Saturday July 20, 2024

Integrators cover higher ‘post-Brexit’ operating costs with different pricing measures

Picture: FedEx UK
Picture: FedEx UK

The big three integrators, FedEx, UPS and DHL, have different pricing measures in place to cover increased operating costs from the re-introduction of customs clearance for shipments once the UK’s Brexit transition period ends on December 31, 2020.

The pricing measures come in the form of higher rates (FedEx), a special fee (UPS) and a surcharge (DHL Express), which will all apply from January 2021 onwards. However, it is still unclear how the end of the transition period will impact on transit times for shipments to and from the UK.

FedEx hikes UK-EU rates

As the end of the transition period approaches, FedEx is standing by an earlier statement in which it stipulated that whatever the outcome of the negotiations, shipments moving from UK to Europe, and Europe to the UK will require the company to perform customs clearance of shipments. However, it is not expected that this will apply to shipments between Ireland and Northern Ireland.

“FedEx is making incremental investments to adjust our systems, processes, resourcing, and customer facing solutions to ensure we are ready for the change on January 1, 2021. To reflect these investments and the incremental cost of clearing shipments, beginning January 4, 2021 we will be increasing transportation rates for shipments from UK to EU, and EU to UK,” it said.

The company added: “All other applicable fees and charges related to moving shipments across borders will continue to apply and will be based on the customer’s instructions to FedEx related to the clearance of the shipment.”

UPS adds ‘border fee’

As for UPS, it will implement a UK Border Fee, effective January 1,2021, on all shipments (excluding letters and documents) exported and imported between European Union member states and Great Britain (England, Scotland and Wales), as well as shipments between Northern Ireland and Great Britain. “This fee covers the incremental transportation and handling costs due to network adjustments. It does not cover any additional brokerage services,” it said.

A UPS spokesperson told CEP-Research: “While businesses around the world have faced unforeseen challenges due to the pandemic, we have continued to partner with them to move the world forward by delivering what matters. We navigate the regulatory complexities of global trade daily for our customers so that they can focus on their businesses.

“With the increased transportation, customs and brokerage, and network adjustment costs associated with goods movements in and out of the UK, we previously announced a flat UK Border Fee to begin on January 1, 2021. As the world’s largest customs broker, we deliver value for our customers by helping them adjust their global supply chains to better manage cross-border risk.”

The company has not disclosed the level of the flat fee, however.

DHL introduces post-Brexit surcharge

Meanwhile, back in September, DHL Express announced a special surcharge on dutiable shipments between the UK and the European Union as of January 1, 2021.

As part of its rates adjustment announcements in European markets, it said: “On December 31, 2020 the United Kingdom will leave the European Union Customs Union. While Deutsche Post DHL Group is used to dealing with a wide variety of trade barriers and obstacles, this development implies the incurrence of significant additional operational cost by the company.

“In order to ensure the continued service excellence our customers expect, from January 1, 2021 a fee will be levied on all dutiable shipments between the UK and European Union countries, both inbound and outbound.

“With the information that is currently available, the intention is that this fee will be set at €0.25 per kg with a minimum charged amount of €5.00 per shipment. This fee may be adjusted, should circumstances change significantly,” it added.

Worries about cross-Channel ports

Meanwhile, there continues to be widespread concerns about potential chaos at major cross-Channel ports with long truck waiting times in the immediate period after January 1 next year with the re-introduction of border controls.

In an exclusive interview with CEP-Research in September, DHL Express Europe CEO, Alberto Nobis, explained that the company does not want to “take any risks” that goods on trucks might be delayed. So instead shipments will be flown between its air hubs in Europe and its UK hub at East Midlands Airport.

“All the traffic inbound to the UK will be flown. We don't want to risk anything for our customers. Basically, from January 1 we will be ready to fly all the goods to the UK,” he said. Normally about a quarter of its international volumes to and from the UK are transported by road.

In response to questions from CEP-Research on whether it expects delays at UK-EU borders as part of the post-Brexit landscape, impacting transit times, a spokesperson for the company replied: “For the last four years, we have been planning for a range of Brexit outcomes, across a range of key areas including our customs clearance capabilities, customer service, networks, ground operations, IT and finance processes. We have been preparing our customers for the new trading environment to ensure they have the right processes and documentation in place.”

SourceFedEx, UPS, DHL, CEP-Research

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