Government publishes latest plans for cross-border trade

Businesses operating across the sector see overcoming bureaucracy as the biggest challenge when trading internationally, as highlighted in our latest Trade Barometer report, which was published in early October.

Government publishes latest plans for cross-border trade

Nearly two-thirds (63%) of firms say this is one of their key challenges. Undoubtedly, a significant element of this will be concerns around both operators and their clients being prepared for the UK’s departure from the European Union.

Last week, the UK Government announced a new web service for operators to check they have the correct documentation ahead of goods reaching UK ports. The ‘Check an HGV is ready to cross the border’ service is to be used in conjunction with the Smart Freight System and the Goods Vehicle Movement System, and is being introduced for operators to complete before goods reach the UK’s main cross-channel transit points.

The new service will also generate the Kent Access Permit (KAP) which the Government unveiled in September. This permit will only be available to operators with the correct documentation in place. Operators without the right permits face fines of up to £300.

The new ‘Check an HGV is ready to cross the border’ system will be in place by December. You can see a demo here.

The Government has also updated the guidance for operators moving goods into Europe from 1 January 2021, which includes the following:

  • having the right Operators Licence as the Community Licence is phased out
  • making sure trailers are registered
  • making sure registration documents are carried in the vehicle
  • having vehicle and trailer insurance in place and carrying a green card as proof of having insurance.

They’ve also included guidance on having the right permit in place. The application process for European Conference of Ministers of Transport (ECMT) permits is open from 2 November to 20 November. While no further clarity has been provided, it’s recommended that operators should explore applying for a permit. More information is available here.  

We’re working with trade compliance experts to help businesses better understand the new regulatory environment and put actions in place to overcome these challenges. They can provide specific regulatory guidance tailored to each business’s needs, as well as a full suite of international trade training courses. For more information please get in touch with us by emailing international@santander.co.uk.

 

International freight news

Container shipping rates on the main Asia to Europe lanes have reached record levels over the last few weeks as shipping lines continue to manage capacity. Alongside this, the continued shortage of boxes in key Asian ports is driving up shipper demand and increasing rates. The Shanghai to North Europe average rate is now $1,100 per TEU (Twenty-foot equivalent units). A rise of a further $16 on the previous week, with spot rates 85% higher than at the same period in 2019.

As we reach peak season, there’s potential for rates to increase even further. Last week, one major carrier announced it would be adding a $150 per TEU peak-season charge from 1 November to 15 November on shipments from Asia to North Europe, with a backhaul peak-season charge of $100 per TEU. It’s expected other carriers will follow suit.

However, as a second wave of coronavirus is beginning to take hold across Europe this could result in falling demand. Although it’s expected that carriers will continue to manage capacity as demonstrated with over 10% of scheduled services cancelled this month.

The UK’s major deep seaports are all experiencing delays in landing vessels and moving goods. Felixstowe has had delays for a number of weeks and with services being diverted to Southampton and London Gateway, they too are now starting to experience delays as we lead into peak season.

As a result of the delays, CMA-CGM (the French container transportation and shipping company) have announced they’re looking at adding port congestion surcharges of $150 per TEU given the additional operational costs incurred as a result of the delays.

With capacity tightening on sea freight, a number of shippers have switched to using air freight. In conjunction with growth in cross-border online retail sales, this means air freight rates are being driven higher. Over the last two weeks average air freight rates have increased by over $2 per kilo and continue to rise. While volume has increased as more scheduled passenger services are introduced, overall capacity is still well below the same period in 2019. With demand increasing it’s likely that rates will continue to rise.

 

Trade Barometer insight

Our latest Trade Barometer annual report, published at the start of October, shows that 100% of companies in transport and logistics are currently most active in the European Union (EU). This is followed by North America (64%) and non-EU Europe (58%). In terms of where they see the most growth over the next 12 months, businesses in transport and logistics cite the EU, while recognising the potential in Southeast Asia, Oceania, North America and Eurasia. Looking at challenges related to the pandemic, companies in the sector are most concerned about the impact of labour challenges, such as inability to train and hire staff due to travel restrictions (31%), lack of domestic customer demand (29%) and supply-chain disruption (28%).

 

How we can help

All of the issues covered in this week’s update have the potential to impact our clients’ international supply chains. We work with a number of logistics companies with specialisms in particular markets or sectors who would be happy to provide advice. If you’re facing supply chain difficulties, please get in touch to discuss potential solutions that might help you overcome such challenges.

To discuss how we can help your business please contact: ccbsectorinsights@santander.co.uk