The UK’s exit from the EU has left a deep impact on industries dependent on haulage from the country, as confusion reigns on everything from the charging of customs duties and VAT to the paperwork necessary.
WhosWho.mt caught up with Franco Azzopardi, CEO of Express Trailers, and Howard Bennett, owner of Trotters Independent Traders, to get an idea of the challenges for B2B and B2C freight services.
“Bureaucracy and paperwork have increased vastly, which leads to a multitude of complications,” says Mr Azzopardi.
The issues operate on two binaries, he explains. “First, there is the issue of the applicable charges on goods, both in terms of customs duties and in terms of VAT.”
“Although the trade deal between the UK and the EU indicates that any cargo originating in the UK is exempt from tariffs, many products we get from the UK actually originate elsewhere. The problem is that such goods are already subject to customs duties when entering the UK, so they are then subject to double tariffs.”
“When it comes to VAT, there is still no clarity on where and how this should be paid, although British companies should not be charging VAT to Maltese customers.”
The second problem relates to freight costs, which have also increased due to the increased paperwork and obligations.
Express Trailers once provided a customs documentation service, a revenue stream that was lost upon entry to the EU. Now, the company finds itself in the position of needing to engage such a service provider in the UK.
“Our UK agent prepares all the necessary documentation, and attaches the cargo to a particular trailer.”
“That means less flexibility for us – if a trailer cannot be dispatched for whatever reason, we’re stuck, needing to re-do the paperwork or wait until that particular vehicle can be dispatched.”
Brexit has also led to tighter cabotage restrictions in the UK, referring to the transport of goods within a country by an operator registered in another country.
Cabotage in the EU has been limited to three stops by the the EU’s Mobility Package 1, meaning that, for example a Maltese haulier can only stop at three locations in Germany before it leaves the country – something Mr Azzopardi has called out as protectionism.
The UK has now limited cabotage to two stops. “The only solution we’ve been able to find is to engage agents in the UK to get our cargo together in one depot. This means we are dependent on third parties, with a related increase in costs.”
Once the cargo has been picked up – by a previously specified trailer, from not more than two locations – the driver makers their way to Dover to cross the Channel.
There, it needs to stop at one of six checkpoints to make sure all the paperwork is in order, where it may also be stopped for a spotcheck.
“Then, once you get to France,” Mr Azzopardi continues, “you need to show the appropriate documents to show that customs duties will be paid in Malta. This means we need our UK customs documentation broker to issue a guarantee to EU governments that the customs duty is insured.”
“That is, if the driver goes AWOL with the cargo, and the duty is not paid in Malta – EU governments are assured that they will be paid regardless through the UK broker’s bank guarantee. Of course, this also represents an increase in costs.”
Express Trailers is also training its drivers to make sure they know how to handle the new border. “We are investing a lot in capacity building to become accustomed to the process,” says Mr Azzopardi. “But there are a lot of teething problems.”
“For example, if there’s defective paperwork, our driver, with their vehicle and cargo, are stuck for two days until everything is sorted out.”
Mr Azzopardi concedes that the situation is very fluid and hopes that as the dust settles over Brexit, things will sort themselves out.
“But for sure,” he says, “there will remain additional costs both on the product and on freight costs. Before there was free movement, now there will be surcharge.”
Turning to B2C services, Mr Azzopardi explains that Express Trailers’ ShipLowCost service has suspended activity from its UK hub. “So far, it’s not worth the additional complexity,” he says.
He has however noticed an uptick in purchases from affiliated companies based in the EU, noting that amazon.co.uk, for example, redirects customers in Malta to the amazon.de website.
“We are already seeing a swing in B2C trade to other countries.”
No such facility is available to Trotters Independent Traders, whose business is entirely in UK to Malta consumer shipping.
“Customs regulations make it very difficult,” says Mr Bennett. “At the moment, we can’t ship any items to Malta.”
Asked how Brexit changed things for his business, he is emphatic in his reply. “Everything changed. It used to be a free flow. We just ordered for the customer, shipped, and it was delivered. Now everything has to be itemised and tariffed and registered with customs.”
Will this lead to higher costs for consumers? “I don’t know,” sighs Mr Bennett, explaining that until the UK and Malta decide on how VAT is paid, he cannot provide customers with any answers. “I can’t find out either!”
Trotters’ first shipment of the year is due to leave the UK on the 14th January, although Mr Bennett admits that this is still very much in the air. “We’ve entered all the customs paperwork, so we’re waiting for customs clearance from the UK to export.”
Mr Bennett will then need to find a carrier able and willing to make the journey, which will end at customs in Malta, which will need to clear the goods from their end.
Trotters’ popular British supermarket shopping service has been suspended for the time being, as each item is subject to a €4 customs clearance charge.
“If you’re buying a tin of baked beans, a pack of sugar, and some black pudding, that’s €12 in charges for three different customs entries.”
Nonetheless, Mr Bennett shares Mr Azzopardi’s hope that things sort themselves out quickly, although he decries the lack of planning. “It’s been four and a half years, and nobody knows what’s going on!”