INSIGHTS

What to Expect as Brexit Changes Take Effect

December 18, 2020 | Post

Many companies — and quite possibly yours — will be impacted by the United Kingdom’s departure from the European Union. Here’s what you need to know, and how MBX can help.

The UK’s departure from the EU — aka Brexit — has immediate ramifications for many companies, including those based in the United States, regardless of any further negotiations and agreements.

Technically, the transition period for Brexit will end as of January 1, 2021. At that point, all shipments between the UK and EU will be affected by new customs regulations and tax implications.

Thanks to our MBX Netherlands manufacturing hub, we have been able to stay on top of the latest developments and forge connections to help our customers. To that end, here are some considerations and steps your organization should take.

New customs formalities

There is now a “border” between the UK and the EU, with separate customs regulations and requirements. This requires a host of new paperwork — such as invoices, customs forms, and importer-of-record documentation. 

Among the changes: Customs VAT. Our existing customers know that thanks to our Netherlands operations, we have been able to ship to the UK without charging VAT or VAT being collected during transit. However, the UK may introduce a 20% VAT — due upon importation. That said, if a last-minute deal is made between the UK and EU, the UK importer may be able to reclaim that tax. Products shipped from the UK to the EU will be subject to VAT and customs processes in each of those member countries. We will have further information about these terms in the coming weeks, so stay tuned.

Also, UK importers will be required to obtain unique Economic Operator Registration and Identification (EORI) numbers for Great Britain in order to be able to import into the UK. Some EU and UK companies, depending on their VAT requirements, may need to have both an EU and a UK EORI number.

Shipping delays, increased freight charges

Several global trends have caused logistics delays that exacerbate the Brexit situation. For example, the urgent need for vaccines, personal protective equipment (PPE) and other medical supplies related to COVID-19 has affected all forms of commercial transport. 

Similarly, most consumers have had to turn to e-commerce to shop during pandemic lockdowns, which has also placed a strain on the logistics infrastructure. For example, FedEx expects 2020 holiday shipping volume will increase by 22%

On top of these demands, as the Brexit transition period ends, the need to process new customs paperwork at border points will cause delays for goods traversing between the UK and EU. We’re advising customers to plan for an extra three to five days for shipping from the EU. Finally, we’re seeing increases in freight costs and fuel surcharges. 

Stay on top of developments

We have filed the appropriate paperwork to continue shipping systems from our Netherlands facility into the UK. And by using our Hatch™ toolset, our customers can gain real-time insights into the supply chain and shipments in transit. 

We will also post regular bulletins in Hatch to share the Brexit-related developments that affect MBX customers. 

Although negotiations between the UK and EU are still taking place, customers should be prepared for increased customs and freight costs, as well as shipping delays for products entering and leaving the United Kingdom. And while Hatch may answer many of your questions, please contact us with concerns you may have.

For more information on MBX’s logistics services or to see a Hatch demo, contact us.

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