Monday 20 July 2020

Amazon sellers the latest to pay the price of Brexit

As we get closer to the deadline, the reality of Brexit is percolating through and its impact is beginning to be felt in ways which will affect people's lives and livelihoods. This weekend we learn that Amazon's European sellers are going to be affected as we leave the customs union. Anyone in the UK who sells things on Amazon's FBA platform into the EU will have to ship products into Amazon warehouses in Europe themselves, Amazon will not move goods across the border for you.

If you don't know what the FBA platform is, it stands for Fulfilled By Amazon. If you sell small, repeat items you may choose to use FBA because it offers a lot of advantages. You send your goods in bulk to an Amazon warehouse and then promote and advertise your product on their website. When an order is placed, Amazon handle the entire process. They store, package (including the packaging), label the item and deliver it for less than Royal Mail charge for delivery alone. And with Amazon Prime your customer can get it delivered next day.

Many sellers operate a business barely seeing the stuff they sell. They buy the products (from China I imagine). have them delivered to Amazon and just sit back while Amazon does the rest. Simple, eh?

But now the internet giant says if you use a warehouse in the UK they will not ship to Europe. The seller will be responsible for all the customs, tariffs and checks to allow them to cross the border (both ways).  And once in Europe, any returns to the UK will be handled by the seller, not Amazon.

It was described as a "bombshell" announcement on Tamebay (HERE).

Dimitry Grozoubinski tweeeted that it was a "huge deal":
Anna Jerzewska, another trade expert says this was always going to happen and she cites two reasons:

This will raise costs for customers on both sides of The Channel directly as a result of Brexit and I imagine (although I don't know) that if you ship goods from China and pay a tariff on it when it enters the UK - you may also have to pay another tariff when it enters the EU - even if we have a trade deal. This because the product will not be classed as UK originating and will not be allowed tariff free entry. Some sellers may not survive.

Next, The Telegraph had a report on Saturday suggesting that three quarters of the UK's international hauliers face being excluded from Europe under the permit system that will apply if we leave without a deal - I posted about this last Thursday (HERE). The Brexit supporting newspaper says:

"When Britain leaves the single market and customs union at the end of the year, lorry companies will lose the right to provide road transport services in the EU. Instead, they will automatically enter the European Conference of Ministers of Transport (ECMT) scheme, which distributes a fixed number of permits per country. There were 8,348 UK-registered international road hauliers last year, according to Department for Transport data.

"However, under the ECMT scheme, the UK would be allocated permits for only 2,088 companies."

There is a suggestion we might be able to negotiate more permits with individual countries but, the report adds:

"Ms Laouadi [of the Freight Transport Association] warned that even if this were legally feasible, negotiations with 27 countries would be lengthy, and for drivers “a patchwork of rules would be a nightmare to ­navigate” on top of other new Brexit paperwork. It would be especially cumbersome for UK businesses operating in more than one EU state after crossing the Channel, she added."

"Alternatively, the EU could grant market ­access to UK hauliers for nine months, as was agreed in no-deal plans, but Ms Laouadi said that was “not a sustainable, long-term solution because the EU does not want a permanent, stand-alone arrangement”.

"A 206-page document released last week, which set out the Government’s post-Brexit border plans, did not address the permits because the issue must be settled with the EU.

“What matters now is to focus efforts on securing a free trade agreement with the EU,” Ms Laouadi said.

"A spokesman for the Department for Transport said it was 'optimistic that an agreement can be reached that will continue to enable the substantial flow of international haulage'."

I too think an agreement will be reached but think about it, who needs an agreement the most under these circumstances?

I know of one local haulier involved in international haulage who was a keen supporter of Brexit but I assume either they wanted to shrink their business or didn't know what they were voting for - or even under what laws they were permitted to operate until the end of the year.

If we do reach a deal - or if they are one of the lucky quarter of hauliers who get some permits (this will be less than 5 per cent of our total need according to the FTA) - they will still be permanently mired in paperwork and responsible for making safety and security declarations - all 215 million per year of them. Welcome to Redtapeland.

Someone retweeted a tweet from December 2018 about this very problem - the one not covered at all by the 206 page Border Operating Model published by the government last week. 

I assume Mr MacKenzie was thinking at the time we would avoid all the paperwork by getting a close deal along the lines Theresa May was proposing. He now knows this will not happen. Let's hope the company responsible for seven million customs declarations is well prepared!
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