"Technology was our secret weapon"

"Technology was our secret weapon"

Paul Wells, Managing Director at ChannelPorts in Dover, shares a British perspective of Brexit and addresses the challenges ahead.

AEB: Paul, what did your workday look like on January 1, 2021?

Paul Wells: January 1 was probably the easiest day. The question is, how were the six months leading up to January 1, 2021? During this time we worked feverishly to bring our employees up to speed so they’d be ready for Brexit. And while all that was happening, we had to vacate our offices to make room for the Border Force, which is responsible for monitoring customs.

AEB: You’re close to the Eurotunnel …

Paul Wells: ... exactly, in Hythe. And we had a service area with truck parking right next to the Eurotunnel. The new offices were still under construction, so we initially set up shop in a few guard shacks. When January 1 arrived, things were rather quiet at first. People were taking a wait-and-see approach and not submitting many declarations. The long holiday weekend may have also come into play: The first workday wasn’t until January 4.

“We told people: You need to prepare, this is going to happen.”

AEB: And then it started?

Paul Wells: And how! The first few days were extreme. Normally we got around 700 calls a day, but that suddenly shot up above 3,000. Brexit seems to have surprised a lot of people, despite repeated warnings from the UK government that it was going to happen. Smaller businesses were particularly hard hit.

AEB: How did you deal with this onslaught?

Paul Wells:  The first four months, the Senior Managers and I must’ve worked an average of 90 hours a week. And that despite the fact that we had technology as our secret weapon. Anecdotally, I heard about others who, at the end of 2021, were still processing declarations for goods that had arrived in January 2021. This was possible because the authorities allowed imports to be cleared after the fact. They checked exports, but for imports, they initially looked the other way.

About ChannelPorts

ChannelPorts has been a reliable customs clearance partner for moving goods into and out of the United Kingdom since 1974 – a long track record spanning the nation’s pre-EU and post-EU eras. The customs management provider has special expertise in the UK’s “roll on, roll off” ports. Since Brexit, ChannelPorts has focused on helping carriers and transport companies move goods from the UK across the English Channel to Europe. ChannelPorts also operates a commercial truck rest area adjacent to the Eurotunnel in keeping with the company’s philosophy of seamless, end-to-end service.

“Technology was our secret weapon.”

AEB: That sounds overwhelming.

Paul Wells: … and it was. Not only that, but there was no test system in the UK for our employees to work with, so we had to make adjustments on the fly. There was also a lot of competition for talent, so companies without enough in-house expertise offered astronomical salaries and other incentives in an attempt to poach experts from other companies. It was a bit of a Wild West atmosphere.

AEB: We have a big shortage of skilled labor in Germany as well.

Paul Wells:  Before Brexit, customs was a niche industry in the UK. Only 5 percent of all trucks coming through the Eurotunnel were subject to controls. That’s all changed now, of course. We always train our own employees. That includes the 30 new people we hired for Brexit. Our Senior Managers run the training, taking into account the unique strengths of each new employee.

“All the customs knowledge had gone.”

AEB: You mentioned that you were pulling 90-hour weeks: What was the greatest challenge during this time?

Paul Wells: The real challenge came from carriers and transport companies. They essentially became our biggest customers overnight even as they grappled with a completely new situation. Since 1993 they had gotten used to just moving goods freely in Europe without having to do anything. And there aren’t too many people in our industry who still remember the times before 1993. All the customs knowledge had gone. All they did was fill out a CMR transport document, check the goods, and send the truck into the Eurotunnel. They didn’t know what a duty deferment account is, or an EORI number, or whether and when it’s possible to offset the import VAT.

AEB: Everything you need for a correct and efficient customs declaration.

Paul Wells: Exactly. Suddenly it was just as difficult to move goods through the Eurotunnel as to import them from the US or Australia, and that was a huge extra hassle, of course.

AEB: So it was the carriers and transport companies that carried the biggest burden?

Paul Wells: They definitely had one of the steepest learning curves. One of the biggest problems was the issue of origin of goods and preferences. Take, for example, a shipment moving from Turkey to the EU and then on to the UK. People were used to these goods having customs privileges based on their preferential origin. All of a sudden, if these goods were imported to Germany, cleared through import customs, and temporarily stored without a bonded warehouse before being shipped on to the UK, they lost their preferential status. And importers had to pay duties twice. The same applies to Japan and other large markets, of course.

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“After Brexit, people just stopped trading.”

AEB: That's something carriers actually want to avoid at all costs...

Paul Wells: And this means that imports to the UK will get even pricier, of course, since the cost of the empty run has to be factored in. What’s more, many larger enterprises have shuttered their UK offices and moved them to the EU. The effects can already be felt with automotive parts, for example, which accounted for a big share of trade. In the run-up to Brexit, the UK government was anticipating more than 200 million customs declarations a year. The latest figures put the number at just 70 million. That’s a huge difference, and if you take out the big players, there’s not much left.

AEB: Do you see anything offsetting this trend?

Paul Wells: The Target Operating Model, or TOM is about the control of SPS goods such as plants and products of animal origin and is due in 2023. This will place additional controls but we are hoping for some simplifications otherwise full check of every product of these types would lead to delays.

AEB: Besides Brexit, what’s keeping you busy right now?

Paul Wells: Right now we’re primarily occupied with CDS ...

AEB: ... the system that replaces CHIEF, the electronic interface to HM Revenue and Customs.

Paul Wells: And the UK’s new e-customs system, which requires you to provide a good deal more customs data. Our main focus was training our workforce and integrating our software systems. It was important for us to be prepared for CDS when it was rolled out. We continue to monitor this evolving situation. Besides TOM, the UK government plans to introduce the Single Trade Window by 2025.

“For the Single Trade Window, we need better collaboration with the EU.”

AEB: A platform through which importers communicate and shared data directly with the various authorities...

Paul Wells: … yes, and with multiple authorities. The goal is to reduce the amount of data entered into different systems, moving goods across borders more easily while making the system more secure. Blockchain is talked about as a way to make this happen.

AEB: The UK government also wants to track the movement of goods using GPS and talks about having the most effective customs border in the world.

Paul Wells: This would simplify registrations. Such a system would certainly be a relief for large transport companies with fleets of 100+ trucks, for example. It’s convenient for them to track the status of each shipment. They can also afford the technical equipment. I’m not so sure about a small freight forwarder with five vehicles. Also, we’re talking about a strictly UK law, so without good collaboration with the EU, the old system will have to remain in place. We’ll know more in 2025, but that’s still quite a long way off.

AEB: What would you like to see going forward?

Paul Wells:  We’re trying to nudge exporters and importers to further embrace software and electronic processes so they can accomplish more with the same staffing levels – and offer more attractive prices, of course. But getting customers to go digital is difficult. Most just want everything to stay the way it was, especially after the heavy lift of Brexit. They tell us that things are going well, even if they could be going better. Businesses still see this as too low a priority. There are large companies that still pay VAT in the UK even though they could use postponed VAT accounting. Many tie up all their workers doing customs tasks that computers can do alone. These people could instead be processing new orders or doing other things. So there is tremendous economic potential in more efficient customs clearance. We seek to leverage this for our customers.

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