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Home » Brexit Red Tape Is Becoming a Jackpot for Customs Pros

Brexit Red Tape Is Becoming a Jackpot for Customs Pros

Brexit Trucking
July 21, 2020
Bloomberg

The next big money-making opportunity of Brexit has emerged: selling customs services.

With Britain’s split from the European Union heralding the introduction of border controls between the U.K. and its largest trading partner for the first time in three decades, companies are rushing to acquire the means to file the new customs paperwork that will be required from January.

The surge in demand is a boon for firms such as AEB SE, a closely-held Stuttgart-based provider of software that helps users to file trade declarations. In recent weeks, the firm has seen a five-fold increase in inquiries for its services, which can cost as much as 2,000 pounds ($2,500) a month.

AEB, whose clients include BAE Systems Plc, Volkswagen AG and Kellogg Co., said it expects to process about 500,000 customs declarations a day from next year based on the business it has already won — an increase of at least 2,000% on current levels.

“This is just the beginning of it,” said Geoff Taylor, AEB’s U.K. managing director, who expects demand to grow further as more companies ramp up preparations for Brexit. “I expect our business to continue to be busy for the rest of the year.”

The new red tape is an automatic consequence of Britain leaving the EU’s customs union. Companies will still have to file additional paperwork even if the two sides reach a trade deal this year. Negotiations over that accord will resume in London next week.

Extra Costs

With 400 million extra customs declarations needed annually, and each costing an average of 32.50 pounds, the extra paperwork will add about 13 billion pounds of costs to U.K.-EU trade annually. And if companies don’t have the right documents, their goods risk being held up at ports, causing traffic jams and supply chain disruption.

In a 206-page document outlining its Brexit border plan, the U.K. government says: “Customs declarations are complicated.” This month it started an ad blitz to encourage businesses to prepare for the new rules — either by seeking the services of a customs agent or handling the declarations themselves.

Cashing In

Other startups are seeking to cash in by automating the customs workload. AiDock, whose software helps complete declarations faster, has been demonstrating its product to companies in the U.K. and Ireland. The company, which is based in Israel, has seen a spike in interest, according to William De’Ath, its head of business development for Europe.

James Coombes, co-founder of Vector.ai, a London-based startup which extracts data from documents to speed up the process of filling out customs forms, said firms will have to turn to technology because of a shortage of human customs brokers. The U.K. logistics industry expects at least 50,000 customs agents will be required to handle the extra Brexit paperwork, but early data from training providers suggest the government is far from reaching that target.

“It can take from six months to a year to train a new customs broker, and it’s just unrealistic to bring on that amount of staff in such a short time-frame,” Coombes said. “We’re in a really good position to help.”

The other big winners are established freight-forwarders such as Kuehne + Nagel International AG, DHL International GmbH and DB Schenker, which handle goods movements and customs processes for multinational companies. KGH Customs Services, a Swedish firm set to be acquired by A.P. Moller-Maersk A/S, said it has seen a rush of companies wanting their help.

“It’s now selling like hot potatoes,” said Steve Cock, KGH’s director of customs consultancy for U.K. and Ireland. “People are now actually starting to spend money.”

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Logistics Freight Forwarding/Customs Brokerage Global Gateways Technology Global Trade Management Global Supply Chain Management Global Trade & Economics Regulation & Compliance Europe
KEYWORDS Europe Freight Forwarding/Customs Brokerage Global Logistics Global Trade & Economics Global Trade Management Regulation & Compliance
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