BREXIT ROUND UP Trade with Europe drops, confidence remains high, retailers see cross-border expansion as key growth driver and warehousing shifts to Europe - The Entrepreneurial Way with A.I.

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Wednesday, March 31, 2021

BREXIT ROUND UP Trade with Europe drops, confidence remains high, retailers see cross-border expansion as key growth driver and warehousing shifts to Europe

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Our regular quarterly look at the impact of Brexit of UK retail finds that, while trade with Europe has dropped dramatically, business leaders remain confident that they can still trade and that growth is possible – with many seeing cross border expansion as the key to growth in 2021.

 

UK TRADE FALLS DRAMATICALLY SINCE THE END OF THE BREXIT TRANSITION PERIOD

Figures out in mid-March from the ONS show that Total UK trade - excluding precious metals - saw its largest monthly fall since records began in January – of 19.3%, or £5.3bn.

 

The fall was driven by a 40.7%, or £5.6bn, fall in exports to the EU in January, and a 28.8% – £6.6bn – fall in imports. At the same time, exports to non-EU countries rose by 1.7% – or £0.2bn over the same period.

 

The collapse in exports has come in the wake of the UK/EU trade and cooperation agreement that replaced the UK’s previous membership – as a full EU member – of the European single market and customs union from 1 January.

 

ONS figures do not specifically look at ecommerce imports and exports. However, ONS research does suggest today that about four in 10 UK businesses that are currently trading and usually buy and sell internationally say they have had challenges as a result of extra paperwork.

 

Businesses that had traded internationally were questioned between February 8 and 21. Some 39% had challenges when exporting, and 40% when importing because of additional paperwork. A change in transportation costs meant challenges for almost a third (30%) when exporting and 42% when importing, and customs duties or levies challenged 25% of exporters and 34% of importers.

 

The largest single group was the 45% that had not experienced any challenges. But the percentage of large businesses that had not had any challenges when importing or exporting has decreased since the end of November 2020.

 

Retailers of all sizes have reported additional costs and having to put new processes in place since the UK’s previous membership of the European single market and customs union was replaced from January 1 with a new free trade agreement.

 

BUSINESS LEADERS OPTIMISTIC ABOUT BREXIT BUT FEAR IMPACT ON SUPPLY CHAIN RESILIENCE

A survey of more than 120 business leaders has found that they expect Brexit to have the biggest impact on the resiliency of the supply chain in the short term and the future.

 

Avetta partnered with the Executive Network Group to gather feedback from C-level executives; 72% of the respondents say the supply chain will experience the biggest changes from Britain leaving the European Union (EU).

 

The findings included in the Brexit Impact Survey Report show half of the respondents expect Brexit to impact legislative changes; nearly one-third (29%) anticipate changes in documentation and administrative processes; 16% on sales revenue; 11% on market/sector competition; and 10% on hiring permanent staff. Only 5% saw an impact on engaging temporary staff and keeping sustainability, environmental and social value commitments.

 

Executives were also asked to provide comments. One said that “Brexit has already impacted the [supply] of spare part[s] and deliveries, within our supply chain [of] goods procured from Europe. Our suppliers are struggling to source these in a timely manner, which impacts our ability to meet deadlines”.

 

Another says: “UK talent will exceed current market place expectations”, while a third adds that “Brexit is considered a big opportunity for us; there may be teething problems in the short term with more benefits long term for business”.

 

Overall, respondents are optimistic about Britain’s future. About one-fourth of the respondents agree Brexit will have an impact on hiring and flexible staffing needs in 2021. However, 39% expect Brexit will affect their hiring strategy for EU workers. Only 11% of the executives say they’ve had to strengthen their team to deal with the changes.

 

The survey suggests executives will need to prepare for the following issues:

  • Mitigating the impact of supply chain disruptions
  • Understanding legislation affecting corporate waste management and recycling
  • Taking a proactive approach towards procurement and long-term sustainability
  • Developing talent pipeline and understanding restrictions to free movement in the EU

 

UK AND EU RETAILERS STILL VIEW INTERNATIONAL EXPANSION AS THE KEY TO GROWTH

Despite Brexit, more than half of UK and EU merchants see international expansion as their key route to growth, saying it is the most important element of online trading.

 

According to data from payment service provider Mollie, half of UK and EU retailers (50%) said managing international expansion was the most important element for trading online - suggesting retailers are looking at careful expansion over the coming months.

 

The survey finds that already 56% of retailers are selling internationally, with 22% selling across Europe as a whole, 20% selling across selected international borders and 14% selling globally.

 

However, the 2500 retailers questioned for the report note a number of challenges. 43% say that the high cost of shipping is a drawback, while 48% said that projected delivery dates were the top reason for abandoned carts with consumers being put-off by long dispatch and arrival times.

 

Conversely, 43% said that unexpected or additional charges like delivery fees was the main reason for abandoned carts. 59% said over-reliance on third parties for shipment was a key factor hindering growth.

 

BREXIT-INDUCED TAX, TARIFFS AND PORT DELAYS ARE PROMPTING UK ONLINE RETAILERS TO SWITCH STORAGE TO EUROPE

A growing number of British online retailers are seeking to ease the extra customs and tax administration and costs involved in trading with the EU by shifting stock from UK warehouses to storage facilities on the Continent as a direct result of Brexit.

 

The supply chain stress of companies that export from the UK to the EU is being ramped up a few more notches by significant, yet under-reported, delays at many of the nation’s ports.

 

The hold-ups are a result of goods having the wrong, or incomplete, paperwork and although the UK Government has been happy to brush the problems off as mere teething trouble, the issue has become so bad that earlier this year DPD decided to put all UK to EU road deliveries on hold.

 

A big problem for carriers is that if just one parcel on a truck is lacking the correct paperwork then the whole truck can be held up at the border and potentially turned around and sent back to the depot. Before it suspended its services, 20% of DPD’s parcels had incorrect or incomplete data attached.

 

“The addition of VAT, customs duties, and in some cases tariffs, on shipments sent from the UK to customers across the channel – not to mention delays at ports and increased shipping costs – are prompting many businesses, including e-commerce firms, to reconfigure their European supply chains,” says Charlie Walker, marketing director of online fulfilment and logistics services specialist, Walker Logistics.

 

By fulfilling orders from distribution hubs located within mainland Europe, UK exporters are able to avoid the need for their EU-based customers to pay the VAT charges and customs duties which have been effective since 1 January.

 

“The changes to the tax regime are driving many online retailers and their logistics service partners to conclude that they have no option but to invest in distribution networks within the EU,” says Walker.

 

And it is not just British companies that are opting to use European warehousing: he believes US and Asia-based traders who export to Europe are choosing to shift stock out of the UK too.

 

“Under the ‘rules of origin’ criteria that form part of the Brexit agreement, products that are not made in Britain, attract tariffs when re-exported from the UK into the European market,” he explains. “So, by bringing products that are produced outside the EU and destined for the European market directly into the mainland - rather than exporting to the UK and re-exporting to the EU, companies can make significant tax savings,” he adds.



via https://AiUpNow.com March 31, 2021 at 06:43AM by Paul Skeldon, Khareem Sudlow,