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Retailers shift stocks to mainland Europe

[ March 25, 2021   //   ]

A growing number of British online retailers are shifting stock to storage facilities on the Continent to avoid customs and tax administration and costs after Brexit, says Walker Logistics.

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

Marketing director of online fulfilment and logistics specialist, Charlie Walker, explained: “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.”

He added:  “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.”

He believes that US and Asia-based traders who export to Europe are also 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.

Charlie Walker says there is also a trend – particularly among American-owned companies – to appoint UK-based fulfillment specialists to manage the storage and delivery of orders for the British market. “It is the same situation but in reverse. Previously these companies have located their European inventory in a facility within the EU but since Brexit many have been prompted to seek dedicated UK-based supply chain support and Walker has successfully managed a number of these migrations in recent months.”

However, supply chains are being stressed by significant, yet under-reported, delays at many of the nation’s ports.

Walker says 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. Before it suspended its services, 20% of its parcels had incorrect or incomplete data attached.

“The nation has, understandably, been so obsessed with the pandemic that the delays to freight at British ports since the start of this year have not been as big a story as they otherwise would be,” says Charlie Walker.

He continues: “It is frankly incredible that despite the long run up to Brexit, since the start of this year the increased bureaucracy involved in servicing customers in Europe, seems to have taken many exporters and courier companies by surprise. Everyone knew Brexit was coming so why didn`t couriers get their act together?” 

Walker Logistics itself is promoting the benefits of warehousing in Europe, with the Netherlands proving an attractive location.

At the start of this year, Walker Logistics signed a partnership agreement with Dutch third party logistics services provider, RIF Europe. The deal allows Walker to offer its clients the opportunity to hold stock and fulfill orders bound for mainland Europe from RIF’s multi-user distribution hubs, which are located on the outskirts of Amsterdam close to Schiphol Airport.

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