The Brexit Burden: 215 million extra forms a year for British trade

July 20, 2020
Sarah McLaren

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A brief look into the UK’s preparation for the incoming rush of customs paperwork post transition period. Vector is a London based supply-chain technology startup.

Come January 1st 2021, one of the realities of Brexit will be the significant surge in customs declarations that UK companies will need to fill out when trading with the EU.

This week the government released estimates that up to 215 million separate declarations will have to be completed each year by UK companies trading with the EU, with an equivalent 215 million forms reciprocated for businesses in Europe. The forms figure rises to 400 million annually if the UK is not granted a waiver on safety and security declarations.

Back in 2018, HMRC estimated that each declaration costs on average £32.50 to complete, meaning an estimated total bill for UK businesses of over £13 billion a year and a similar bill arriving on the other side of the channel.

It’s estimated that 50,000 new customs agents will be needed to help process this massive paperwork mountain, not an easy task in such a short time-scale and with so few resources dedicated to this issue. The £34 million allocated by the UK Treasury to solve this problem is a drop in the ocean, and even money permitting, Robert Keen, the director-general of BIFA, reports the time it takes to train a new recruit in customs can take at least a year.

Whilst paperwork isn’t the only complexity around customs clearance, it plays a significant part in a customs agent’s role and is a necessary evil of importing, exporting and financing trade between companies in different countries. A lot of paperwork needs to be done to verify goods passing through customs in cross-border trade and for moving freight in general. When Brexit finally comes, companies will need to try and make that process as smooth as possible to keep costs of importing and exporting down and make sure they can keep international trade growing.

The UK government’s advice is that businesses make use of customs agents or logistics providers like freight forwarders in order to navigate the added complexity of cross-border trade after Brexit. Freight forwarders are the middle men in the shipping process that assist businesses in navigating the difficulties of getting goods from one country to another via multiple modes of transport, helping to make cross-border trade easier. We’re expecting to see a significant increase in demand for freight forwarding services once the Brexit deadline in January passes.

Whilst the new customs border will likely mean an increase in business for them, managing up to an additional 400 million declarations each year is likely to be a further paperwork burden for an industry which still predominantly operates on outdated paper-based processes. According to the UNCTAD, an average customs transaction involves 20–30 different parties, 40 documents, 200 data elements (30 of which are repeated at least 30 times) and the re-keying of 60–70% of all data at least once. That’s a lot of data to be processed!

Cross-border trade is complex — Photo by Hugo D. on Unsplash

The UN estimates that by digitising trade paperwork processing they could cut costs by 31% and time by 44%. Customs and freight documents come in all shapes, sizes and formats. One small screening process, like checking the consignment number is consistent across 80 pages of documents, can be super painful and needs a lot of dedicated man hours.

Here at Vector we specialise in helping freight forwarders process trade paperwork. As their paperwork co-pilot, we use artificial intelligence to do a lot of the leg work that the extra 50,000 customs agents will be employed to do, saving employees’ time, companies’ money and making it easier to serve customers. Our platform’s trade focused workflow helps guide agents through handling incoming paperwork, ready for customs declarations, reinforcing best practices and making processing 10 times faster.

As a British built company we are particularly impassioned to help address the paperwork pain and minimise the impact of Brexit on companies dealing with international clients or suppliers. From our engagement with global logistics players we know our technology can assist meaningfully by reducing the time taken to turn vast quantities of unstructured data into useful, well structured information, key to this customs challenge. Boris Johnson himself gave the call to action, “there are big opportunities for this country to do things differently and do things better. We have to get ready for the end of the transition period and get it done.” The domestic tech scene, home to some incredible entrepreneurial and machine learning talent, has a real role to play in these strategic conversations and, indeed, may be the key to the Prime Minister’s vision to not only survive Brexit, but to thrive.

When the new customs system comes into play in January 2021, digitisation will play a key part in keeping the UK trading with other countries. We’d love to get rid of paperwork all together, but whilst it’s here, using a paperwork co-pilot to efficiently guide users through the process is a quick way to make things easier.

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