How Will Brexit Affect Freight Forwarders in 2022?
Brexit has had a significant impact on freight forwarding between the UK and EU (and, for that matter, the rest of the world) over the past year. In a global economy already marred by pandemic shutdowns and slowdowns, Brexit-related restrictions and documentation challenges have caused even more disruption.
In 2022, we expect many existing challenges to continue but hope to see more stabilisation in the industry as regulations are more widely adopted. We’ve talked about the implications of Brexit in the past, and now many of those new processes are finally in play — so what does this mean for freight forwarders?
Existing challenges will continue
Brexit has changed the kinds of goods that can be shipped from the UK to EU member states and the processes required to do so. In short, there are new documents to track, new regulations to adhere to, and new fees to pay at the border.
Already, Brexit restrictions have made some methods of transport too costly for UK-based merchandisers while putting new emphasis on markets in Northern Ireland. A lot has changed in the freight forwarding ecosystem in only one short year, with another year of unpredictable developments ahead.
The core challenges of 2021 will continue to make the international movement of goods an uphill struggle in 2022. Here are the three biggest challenges:
More paperwork equals more opportunities for costly paperwork errors. Common errors that we see include incorrect HTS codes, incorrect duty estimates, and incomplete bills of lading. As paperwork requirements and HTS codes change, we can expect to initially see more errors, which can cause slowdowns, lost profits, and unhappy customers.
Customs clearance delays
Even if you have your paperwork in order, slowdowns at customs checks are still likely as other businesses adjust to the new regulations and paperwork requirements.
Many freight forwarding companies have gotten comfortable with their grace period processes and may struggle to meet new guidelines as those grace periods expire.
Even more changes ahead
The Northern Ireland Protocol still hasn’t been solidified. Current arrangements will be extended until a final agreement is reached, and discussions are ongoing as of January 2022. Once a deal is finalised, there could be even more changes on the horizon in 2022.
Freight forwarders will continue to face considerable uncertainty about the regulations and logistics of moving goods between the UK and Ireland. Much could still change, so it’s difficult for organisations to know just how much additional staff they’ll need, what training they’ll need to undertake, or how their processes will change over the coming months.
Many companies are hesitant to staff up for new protocols that may not be permanent and find themselves needing greater expertise to avoid the paperwork errors and compliance issues discussed above.
What do freight forwarders need to know about Brexit in 2022?
Several grace periods were established in Brexit negotiations to minimise market disruption and prevent critical shortages. Many of the grace periods put into effect to ease the transition have already ended or will end later this year.
As of January 1, importers can no longer delay making import customs declarations under Staged Customs Controls rules from 2021. That translates into a number of new paperwork processes, fees, or duties on goods transferred across borders, depending on the contents of the shipment, its origin, and final destination.
Restrictions and checks for live animals, feed, and a number of animal- and plant-based products have changed.
Agricultural suppliers who wish to transport goods to the EU are now required to follow importation regulations that go well beyond standard declarations, in some cases including veterinary inspections from EU officials.
Enforcement dates and specific requirements vary by product type, and further requirements will be rolled out starting in July.
Stricter origin rules
The easement regarding Rules of Origin has ended, and the requirement to provide a “supplier declaration” can no longer be delayed. “EU” will no longer be accepted as a country of origin, so products that are listed this way could be stopped or delayed at the border.
New commodity codes
HS codes impact product classification, duty rates, and other compliance matters are slated for an update as well. Shippers that use outdated codes will see their cargo withheld and may be subject to penalties and added duty rates. In some extreme cases, freight could be confiscated by customs officials.
In many ways, Brexit and freight forwarding are natural enemies. The streamlined, seamless flow of goods that profitable freight forwarders rely on is, by its nature, inhibited by Brexit rules, tariffs, and bottlenecks.
Brexit poses challenges and changes for many shipping companies, but having the right partner can set you up for success today and in the future. When getting shipments to your customers quickly is crucial, outsourcing your customs brokerage processing to an experienced BPO partner can help you reduce errors, stay ahead of Brexit challenges, and clear shipments faster with less work for you and your team.
When looking for a BPO partner, you want one with international shipping and customs brokerage processing with multilingual proficiency.