Brexit Customs System Rollout: Potential Delays and Impacts on TradeEverstream Team
- Regardless of the outcome of Brexit negotiations between the UK and the European Union, the UK has introduced three new IT systems to manage and facilitate customs starting January 1, 2021: the Goods Vehicle Movement Service (GVMS), Smart Freight Solutions, and the Trader Support Service.
- At the time of reporting, GVMS is still in its research phase. This is a cause for concern for some shippers that wish to see a timely implementation of the system to ensure minimal disruption at British ports of entry.
- Smart Freight Solutions is in its development phase, with plans to transition into a beta phase between October and December. While on track, there is a lack of confidence in a bug-free rollout.
- The Trader Support Service is online as of September 28, 2020. During the interim development phases of GVMS and Smart Freight, this can offer support to those planning the rollout of GB-NI and UK-EU commerce after January 1, 2021.
- The GVMS and Smart Freight systems remain in a preliminary phase of testing. As such, unresolved issues may complicate and elongate the duration of shipments within, to, and from the UK due to software bugs.
- Shippers can prepare for such complications by integrating and becoming familiar with the systems. Integration will require the appropriate analog and digital backups to ensure that trade to, from, and within the UK is seamless, and to inform HMRC of any issues that arise.
On December 31, the United Kingdom (UK) will formalize its break from the European Union (EU), after which customs declarations will be required for shipments to the Irish trade area and the EU at large. All imports shipped from the bloc will require customs declarations from July 2021. To facilitate trade and to avoid the required storage of up to 90 days pre-declaration, the UK is planning to implement the Goods Vehicle Movement Service (GVMS) for trade by truck in both directions.
The objective of the full July 2021 implementation is the automated and unimpeded movement of goods. The expectation is that this will occur after passing the Goods Movement Reference (GMR), a comprehensive customs declaration form to be presented at the EU-UK border. The GMR intends to eliminate some disruptive customs processes by allowing the collation of separate declarations so the cargo hauler must only present one single reference. The implementation is designed to establish a notification system in Her Majesty’s Revenue & Customs (HMRC). By July 1, 2021, the GVMS is expected to be declared “in place” for all imports, exports, and transits at the ports of entry that wish to use it.
As the implementation date approaches, testing complications may arise, which is not anticipated to start until November. Smart Freight, the mobile application designed to manage traffic flows at the border, has not yet been tested either. While the Trader Support Service is operational and available for use by brokers as of September 28, it has not yet provided an adequate solution for Great Britain-Northern Ireland trade. This is due to its nature as a mere advisory mechanism, and not an active input system for performing high-level customs tasks. Though it is intended for use by those engaging in commerce in the UK, a potential interim use for the protocol is for completing digital declarations. Until this happens, it is an inadequate solution to correctly process and manage the litany of declarations and forms for unencumbered trade between Great Britain, the Irish Customs Area, and the rest of the EU.
Regardless of the outcome of the Brexit negotiations, logistics disruptions can be expected. Shippers can benefit by studying the developments and staying abreast of the timeline for implementation to preempt and prepare for any shortcomings in the system rollouts.
The preparedness of GVMS, Smart Freight Service, and the Trader Support Service has been questioned since the onset of system feasibility research began in September 2020.
As of June 24, the GVMS is in Version 0.3. Its objective will be to link the movement of goods to declarations and notify when clearances are successful. The current iteration is an API that is intended for integration into existing systems’ interfaces.
|GVMS Software||Crossing DirectionsVehicle & Trailer RegistrationsCrossing & Accompaniment DetailsTransit Accompanying Document MRNs for transiting goodsERNS for CHIEF-declared goodsMRNs for CDS-declared goodsDUCR for export-bound CHIEF/CDS-declared goodsEORI for authorized self-declared goodsATA/TIR Carnet numbers|
|GMR declaration||Reproduction of declaration by proprietary software or link|
An implementation challenge has been discovered in the replacement of Semaphore, the database on which the systems would run. The system was slated for replacement due to collection and quality concerns. Semaphore is planned to remain as the database for the new systems through December.[ii] While current estimates suggest that HMRC will be able to have GVMS ready by the testing date, ensuring proper and effective use by the shipping industry may present challenges. Further, ensuring that GVMS offers shippers, truckers, and brokers alike the functionality needed may be complicated.[iii] January 1, 2020 is the start date for GVMS implementation for transit movements. However, a temporary exception has been made by the Border and Protocol Delivery Group for animals, plants, and certain pre-notified movements which will not require entry into Great Britain via a border control post until April 2020. A full listing of Great Britain Border Control Posts intending to employ GVMS has not yet been disclosed to the public.
Smart Freight previously appeared to be on track for implementation from October to November. However, industry estimates now suggest that the beta version will not be ready until the middle of December, the busiest time of year for British shipping. This will compound concerns around training those tasked with employing it and if they can be trained in time for implementation.
Trade Impacts in the UK
The impact of the troublesome implementation of GVMS is likely to exacerbate broad trade-related issues resulting from the phasing-in of the UK Global Tariff Schedule. In the event of a no-deal Brexit, checks are likely to be required upon departure from the UK and arrival in the EU, increasing the need for successful implementation of GVMS. Aerospace, chemicals, pharmaceuticals, and perishable consumer goods are anticipated to be the worst impacted sectors in this regard. As for customs declarations, GVMS is designed to accept both the legacy Customs Handling of Import & Export Freight (CHIEF) declarations as well as the latest phase of the Customs Declaration Service (CDS).
|GVMS Implementation Phase||Month||Subject Goods|
|One||January 2021||ATA-applicable non-perishablesEndangered flora and faunaAnimal productsBottled waterExcise goodsDrug and explosive precursorsPharmaceuticalsClinical Trial Supplies|
|Two||April 2021||Goods subject to phytosanitary controls|
|Three||July 2021||Goods subject to phytosanitary controls|
There does not yet appear to be any information on supplementary documentation required for declaring the most sensitive commerce: perishables, such as foodstuffs, and pharmaceuticals. Finally, for the Transit phase, the most immediate application of GVMS, shippers will be required to have a paper Transit Accompanying Document (TAD) in addition to the electronically submitted GMR.
UK Logistic Impacts
The delays in GVMS implementation as well as accounted-for technical difficulties are likely to be compounded by anticipated staffing shortages at customs brokerages. The additional documentation is anticipated to exceed 260 million customs forms per year, consolidated into 215 million declarations per year. From the shipping side, estimates as of September 23 suggest that 30 to 60 percent of trucks crossing the English Channel might not be prepared for the new documentation requirements and GVMS by January 1, 2021. This could create queues of over 7,000 cargo trucks, with wait-times of up to two days for entry into the EU. The Border and Protocol Delivery Group has recommended that logistics firms instruct drivers not to proceed to the border before all necessary inputs in the GMR are made, and to present the GMR to the carrier upon arrival. Yet, it is uncertain how well this advice will be transmitted and implemented in practice. As such, these challenges have the potential to deter EU truckers at Kent and Dover, as well as raise the possibility of increased haulage prices. The proposed Kent Access Permit system, which would require documentation checks ahead of a trucker’s approach to the border, will extend wait times further. Such a system would institute a voluntary pre-inspection regime that would examine documentation prior to arrival at the border. Though the aim is to reduce non-compliance-related delays, such a regime is more likely to exacerbate the congestion.
Those seeking alternative crossings to Kent and Dover should consider that border locations without existing customs control systems will not be required to implement GVMS or a temporary storage mechanism for standard imports and exports. Furthermore, some ports may elect to continue with a paper-based method. In accordance with pre-lodged declaration requirements, ports implementing GVMS may not be implemented at roll-on/roll-off (ro-ro) locations. GVMS will not be required for transit, however, thanks to the UK’s membership in the Common Transit Convention. Any frontier location of any transport mode will be required to become a customs-approved area by the time of full GVMS implementation. However, it is unclear how the voluntary nature of GVMS implementation will align with such requirements. Technological and customer-use difficulties were reported in GVMS during the early days of January’s transit implementation, and as late as July’s full commercial implementation. Given this, the non-mandatory nature of GVMS could lead shippers to elect alternatives, or warehouse goods for later inspection, and thus increase the likelihood of warehouse congestion. This would be especially relevant for facilities near Dover and Holyhead.
Moreover, considering Smart Freight’s launch delays at the government level, implementation delays at the user level can pose their own shipping challenges. Mindful of the potential for congestion issues at Kent, Smart Freight is being designed to issue messages to users through its web-based portal about the necessary documentation for cross-border transit. If the carrier possesses complete documentation and information, Smart Freight would advise the carrier to proceed to the port. If the carrier does not have complete documentation and information, however, the carrier would be advised against proceeding to the border. While the application has capability limitations, a lack of advisement about an incomplete application could lead shippers to proceed to the border without proper document and thus, amplify congestion. If a hauler or truck owner does not register with Smart Freight, those entities are liable for fines of up to GBP 300 (EUR 332).
The Smart Freight challenges alone are prompting shippers to consider alternate routes into the UK via Franco-Irish shipping. The possibility of the increased popularity of seeking alternatives has prompted Irish officials to state that French contingencies are planned in the event of implementation challenges, with similar plans likely to develop with Germany, the Netherlands, and Belgium. Furthermore, as routes from Northern Ireland to Great Britain are not the only Irish sea trade route, Irish sources also indicate that Dublin-Holyhead trade will suffer delays, although perhaps not as severe as the effects suffered at Dover.
Outlook and Recommendations
s the New Year approaches, the window for successful testing and implementation is slowly closing. Authorities recognize the challenges for implementation and the complexities of using multiple systems and are contemplating simplification and consolidation. The likelihood that such processes can be completed before January 1, 2021 is low. The GVMS API is publicly available for sandbox testing, which will allow those conducting trade between Great Britain and Northern Ireland and between the UK and EU to test the system before use. This will allow them to create, update, finalize, list, populate details of, delete, and obtain reference data for GMR. Those conducting trade between Great Britain and Northern Ireland and between the UK and EU should therefore consider the following recommendations:
- Prepare contingencies outside of GVMS: Develop paper, phone, and email-based contingencies to mitigate the impact of a potential GVMS failure after implementation.
- Familiarize trade and IT personnel within your supply chain with the GVMS API: Where possible, those conducting trade to and from the UK should take advantage of the availability of the GVMS API from the HMRC Developer Hub to experiment in a sandbox. This will help assess how integration into pre-existing or ad-hoc solutions can mitigate any potential implementation or customs clearance issues, or in the best case scenario, provide recommendations to HMRC upon the discovery of any challenges faced in the beta version.
- Familiarize relevant personnel with Smart Freight: Familiarizing and training staff, even with the beta version, can mitigate potential user issues prior to January 1, and afford an opportunity to identify bugs and introduce suggestions to improve the app.
- Take advantage of the Trader Support System: This is the most accessible opportunity that those planning to ship between Great Britain and Northern Ireland and between the UK and EU will have to familiarize themselves with trade issues to and through the New Year.
With the aforementioned recommendations outlined, those shipping between Great Britain and Northern Ireland and between the UK and the EU should be mindful of the disruptive potential of the new IT customs systems, the possibilities of system failures and subsequent delays, and plan accordingly.