/or service, not just from China but maybe the USA, why don’t you give us a call – we understand what it’s like to be an importer or exporter and more than that, we have a vast amount of knowledge and real world experience, have probably helped a company just like yours and could also take all that work involved with a review from you, reduce your costs, improve your compliance and tailor the service provided by a new logistics provider to your individual needs.

Not only that, we offer shared savings models which means that we do all the heavy lifting and you see the service, communication, financial and other benefits without having to become overly distracted from your primary role. It’s what we do and we’re good at it. So please do give us a call, as they say, nothing ventured, nothing gained.

Take a look at our Straightforward Consultancy website, it’s straightforward, clear and concise, we wrote it in plain English as there’s enough confusing logistics/industry terminology out there and it makes the task even more daunting!



Andy Cliff is an industry professional who launched his own logistics consultancy, Straightforward Consultancy Ltd (SCL) after a 30 year career in international logistics, working for companies such as DB Schenker, Kuehne & Nagel and DHL Global Forwarding in operational, sales and management roles.

Andy was part of the judging panel for the 2016 Global Freight Awards, his second year in this prestigious role. The awards recognize quality, innovation and performance in the field of international logistics.


Andy felt that in an increasingly complex and confusing world of logistics, UK importers and exporters needed a company alongside them which could help them to reduce costs, lessen their workload and provide expert advice and support day-to-day.

Thursday, 6 April 2017

Visiting Multimodal 2017 at the NEC this week?

Visiting Multimodal 2017 at the NEC this week?

The Multimodal exhibition is well worth a visit as it’s very compact and you can visit the stands of many companies, be they logistics providers, shipping lines, freight publications or even port operators such as Liverpool or DP World.

Of course, if you’re an importer or exporter, you can talk with the people from the logistics providers who are there (there’s usually around 5-6 well known ones) although they will often be fairly senior and from their London office, so will rarely be the people you would need to meet and discuss your traffic, needs, frustrations etc.


So, it’s certainly worth visiting and you will no doubt come away with a carrier bag full of brochures and giveaways – and I think there lies the dilemma – you walk away armed with info, ideas and great sales pitches but what are these companies really like to work with and are they even competitive from a rate and service perspective.


Furthermore, you may do what many of us do, put the brochures in your “to do” tray, fall back into the cut and thrust of day to day operations within your business and do nothing and before you know it, a month has passed.

If that’s you, why don’t you give us a call – we understand what it’s like to be an importer or exporter and more than that, we have a vast amount of knowledge and real world experience, have probably helped a company just like yours and could also take all that work involved with a review from you, reduce your costs, improve your compliance and tailor the service provided by a new logistics provider to your individual needs.


Not only that, we offer shared savings models which means that we do all the heavy lifting and you see the service, communication, financial and other benefits without having to become overly distracted from your primary role. It’s what we do and we’re good at it. So please do give us a call, as they say, nothing ventured, nothing gained.

Take a look at our SCL website, it’s straightforward, clear and concise, we wrote it in plain English -  there’s enough confusing industry terminology out there and it makes the task even more daunting!




Andy Cliff is an industry professional who launched his own logistics consultancy, Straightforward Consultancy Ltd (SCL) after a 30 year career in international logistics, working for companies such as DB Schenker, Kuehne & Nagel and DHL Global Forwarding in operational, sales and management roles.

Andy was part of the judging panel for the 2016 Global Freight Awards, his second year in this prestigious role. The awards recognize quality, innovation and performance in the field of international logistics.


Andy felt that in an increasingly complex and confusing world of logistics, UK importers and exporters needed a company alongside them which could help them to reduce costs, lessen their workload and provide expert advice and support day-to-day.

Wednesday, 8 March 2017

Rising fuel prices will feed into freight and logistics costs for UK importers and exporters

It's one of those very gradual changes that you may have only just begun to notice - but here in the UK, unleaded petrol fell to £1.00 per litre at the end of 2015, as crude oil prices fell to a seven year low.

Unleaded petrol falls to £1.00 per litre!

Since then the price has been inching up, to the point where we're now over £1.20 per litre - pretty annoying if you use your car to do a daily commute - but also remember that these increases are already feeding into logistics costs. I took this photo only this morning here in Warrington where our company Straightforward Consultancy is based.




With ocean freight, we are seeing rises in bunker adjustment factor (BAF) a variable surcharge applied on top of core ocean freight rates and this is at the same time that the US dollar is at a historic all time high - circa USD 1.20 - why does that matter?

Because freight rates and surcharges for ocean are constructed in USD so there's a double whammy going on here. Even after your container has landed (or before it's loaded for export) fuel surcharges linked to container collection and delivery costs are being affected as most shipping lines and freight forwarders will have a base delivery price (lump sum) with a variable factor for fuel surcharge, so another area where fuel prices are increasing your costs.




On the air freight side, fuel surcharges are affected as jet fuel prices have a direct link to the price of crude and again, most air freight rates are constructed in US Dollars.




So, do yourself a favour and find out exactly what you're being charged by your logistics provider - and if our experience since 2010 is anything to go by, you're probably paying around 35% more than we could achieve and you may not have proper controls in place to ensure your freight costs remain market competitive. 

Why do I say that? Because we see this, month on month and it's a shame, because you really should ensure that you have a tight control on this area, not just because of basic financials, but also from a Customs compliance angle too - you could be wasting money on unnecessary import duties because of a loose or out of date process. Or worse, under-declaring to HMRC and risking a large fine.






Andy Cliff is an industry professional who launched his own logistics consultancy, Straightforward Consultancy Ltd (SCL) after a 30 year career in international logistics, working for companies such as DB Schenker, Kuehne & Nagel and DHL Global Forwarding in operational, sales and management roles. 

Andy was part of the judging panel for the 2016 Global Freight Awards, his second year in this prestigious role. The awards recognize quality, innovation and performance in the field of international logistics. 

Andy felt that in an increasingly complex and confusing world of logistics, UK importers and exporters needed a company alongside them which could help them to reduce costs, lessen their workload and provide expert advice and support day-to-day. 

Wednesday, 22 February 2017

USA container port workers plan to march on Washington



Further to our last blog on Logistics Simplified "Clouds Building On The Logistics Horizon", the notoriously militant International Longshoremen's Association, better known as the ILA are in the news again. They have already signaled their intention to fight port automation and strike another generous wage and benefits deal in the upcoming 2018 contract negotiations but are now in dispute with the Waterfront Commission of New York harbour and state port operators in the South East over "government interference" and plan a one day strike – not good!

ILA planning one day strike

This doesn't augur at all well for the ILA master contract negotiations which the ILA have said they would like to conclude before the expiry deadline of September 2018.

Things could start to get fractious and disruptive and if the drama surrounding the last contract negotiations in 2012/2013 is anything to go by, if you export to or import from the USA, you may wish to watch this situation very closely and have a contingency plan.

If you think it won't affect you because you use non-union ports (for example Chester,PA which is served by ICL) then think again, because US importers and exporters will look to alternative options should the union start to strike and threaten disruption.

And the same goes for air freight, as customers will divert ocean to air, so certainly one to watch - as they say forewarned in forearmed!

Just drop us a line of you need any guidance or would like to lean up your supply chain in general, especially in these times of a very strong USD (which has ramped up freight costs for air and ocean).


Andy Cliff is an industry professional who launched his own logistics consultancy, Straightforward Consultancy Ltd (SCL) after a 30 year career in international logistics, working for companies such as DB Schenker, Kuehne & Nagel and DHL Global Forwarding in operational, sales and management roles. 



Andy was part of the judging panel for the 2016 Global Freight Awards,
his second year in this prestigious role. The awards recognize quality, innovation and performance in the field of international logistics.

Andy felt that in an increasingly complex and confusing world of logistics, UK importers and exporters needed a company alongside them which could help them to reduce costs, lessen their workload and provide expert advice and support day-to-day.