COMING, READY OR NOT
For business leaders in every sector, over the past six months it has been almost impossible to focus on anything but finding the most sustainable way through this sudden and unexpected crisis – and, for most, it will be hard to think about anything else for a long time to come as they battle to protect the futures of their organisations.
Against such a dramatic and damaging backdrop, every business can be forgiven for letting Covid-19 dominate their thinking. They have shareholders to satisfy, customers to support and jobs to protect. Right now, the very survival of companies of every size remains in the balance with no end date in sight to the current crisis.
It’s not surprising then that the previous big talking point for governments and businesses in Europe, and consequently all over the world, has been quietly pushed into the background – but that’s about to become a major problem for companies that are unprepared.
Yes, it’s back – well, actually, it never went away – and time is rapidly running out to prepare for the changes if you’re moving goods between the UK and EU and vice versa. As well as all the obvious financial consequences of not being able to trade seamlessly in these major markets, failure to have all the necessary requirements in place may also play conveniently into the hands of Organised Crime Groups targeting supply chains because, as TAPA members know only too well, anything which disrupts, slows or stops the physical flow of goods often presents a ready-made opportunity for cargo thieves.
Last month, a leaked letter to trade bodies from UK Cabinet Office Minister, Michael Gove, warned of the risks for traders which are not ready for EU border controls.
As TAPA often states, ‘trucks at rest are trucks at risk’. Michael Gove’s letter reportedly estimated up to 7,000 trucks carrying goods from the UK to the EU might face delays of up to two days at the Port of Dover after the Brexit transition due to border controls, regardless of the outcome of future relationship discussions which continue between UK and EU leaders.
The British government is said to estimate that between 40% and 70% of trucks travelling to the bloc on 1 January 2021 may not be ready for the new border controls. Adding to the confusion and likely congestion is the lack of capacity at French ports. Clearly, some businesses so overwhelmed by the pressures of Covid-19 might be gambling on the outcome once the New Year arrives, hoping that the warnings and forecasts were actually far worse than the reality. Such thinking may be the biggest risk of all.
So, what potential supply chain security risks should companies be prepared for, before and after the end of the Brexit transition period on 31 December 2020? Vigilant asked Jason Breakwell, Vice Chair of TAPA EMEA and a senior executive in the road transport industry, for his insight…
There are some potential security risks to be prepared for, before and after the end of the transition period on 31 December 2020.
“Any truck arriving at a border without correct or complete declarations will need to wait whilst any irregularities are fixed. This could cause congestion in port areas and, in worst case, queues of trucks on access roads, especially in Kent. Trucks could become trapped in lines of stationary traffic and be at risk of cargo theft. Trucks may need to be parked up until correct declarations have been made and this could reduce parking capacity in the few safe zones available to drivers on routes towards ports in the EU and UK. Drivers may not be able to reach planned safe zones if they are delayed by unexpected Customs problems,” he says.
The best practise, he adds, is simply to ‘be prepared’. “Ensure all Customs, safety/security (and sanitary, if applicable) declarations are made in advance of arrival at the border. This will enable trucks to access the green channel and avoid any potential delays.”
Breakwell also highlights:
· Trucks driving towards the Kent ports of Dover and Folkestone without a Kent Access Permit will need to park further inland until the permit has been issued. You need to ensure trucks are parked in safe zones;
· In anticipation of congestion around the short sea terminals at Calais, Dover and Folkestone, some traders are already recommending or even mandating use of longer ferry routes, for example across the North Sea or from/to ports in north west France. It’s important to note the ports of Calais and Dover and Eurotunnel have confirmed they are fully prepared and don’t expect delays. However, if you will be using alternative routings, you need to assess risks on these routes and plan a back-up in case your truck misses a booked ferry. Most of the longer ferry routes are only operated once or twice per day and there is extremely high demand for capacity, especially for driver accompanied services which may need to be booked at least 48 hours in advance;
· Due to the uncertainty surrounding the final EU/UK trade deal, exporters and importers may increase trade volumes before the end of 2020 to boost inventory levels, which could lead to a spike in demand for transport capacity and the risk of subcontracting pyramids, which have been known to be infiltrated by bogus transport companies;
· Carriers (hauliers) will be responsible for the Safety and Security declarations that will be necessary next year. You may need to implement contractual agreements covering the exchange of data and also liability in case of false or incomplete declarations that could result in demurrage and Customs penalties;
· Customs controls can result in higher levels of criminal activity, for example fraudulent declarations and smuggling.
Even so close to the deadline, so much is still undecided. More will obviously become clear in November and December, but four facts are already clear and should be in no doubt:
· Regardless of the final deal between the EU and UK, Customs controls will apply from 1 January 2021;
· In addition to mandatory Customs declarations for all goods exported and imported, there will be other new procedures which shippers and traders need to be ready for;
· Due to the very late formulation of requirements, ongoing trade negotiations and no EU/UK road haulage agreement so far, some of the services and systems are not yet tested or available for hauliers and traders to become familiarised with;
· As a consequence, some traders and hauliers will simply not be ready and some vehicles will need to stop at borders to complete or correct procedures, causing congestion and, therefore, heightened risks around ports.
Don’t be misled by the status quo which has existed throughout 2020 to date. As part of the 12-month Withdrawal Agreement between the UK and EU, although the UK is no longer a member of the EU, it has continued to be subject to EU rules and remained a member of the single market and Customs union. Once this transition period ends at 23:00hrs UK time on 31 December 2020, Customs controls will apply to UK and EU trade for the first time since the single market was introduced in January 1993.
One of the drivers of the transition period was to provide time to initiate, develop and test systems and procedures to manage the predicted 400 million Customs entries per annum for the 43% of UK exports going to EU countries and the 51% of UK imports from the EU. An estimated 180,000 traders will be making Customs entries for the first time next year, so if you haven’t already given this sufficient priority, it is now going to be an immense challenge to employ and train staff, file the necessary applications and prepare for new practises, especially as some processes are still not ready or fully transparent.
You’ll find more details in the UK government’s Border Operating Model. Click here to download the publication.
If your company exports goods from the UK to EU, you’ll need to be prepared for a number of significant changes:
· You will need a GB EORI number to trade with the EU – click here for more information https://www.gov.uk/eori
· There will be changes to Incoterms which define how goods will move, who will pay the freight charges and transit insurance
· Commodity codes will apply for all goods moved – see more here https://www.gov.uk/trade-tariff
· These codes need to be shared with your freight agent/logistics service provider (LSP) who you must contract to make Customs declarations on your behalf
· Your freight agent/LSP should be able to give advice on the production of Commercial Invoices which will be needed to generate Customs and border declarations
· Your transporter will be required to make safety and security declarations for all movements into the EU, including Ireland, from 1 January
· Sanitary or phytosanitary (SPS) declarations will also become mandatory from 1 January for movements of animals, products of animal origin, plants and plant-based products. Inspections will be done at the port of entry to the EU
· Customs, sanitary and security declarations can be made in advance of arrival at the border and this method is recommended to minimise friction.
If you’re a road transport company moving goods from the UK to EU, you will also need to be prepared for some important new procedures from 1 January 2021:
· You’ll need a UK EORI number – find out more here https://www.gov.uk/eori
· You’ll also need an EU EORI
· You must ensure that CMRs are completed more thoroughly, including a full description of commodities
· UK-based drivers will need an International Drivers Permit
· UK-based drivers will need a passport that is valid for at least six months
· UK hauliers may need an International Operators License or possibly ECMT permits. Cabotage may not be permitted in EU member states. Carriage of loads between two member states may also not be permitted for UK hauliers. These points are subject to the ongoing EU/UK negotiations
· Your drivers will need to have the TADs (Transit Accompanying Document) for goods travelling under Transit (NCTS)
· A “pre-lodgement” model will be implemented at Ro-Ro ports using the GVMS (Goods Vehicle Movement Service). Hauliers will need to use GVMS to obtain a GMR (Goods Movement Reference) (see separate panel)
· A “Smart Freight” System (SFS) called “Check an HGV is Ready to Cross the Border” will be used from 1 January to help hauliers assess safety and security risk and confirm they are ready to cross UK – EU borders (see separate panel)
· You’ll need to register each movement via the portal of the Customs authority of the first country of entry to the EU (examples below) and you’ll need the Customs MRN to do this.
· Safety and Security Declarations (also known as Entry Summary Declarations or ENS/ICS) for all shipments will be mandatory from 1 January. Whilst the haulier will be responsible for these declarations, the exporter, their freight agent or their LSP will probably make the declarations as they have more detailed shipment data. Clear guidance for all routes is not yet in place but these declarations will need to be done in advance of export movement.
You can register here to receive UK government updates via this link https://www.gov.uk/transition
GVMS and ‘Check an HGV is Ready to Cross the Border’
It is still not clear when GVMS will be ready or when it’s use will become mandatory. The current understanding is that it will be mandatory from 1 January for all transit (NCTS) movements for EU/UK and UK/EU, and also all GB/NI, movements. Full introduction of GVMS is expected by 01 July 2021.
Hauliers will be able to access GVMS via a web portal or by integrating their software with an API. Once operational, hauliers will need to declare Customs MRNs, SSDs (and SPS references if applicable) to obtain a finalised GMR (goods movement reference). Ferry operators and Eurotunnel will not accept booking requests without a finalised GMR. The UK government recently announced GVMS software integration will not be available until December. TAPA will share the GVMS link when it becomes available.
The UK government also announced this month that the ‘Check an HGV is Ready to Cross the Border’ service will be available by late December. Hauliers can already participate in tests by following the ‘Contact us’ link here https://check-an-hgv-is-ready-to-cross-the-border-demo.fbplatform.co.uk/
This service will help hauliers ensure they have the correct declarations for each truck exiting the UK. Access to the county of Kent in south east England will be controlled for trucks using the ports of Dover and Folkestone. These trucks will require a ‘Kent Access Permit’ and failure to obtain a permit in advance of each journey will result in a £300 penalty.
Similar requirements and new procedures will be phased in during the first half of 2021 for companies exporting or moving goods from the EU to UK.
Eurotunnel and French Customs have produced very useful explanations of the new procedures, which are available via these respective links:
Jason Breakwell, who will provide a further update in next month’s Vigilant, said: “The sudden imposition of so many controls in a very short period is unprecedented. Furthermore, the complexities and fragmented nature of supply chains increase the potential risk. The best advice to TAPA EMEA members involved in EU/UK or UK/EU trade, is to research the changes thoroughly, speak with their trade bodies and increase communications with their customers, suppliers, partners and government agencies. There is no more time to waste.”