Logistics expertise 03.01.2022

Post Brexit Customs regulations, cabotage, extended work visas. What's next?

Together with its customers, TIMOCOM ventures a look into the crystal ball

A young man looks into a crystal ball in his hand. It shows a lorry with a British flag and a lorry with a European flag, there

"Brexit has not helped us," is the down-to-earth assessment of Chris Hall, European Manager at the British freight forwarding company UKI Express Transport LTD, in an interview with TIMOCOM. The Brexit's faithful companion goes be the name of "uncertainty". Besides daily business, dealing with customs into other European countries has to be newly learned due to many applicable peculiarities, and driver shortages and supply bottlenecks have to be compensated for. Talking to TIMOCOM users like Chris Hall it becomes clear that a long-term easing of the situation is not expected in the near future for companies in the transport and logistics sector.

Now two years after the UE exist, consequences such as new customs regulations, empty supermarket shelves, high fuel prices and driver shortages, reveal the flaws in the plan for a self-determined Britain. Easing the rules on work visas and cabotage have been put on the table as solutions. The question is, how they will be assessed in practice and whether they can also provide long-term relief. TIMOCOM customers and Gunnar Gburek, TIMOCOM Company Spokesman & Head of Business Affairs, have looked at the current developments. Their assessments of the future are marked by caution and tend to be sobering.

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Turn of the year 2020/ 2021: bumpy start into a new trading era

Almost 50 per cent more freight offers than in the third quarter of 2020 were entered in the System. At the end of the year 2020, the TIMOCOM transport barometer showed a clear upward swing on the Germany-United Kingdom route. The coronavirus pandemic triggered European panic buying, and the British braced themselves for shortages caused by the approaching new customs regulations in the wake of Brexit. This is understandable, given that freight offers fell by around two thirds in the first three months of 2021.
Unclear customs regulations and the bureaucratic burden for companies involved in the supply chain once again massively hampered the transport of goods less than a year after Brexit.
"We were not prepared," recalls Chris Hall. " No one received any form of training, not even big companies and service providers. In January, February and March 2021, people just didn't know what to do. The problem is that we don't have a government body that provides training on the subject."

New customs regulations in the UK: the fine art of being proactive

The lack of information flow and the lack of preparation by the government for the changes seem to be the main problems that the British economy is still facing. Since the beginning of 2021, export regulations to a non-EU state apply to the shipment of goods to the United Kingdom. The reverse, however, appears to be a greater challenge for UK companies. The export of goods from the UK to European countries is subject to many specific regulations which are not yet part of the daily routine causing long waiting times.
British companies and companies that have a business relation with the United Kingdom had no choice but to take the initiative.
"In the absence of government support, we studied the contents of the new customs regulations ourselves, as well as how to deal with the necessary documents," says Hall. "As a result, we definitely now have a much better overall understanding of the processes than we did in January 2021. "
Thus, our knowledge increased, and new routines determine daily work. And what's more, according to Hall, the new regulations actually simplify processes, because his company now handles all customs formalities itself.

However, the required knowledge does not seem to be at the same level across the board, and therefore longer waiting times should be planned for, especially at warehouses and distribution centres.
"This has a direct impact on the processing time. Five hours until you can load is not uncommon as a result."
So especially the so-called blue-chip companies, i.e. listed companies with large trading volumes, still seem to be reaching their limits. At this point it is hard to predict when the race to catch up will be over so that these gaps can be closed, and supply chains can be brought back into flow. Especially trade and the transport of goods from the United Kingdom to other European countries are suffering from this.

Customs debacle, bureaucracy, coronavirus: key indicators for negative economic development

Transport and logistics companies in the UK will probably have to live with these delays for a little longer. Building expertise in an ongoing process is a challenge. The larger a company is, the higher the number of employees that have to reach the same level of knowledge at the same time.
In addition, a slow economic development repeats itself at the end of the year. A look at the TIMOCOM transport barometer shows a 32 per cent decrease in freight offers on an international level since September 2021. This development also affects the routes from Germany to the United Kingdom and vice versa. Reliant on imported goods, freight offers from Germany to the UK are still relatively high. However, the freight offers in TIMOCOM's freight exchange from the UK to Germany are 71 percent lower and at the same time also significantly below the international level.

A look at Poland: services as quick-win from Brexit

However, there are also companies that are using the EU exit for a reorientation or service expansion. For example, the Polish TIMOCOM customer Sped-Trans. The company has been offering customs services since 2011, so managing director Anna Gizowska expanded her portfolio of services there. She noticed the difficulties in dealing with customs regulations both for traffic to the UK and back.
"In addition to providing advice, we take care of the customs formalities that arise concerning transport to the UK. We often have to contact the authorities at the border to prevent administrative errors," says Anna Gizowska in an interview with TIMOCOM.
Like Chris Hall, she has experienced with her company that the people in charge on site have not been adequately trained and cannot keep up with frequently changing regulations.
"Our own legal department responds quickly to requests from our customers and takes over in their place," Gizowska continues. "This way we kill several birds with one stone: we train, we support and thus build long-term customer relationships. Because we show the best solutions so that our customers do not have to pay unnecessary customs and tax costs."

Delays at the border? Opaque customs regulations? Better to return empty then.

"Many transport service providers certainly decide to return empty when faced with slow customs clearances and fear of long waiting times at the European border," says Gunnar Gburek from TIMOCOM. "This is based on a simple calculation. Downtime is expensive, fuel prices in the UK are high. Therefore, it is cheaper not to take a load on the return journey."
Excursus: The keyword "long waiting times at the border" brings back images of the turn of the year 2020/2021. Kilometre-long queues of trucks heading for the port of Dover made the news for weeks. The reason was France's border closure due to the coronavirus pandemic, which stranded thousands of trucks in the UK. The fear that this scenario could repeat itself also resonates with all the uncertainties surrounding customs clearance. This is not unfounded; after all, the number of coronavirus infections in the UK has recently increased significantly. This could, for example, give the French government renewed reason to close the borders. The consequence would be the same as a year ago, i.e. stranded European HGV drivers who would not be allowed to leave the UK.

"Apart from the fact that empty runs are inefficient and avoidable via a freight exchange like ours, the decision to return empty leads to even bigger problems for the British," Gburek continues. "There are available vehicles on their roads, but the supply shortage remains. External drivers certainly can't solve the problems with general cargo or branch deliveries, but they could relieve the freight market in the UK through LTL or FTL."

Cabotage without limits: the solution to driver shortage and supply bottlenecks?

Recently, the British government eased cabotage regulations within the country, with the exception of Northern Ireland. Until 30 April 2022, foreign hauliers are allowed to make unlimited journeys in the UK for 14 days. The aim is to counteract the supply bottlenecks in the short term, as well as the driver shortage.
As expected, critical voices on the decision soon followed.
After all, the solution contrasts with the government's plans to increase wage levels, skills and the percentage of its own labour force.

Cabotage ease: a short term-option, not a long-term solution

Easing cabotage regulations until spring 2022 brings only temporary relief. Although it helps to provide supplies, it does not solve the shortage of local skilled workers. There is currently a shortage of 100,000 HGV drivers; companies have vehicles that are at a standstill due to a lack of staff. Once the cabotage regulation ease ends, the scene would probably be the same again. That is why British companies have recently been luring European drivers with bonuses and dream salaries.
"Foreign drivers are very welcome," affirms Hall. "Nothing has changed about that at all. But many are also afraid of being stuck in the UK should the borders be closed again because of the coronavirus."
Gburek adds: "The pandemic is one thing, but there is also a driver shortage in European countries. Drivers naturally find it attractive to work for a British company at a very high salary. But even in the UK itself, not every company is able to pay higher transport costs.

British attract with dream salaries but questionable long-term prospects

It is feared that British exports, which are already weakening, will fall even further and that British competitiveness will decline. After all, high transport prices and driver wages often lead to an increase in prices. A wage-price spiral seems to have been set in motion that simply cannot be stopped, let alone reversed quickly.
Attracting foreign drivers with high wages is a decision made by the company. But the question is whether the decision of professionals going to the UK can be based purely on financial reasons. After all, there is an end date for both the cabotage regulation and the extension of work visas. The emigration effort can be very high and depends on language skills, accommodation situation, familiarity with the place, the recognition of qualifications and the duration. Whether the effort for only a few months is worth it is questionable.
Basically, the Brexit has complicated the opportunities for European HGV drivers to work in the UK, so some have moved back to their home countries. The extension of work visas until Christmas Eve 2021 came too late for many since the decision to return had already been made or taken place.

The UK's future? Dense fog in the crystal ball

The inventory makes it clear: no statement can be made with any certainty for now. What are the short-term measures in the (near?) future? The British government probably does not even know what measures will be taken in the future. However, it is becoming apparent that the current interim arrangements are not sustainable in the long term. Especially when they have an expiry date, like the cabotage regulation and extended work visas.
Small and medium-sized enterprises in particular will reach their limits and will be faced with making new decisions such as whether to pay high wages and employ less drivers. This would also mean leaving vehicles standing still, which, in some cases, have not yet been paid off. One only has to extrapolate this scenario to come to the conclusion that this would probably only further foment the supply bottleneck and the shortage of skilled workers.
"It's a double-edged sword," says Hall. "But the positive effect is that hauliers are no longer the bottom of the barrel and are better paid." Only the crystal ball knows what role such a positive attitude will play in the future. Some things make it easier to be optimistic. That much, at least, is certain.