As per Europa Worldwide MD Andrew Baxter, Delivered at Price (DAP) is the major cause for delays post-Brexit. He admitted that the new EU-UK trading relationship has become unbelievably tough for people, however remains absolutely confident that Delivered Duty Paid (DDP) method has worked well and alleviated many issues encountered at the borders after Brexit came into force.
He also said, “While the implementation of this new product was more difficult than we expected, with a very challenging first six weeks, the product is now working very effectively,”
Mr. Baxter also added that, “Export consignments are being delayed in our hub by around 24 hours while anticipated declarations are submitted, but beyond that they are more or less moving as normal; we’ll be working over the next three weeks to remove the delays altogether.”
After transition period ended on 31st December, 2020, logistics operators say that officials at the border lacked consistency in the methods followed while applying the new rules. They have noticed that less than truck load or LTL (groupage) freight bore the brunt the most. The LTL shipment carrying food and drink has been subjected to checks on imports. One single item in the freight can cause the delay of the whole shipment, making way for damage of goods, for they have very low shelf life.
Sources relating to the automotive sector says near-identical freights shipped from the same factory leave different ports at different time for some are being stopped and while others are allowed to go.
Mr. Baxter told The Loadstar, the popular transportation and logistics publications, “Market disruption to groupage is principally caused by DAP shipping terms and the need for the receiving hub to contact the importer, establish a commercial relationship and get them to pay VAT, duty and customs fees prior to delivery. Before Brexit came into being, Europa has made major investments such as £2m in the Dartford transit warehouse to increase its overall capacity by seventy-five percent. It has also spent £3m on consultants, recruitment, training, IT and Europa Flow, its DDP product launched on 1st of January this year.
Europa Flow is dedicated to handle the goods flow between Europe and the UK right from January 1st of 2021, that is after the end of the eleven-month long transition period.
Facilitating exports on DDP terms to the EU, Europa Flow is designed to remove the difficulties faced by EU importers which eventually aimed at preventing them from paying for import duties or the need for appointing customs broker. Top of all, the goods will be absolutely exempted from tax and thus features zero-rated VAT.
By following the DDP terms, the entire responsibility in terms of import and export formalities duties, taxes and transport have to be met by sellers. In this regard, Mr. Baxter says, “just as easy to buy from the UK”, similar to the situation prevailed prior to Brexit.
“It’s been really tough, but it is now working. I firmly believe we now have the quickest and most reliable service in the market.”
That being said, there are doubts regarding the usability of Europa Flow as it is created based on a loophole in the rules, which can be removed in any moment down the line.
However, Mr. Baxter opines that, “Regime 42 is not a loophole, it is a standard EU process that has been in place for many years and is used to facilitate billions of euros of trade each year of non-EU imports into the EU. There is no reason to think this process will be changed in the near future.”
The European Commission in an FAQ statement it has published lately describes that, “Customs Procedure 42 (CP42) is a simplification procedure that provides for a deferral of paying import VAT on goods cleared upon arrival into the EU. It can be used when goods being imported from outside the EU (e.g., from GB) into an EU member state are subsequently being sold on to a company in another EU member state (i.e. an ‘intra-community supply’)”.
The publication also adds that, “the application of the customs procedure 42 and its requirements may vary according to the member state of importation concerned. Imports into Northern Ireland can still benefit from the CP42 procedure if followed by an intra-community supply”.