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Post-Brexit Concerns of the U.K. Exporters- Is Automation the Only Way Out?

As per the British Chamber of Commerce, about half of U.K exporters have to pay additional costs while facing delay in shipments dispatched and received after Brexit, owing to the strict checking at the border. Prior to Brexit, items are transported with the least paperwork and shipped to any state in the EU effortlessly. However, as we all know the situation has changed a lot since the UK’s exit from the EU. The export declaration procedures, exit border clearance, import declaration at the country of destination are made mandatory following Brexit. 

The Long-Winded Documentation Process 

The founder and CEO of document management solutions KlearNow, Sam Tyagi says, “Goods that used to flow freely must now include additional documentation and other requirements, for example, phytosanitary certificates, testing and analysis reports, and other health and safety restrictions. Products such as perishable foods have an added time constraint that is causing a lot of headaches, while makers of some products, like perfumeries, have stopped shipping altogether until they can implement the required protocol.” His digital solutions platform is helping thousands of importers, customs brokers and freight forwarders. 

Red tape coupled with other additional restrictions make trade between EU and UK very difficult since January 2021 after the Brexit transition period. Businesses are getting affected like never before. Let’s see what the founder of Sole of Discretion, a Plymouth based ethical fishmonger, Caroline Bennet has to say, “We made our third attempt to export yesterday, again without success. This time it was rejected because the label had ‘U.K.’ rather than ‘United Kingdom’. Every week we are given new rejection reasons. I don’t know why they couldn’t give us this information from the start.” 

Around thirty-five percent of the firm’s yearly sales are attributed to their customers based in Belgium. It is quite disheartening to note that since the beginning of this year, the company wasn’t able to transport fish, because of the issues arising out of border control. 

Earlier, there was only one single document needed while as of now, each shipment needs eight documents. This has considerably increased the cost alongside the effort and time but that cannot be added to their Belgium customers’ bill. The question of improving domestic sales to balance the loss, also stands as a difficult proposition. Caroline Bennet further adds that,  

“We need to change domestic consumption habits, weening them off the ‘big five’; cod, haddock, farmed salmon, tuna and prawn, which make up 80% of all fish consumed in the U.K., while our European customers buy pollack, ray, ling, pout, lemon, megrim, etc. Eating a wider variety of species will make a difference, simply eating more will put further pressure on already depleted stocks.” 

Even though buyers from Singapore and China have showed interest in the trade, but Bennet says they have not planned to sell to other countries other than those in Europe and the U.K. And there is genuine reason for the company to make such a decision. She says, “I don’t believe that international trade fits well into our sustainable business model. Many want airfreighted fish, for example, which in my view is not sustainable.” 

To add to the wows, she also raised concerns that the prices will the escalated to make up for the additional costs of paperwork and this would discourage small-scale operators which further lets corporate brands to take over international trade. “This is a huge loss for ‘foodies’, Bennet says. “Small scale operators of niche, artisanal produce will decide there is enough demand locally and give up selling abroad.” she added. 

Business firms in the U.K. are also having a bad time due to the additional costs that is added into the price and profit margins of products traded. 

British organic baby clothes retailer, MORI has been subjected to the payment of additional sixty percent costs for clearing goods for delivery. Before Brexit, during 2020, the company has earned a revenue of €1.5 EU from their sales. Unfortunately, at present they have predicted a thirteen percent decline in revenue before a long-term remedy can be found out by establishing 3PL logistics warehouse in EU. 

Akin Onal, the company’s founder and CEO says, “The practicality of establishing a warehouse in the EU depends on which 3PL partner we choose and the integration process. It requires a project team, budget and planning, and for a business of our size, an additional amount of resources and management time.” 

This would radically prevent the duty on sales for orders from EU buyers, reduces cost and pricing becomes more competitive making way for a situation conducive for business growth. However, it has some demerits too. Operating different warehouses, extra staff, providing adjustments to stock management systems, poor flexibility are a few concerns. 

Onal continues, “Establishing a warehouse in the EU is the only long-term solution that will allow us to truly be competitive in Europe. If our customers continue to have to pay up to 60% in extra costs to clear goods for delivery then we continue to lose out to our EU competitors, and any marketing efforts and spend are hard to justify.” 

Meanwhile, the U.K government explained the issues faced by exporters as teething problems which gets resolved during the course of time. Syam Tyagi has pointed out that shifting from age old business model that predominantly relies on a manual entry process is not superficial. Therefore, he opines that the sole remedy is automation or digital transformation. 

His company has designed a complete digital customs business network by way of a web-based platform which helps exporters, transporters, freight forwarding agents, importers can collaborate seamlessly. Hence, it avoids the need for manually entering the data again by all the parties involved. 

Sam Tyagi adds, “This kind of automation improves communication, simplifies data processing, and streamlines recordkeeping while boosting the speed of export and import filings directly with customs authorities”. He is very optimistic about it and continues that, “Although there are shipping costs associated with moving products further around the globe, those costs may be offset by other benefits resulting from expanding into new markets beyond Europe.” There is one more merit to it. The U.K will be able to enter into bilateral as well as multilateral trade deals free from the influence of the EU which during the past might have acted as a hindrance for tapping opportunities.