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After the historic EU referendum vote in 2016, the future of international shipping was one of the hottest topics on the table of the arduous and often heated negotiations around Britain's withdrawal from the European Union. Britain and the EU are major trading partners, and many businesses saw a deal needed to be struck to allow this trade to continue. However, while the zero-tariff, zero-quota deal was a positive outcome of the talks, international shipping became much more complicated, and rules, processes, and paperwork increased. Trying to work through these new regulations can sometimes feel like a maze for many businesses. Here we guide you through how Brexit has affected international shipping and the steps you can take to alleviate the burdens brought about by the new changes.
What is Brexit?
On 23rd June 2016, the UK held a referendum on its membership in the European Union. The question voters had to answer was, 'Should the United Kingdom remain a member of the European Union or Leave the European Union?'. 51.89% of UK voters chose to leave the EU.
And so, on the 31st January 2020, The United Kingdom withdrew from the European Union after 47 years of membership. The UK left with a Withdrawal deal negotiated by the then UK Prime Minister, Boris Johnson.
How has Brexit Affected the International Shipping Industry?
The Brexit vote was a landmark decision and one that had a global impact. From stock prices to holidays, most people have felt at least some effects from the UK's withdrawal. However, those engaged with international shipping have felt the full impact of changes and challenges.
The historic decision to leave the European Union has positive and negative connotations for business across the UK and Europe. However, for many, the frustration lies in the mystery and the questions it has caused around rules and regulations. What does it mean for your business? What are the new rules and regulations for logistics? How do you continue to serve your UK and International customers to the same standards?
To help you keep up-to-date and on top of Brexit's impact on business, here are the main shipping challenges faced by businesses:
Border Control and Customs
When shipping internationally, border control and customers can cause delays in the delivery timeframe. Brexit has added further complications to this, as you need to be aware of extra red tape and documentation at the border.
As of January 2022, full customs declaration is required at the point of import for UK goods. Pre-Brexit it was possible to delay this by six months, but now this is no longer the case. If you do not follow the correct process, the new systems will not allow goods to leave the Uk, and they will be turned away as they do not hold an export clearance. It is estimated that 145,000 businesses are responsible for making import-export declarations for the first time.
Global Trade Agreements
It is not just the European Union whose trade with the UK has been forced to change. As a result of breaking with the Union, the UK has been hard at work negotiating trade deals. Since Brexit and September 2022, the UK has signed 71 new trade deals and agreements in principle, including one with the European Union. A significant example of this was the tariff-free UK-Australia trade deal announced in June 2021. The agreement covers nearly £14 billion in trade every year.
The UK's break from the EU allows it to create new relationships and deals with various international partners. The discovery of new trade deals could benefit businesses, leading to more favourable shipping conditions.
Over the next few years, we will likely see more of these new trade deals, and businesses should keep themselves up-to-date with the latest developments. As these new trade deals appear, they could open up exciting and profitable opportunities for import and export shippers in new countries.
Over the last couple of years, it has been well documented that imports and exports have reduced. Brexit has partly been responsible for this, but the biggest culprit has undoubtedly been the Covid-19 pandemic. The good news is while the trade and shipping environment is still challenging, things are showing signs of improvement. In August 2022, the UK National Office of Statistics released the latest trade figures.
- Total imports of goods in August increased by £3.1 billion (5.7%). This was due to a £3.5 billion (13.3%) rise in imports from non-EU countries. Imports from the EU did see a decrease of £0.5 billion.
- The total export of goods increased by £0.4 billion (1.2%) in August 2022. This was again driven by an increase in exports to non-EU countries of £0.7 billion (4.1%). Export to the EU decreased by £0.3 billion (1.5%)
While the trade figures are down from 2019, as the world continues to step away from Covid-19 and the government continues to iron out the trade agreements, particularly with the EU, the future for the shipping industry is slowly starting to see some light.
Power of UK eCommerce business and Order Fulfilment Strategy
Excess paperwork, stricter customer checks, and increased delivery times in the post-Brexit world significantly affect one of the most powerful industries in the UK and globally, eCommerce.
As we have entered the digital age, eCommerce in the UK has had a gargantuan rise in recent years. To highlight this rise, here are some incredible statistics showing the power of the UK eCommerce industry.
- The UK was the fourth largest market for eCommerce, with a revenue of $118 billion in 2021.
- This revenue equalled a growth of 29% for the year.
- 82% of the UK population bought at least one product online in 2021.
- Since the coronavirus pandemic, 70% of Britons say buying online has become their preferred shopping method, up from less than half pre-pandemic.
- The UK is the third most popular market globally for online cross-border shopping sitting only behind the US and China.
The UK is a significant player in the world of eCommerce. Therefore, UK retailers must have an efficient international shipping strategy in line with Brexit's new rules and regulations.
It is no secret that as soon as Brexit came into play, exports from the UK to the EU fell. In 2021, this figure was a 14% drop, equaling £126 billion. This decrease was heavily due to the extra red tape and costs of shipping goods between the EU and the UK. These complications led to many EU businesses pausing their product distribution to the UK due to rising costs and extra administration.
Despite the stress, anxiety, and frustration you may be experiencing, there are solutions. Have you considered outsourcing your order fulfilment? Next, we will explore what we at Core Fulfilment and many fulfilment companies like us are doing to reduce the impacts on international shipping for businesses.
Expanding into Europe to Fight the Challenges
One of the fulfilment solutions to get around these rules was for providers to expand their UK operations into Europe. So, for example, providers of outsourced fulfilment services to online retailers could open new fulfilment centres in the EU, for eCommerce firms to use to tackle the growing red tape and costs.
Key benefits of fulfilment centres within the EU include:
- Improved and more effective cross-border trade - EU fulfilment centres can help UK companies to continue trading without being hit by VAT charges. It also helps reduce potentially lengthy shipping delays and improves customer duty management.
- More efficient shipping to crucial EU markets - Due to reduced travel times, paperwork, and costs, fulfilment centres can ship efficiently to Germany, Belgium, and France.
- Reduced Shipping Rates to EU Consumers - EU-based fulfilment centres can offer more affordable shipping options for retailers.
In the face of restrictions and red tape, businesses are finding ways to adapt, and order fulfilment is a crucial avenue to explore to help make these changes. Next, we will explore what we are doing to help our clients overcome the changes in international shipping in a post-Brexit world.
We Support eCommerce business and International Shipping
We can see from the statistics how fast the eCommerce industry is expanding and how vital it is to retailers, large and small. However, whilst we have seen room for improvements and signs of a smoother future, the early stages of Brexit have certainly caused some headaches and challenges for retailers and international shipping.
Core Fulfilment are here to ease the headaches and stop you from worrying about the challenges. Our simplified fulfilment solution gives your business a significant advantage over your competitors. For example, if you are an EU-based direct-to-consumer sales eCommerce business, you can simplify trade with your UK-based clients by transferring your fulfilment operation to us in the UK.
Partnering with us and transferring your fulfilment from Europe to the UK reduces your fulfilment costs and gives retailers a whole host of benefits. For example, with a next-day delivery cut-off time as late as 10pm for Shopify and Magento eCommerce platform users, we can enhance your customer experience. Furthermore, our UK fulfilment service reduces the potential delivery delays that can occur due to issues at customs.
In addition, we can help reduce costs, wasted compliance time, and expensive shipping fees, further easing your headaches. Our UK fulfilment service aims to grow your business and to continue to establish you in the UK market. We want to get back on track and away from the noise of Brexit red tape and challenges.
Don't hesitate to contact us today if you want to speak to our fulfilment experts about how we can grow your business and get ahead of your competitors in the UK market. Alternatively, visit our dedicated order fulfilment page for more information about our services.