The shipping news: life after Brexit

VI-1s may be on hold, but there’s still a lot to take on board for any wine merchant planning to do business with wine exporters in the European Union after January 1. Chris Porter of Kukla Beverage Logistics explains the new process

Are we facing chaos in the freight system from January 1?
The possibility is certainly there for “a chaotic few weeks”, says Chris Porter.
That’s why importers are being encouraged to make sure they are up to speed with the changes – and that the wineries they deal with are, too.

Porter adds: “Many importers are stockpiling, but considering the impact of coronavirus, it’s difficult to gauge what is regular ‘Q4 peak season’ and what is ‘safety stock’ shipped to cover possible post-Brexit disruption.”

Is the Dover-Calais route likely to be a pinch point?
It seems likely. “Whilst the latest Border Operating Model released by the government represented a positive step forward in terms of process detail, precise requirements relating to roll on, roll off ferry ports, particularly the Calais-Dover routing, remain unclear,” Porter says.

One major concern is ensuring that all relevant documentation is submitted in a timely way. Another is the fact that Goods Vehicle Movement System (GVMS, for non-transit shipments) will only be available from July 1, Porter says.

Does that mean we can expect to see wine shipments routed through other ports?
Kukla expects to bring in more shipments from Antwerp, Zeebrugge, Moerdijk and Rotterdam – “those ports where the ship pulls up alongside the quay and the containers are craned on,” Porter explains.

“These are unaccompanied shipments and that gives the haulage, freight-forwarding and broker communities a little bit more breathing space to handle the customs formalities. For example, a typical routing from Italy into the UK, certainly to the home counties area, would go into Rotterdam and then pick up a short-sea service into Tilbury or Purfleet.”

What’s happening with the Excise Movement Control System (EMCS)?
Porter explains: “EMCS will be retained by the EU. Suppliers will continue to raise the eAD [which creates an individual ARC number that follows the movement throughout its journey] with their Movement Guarantee, but it will be consigned to the last EU exit port as opposed to a UK tax warehouse [bond] – or REDS declarant, in the case of duty-paid shipments.”

He adds: “As the container or trailer arrives safely into the EU port, the ARC will be scanned into the port system, closing the eAD and discharging the EU wine supplier’s Movement Guarantee liability. The UK will retain EMCS for movements between domestic ports, tax warehouses and bonds.”

How will duty be collected?
The existing CHIEF (Customs Handling of Import & Export Freight) system currently only handles New World wines. The next generation system, the Customs Declaration Service (CDS), won’t be ready until at least September.

“We’ve been told that CHIEF has been upgraded and will be fit for purpose for Brexit,” says Porter.

Are there sufficient customs brokers and intermediaries?
That looks highly unlikely. “On a headline level, there are some 55 million declarations pre-Brexit and there will be a conservative 255 million declarations post-Brexit,” says Porter.
“There’s just not enough agents, brokers, clearance and data entry clerks to support what’s coming.

“We at Kukla took the strategic decision three years ago to bring our customs clearance activity in-house. Having achieved Authorised Economic Operator (AEO) certification and secured all necessary customs approvals, we opened our customs clearance division in June and are scaling up our staffing to support the year-end transition. In context of what we need to do for our customers, we are Brexit ready.”

What other paperwork is required?
Along with the eAD, and commercial invoice, an EX1 will be needed. Porter says: “We are working with customers and their producers to assist with the EX1 requirement. At the point of loading, we will capture all three documents which will be saved to an ‘electronic envelope’ that can be made available to all parties in the chain.”

A VI-1 (the controversial form which describes the wine and includes lab analysis) is not currently required, but the government plans to make this a requirement from July 1, 2021.

What’s an EX1 form?
Porter explains: “The EX1 – otherwise known as the EAD (not to be confused with the eAD) – is a standard EU export document that generates the Movement Reference Number. The MRN is another essential part of the arrival formalities into EU ports, without which access will be denied. Once safely arrived into the EU port, the EX1 is automatically closed.”

Is everyone in the supply chain aware of the challenges ahead?
Put simply, no. There is a slightly misguided view that negotiations between the UK and the EU will conclude with a free-trade agreement and that this will simplify things. The reality is, irrespective of deal or no deal, the UK will leave the EU customs territory and from January 1, export and import declarations will be mandatory.

“There will be some pain,” Porter warns. “The key challenge is to encourage wineries and their customers in the UK to engage and to understand the new export formalities. From there, a collaborative approach with UK forwarders and stakeholders to ensure compliance.”

November 2020