Freight Industry Perspective: Customs Clearance in Post-Brexit Britain

John Shirley is an international freight forwarder in Dover and an alumnus of the UCL School for Slavonic and East European Studies (SSEES). His perspective on the UK-Europe customs relationship has been consulted in the House of Lords and in international news outlets including the BBC.

As an international freight forwarder with more than 30 years in the industry, it is clear to me that the UK’s impending departure from the EU presents a chaotic and problematic burden to those working in customs clearance. The government has significantly underestimated how customs clearance will be operationalised in just a month’s time.

I am the owner of a freight forwarding company, John Shirley Ltd, and have been working in international trade since 1988. I first worked as a commodity trader for Metalchem International, and then at L.C.L International Ltd in 1992, which used to custom clear cargo coming by road. In 1996, I formed my own company specialising in Eastern European cargo. My company is situated in an old railway station, acquired from P&O Ferries in 2013, which is fittingly opposite Dover Customs.

The British International Freight Association and Logistics UK continue to press HMRC and Westminster for clarification on customs, with no clear response as of yet. However, imposing customs afresh on 27 countries will not only be a burden for the UK, but also for the individual member states, albeit to a lesser extent. Those countries may have to hire extra customs officers, while freight forwarders in the UK will certainly have to recruit and train new customs clerks to submit entries to officers here.

The understaffing of customs clerks will become significant once the UK leaves the single market on the 31 December 2020. Today, just a minority of forwarders retain customs clerks in the EU, all of whom need several years of training. The only remaining freight forwarder in Calais is Gondrand, which has just three customs clerks. This greatly contrasts the 2,000 clerks that existed there in 1992, when there were approximately 40 freight forwarders. A similar figure of clerks exists in Kent, with each clerk submitting 50 entries to customs per shift. Given that the volume of traffic in the last 28 years has risen 400% each side of the Channel, the handful of customs clerks is demonstrably insufficient.

Dover Harbour Timelapse by SE Media, used with permission.

Delays will increase if the member states and freight forwarders have not drawn up contingency plans for a no-deal Brexit, which has the potential to cause serious delays. Currently, a driver carrying intra-EU cargo simply drives from Factory A to Factory B, the only paperwork might be an invoice or CMR note. But under customs clearance, British road-freight will have to join the queue with other non-EU cargo arriving at or departing from a customs depot. Yet, delivering goods by road to countries outside the EU can be burdensome for hauliers situated in a member state. This is noticeable in how Croatian hauliers such as Autotransport Stjepan Radic regularly refuse loads to neighbouring Bosnia; they prefer loads coming from the EU.

A key reason for this is that most hauliers lease rather than own their trucks outright. Trucks are very expensive, with a truck and trailer easily adding up to €100,000. This is attributable to modern trucks being heavily computerised and having to use authorised dealers for repairs and maintenance. The trucks therefore have to be constantly used to offset these costs, along with the financial burden of leases, road tolls, and fuel.

A second reason is that drivers are scarce, with more than half from member states being paid by the kilometre. This means drivers not on a salary are likely to quit and migrate to another haulier carrying only intra-EU cargo if frequently stuck at customs. At a risk to hauliers, they are essentially forced to avoid loads going outside the EU unless a very high price is agreed, should they have the correct permit. However, this pushes the cost onto the non-EU exporter or importer. This is why forwarders, when booking a load from the UK to Serbia for example, will generally use a Serbian haulier, or a Belarussian haulier to Belarus, to keep costs down.

Further issues arise when consignees fail to correctly arrange the import paperwork or permits, resulting in the truck being potentially stuck at customs for days. This can force freight forwarders to seek demurrage from the shipper, which is currently £300 a day per truck. Surprisingly, all this happens on borders or at delivery points where are a sufficient number of state-employed customs officers and customs clerks at freight forwarders. However, this will certainly not be the case for Britain or the EU on 1 January 2021. Hauliers are aware that both sides of the Channel are vastly understaffed and deterred by the risk of serious delays, requests for trucks to the UK by forwarders or factories will go unmet.

With these issues in mind, it is evident that customs clearance is a huge bureaucratic burden. One only needs to look at the situation on the external border to see the potential for delays at Dover and Calais. On the Croatian/Serbian border, it takes around six to eight hours to leave, and twice that to enter. This is further delayed inside Moldova, Ukraine or Serbia, where drivers are required to endure a second clearance at their destination, adding more hours to delivery.

While the exact figures are difficult to obtain and as yet, still up in the air, my calculations for the cost of the end of the transition period paint a bleak picture. Between the increased costs to British importers and exporters, the demurrage costs for goods possibly delayed for a fortnight, multiplied by the thousands of trucks crossing the Channel, importers and exporters may be looking at an annual burden of more than £33 billion. The long-term effects of customs clearance could be even more dire, similar perhaps, to self-imposed sanctions.

Featured image by Nigel Tadyanehondo on Unsplash

NoteThe views expressed in this post are those of the author, and not of the UCL European Institute, nor of UCL.

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