EU Hauliers and Transport Companies are now turning their backs on UK Business
Leading up to Brexit, many businesses anticipated some changes to the easy process of transporting goods through the UK. However, the UK's new required guideline to provide a T1 financial guarantee on arrival in Britain was a shock to many EU hauliers and transport companies.
The financial guarantee requirement was not applicable for EU companies before Brexit, as goods usually sailed through British ports before Brexit. Now EU suppliers need to provide a significantly increased amount of paperwork before export in addition to the T1 financial guarantee. Documentation required from EU companies also includes completing mandatory customs declaration documents.
Since leaving the EU in January, a large number of freight groups have rejected contracts to move goods from France to Britain in EU hauliers. Apart from the customs declaration and the T1 financial guarantee, EU companies are required to provide a REX (registered exporter system) document to certify their products' origin. This REX will determine, whether tariffs will apply on entry to the UK or subject to preferential treatment.
According to data from German software firm Transporeon, during the third quarter of 2020, the rejection rate for transport to the UK was up by 168% and had doubled in the first week of January 2021. Colin Jeffries, Director at Key Cargo International has said, EU transport companies who previously provided a shipping service for small and medium-sized businesses, have decided they do not want the extra financial burden. Colin has been working for Key Cargo International for over nine years, and he reported the business nearly came to a standstill in the second week of January because of the sudden trade barriers that were put into effect on 1st January 2021.
"A truck with a £200,000 cargo would need cash or a T1 financial guarantee document for £40,000 in VAT alone… a significant burden for transport companies with multiple trucks going to the UK." Colin Jeffries, Key Cargo International.
How are other EU and UK businesses going to move forward with this new requirement? Will we revert to business as usual or will UK companies consequently experience a ricochet effect on their finances and business transactions due to the new guidelines?
To find out more on the latest government guidelines and updates visit the Government Guidance Website.
