Duty dilemma awaits post-Brexit cargo

With just nine days to go before the Brexit deadline on March 29, and still no finality in sight, the shipping industry remains in limbo.

Patrik Berglund of Xeneta looks at likely scenarios for the cargo on two container vessels come April 1.

·      Shanghai-Felixstowe; MSC Kalina. ETA Felixstowe 1 April

·      Felixstowe-New York; CMA CGM La Traviata. ETA New York 2 April

“Both ships arrive just after Britain leaves the EU,” says Berglund, “so with Britain then having no trade treaty in effect with either China or the United States, importers must (probably) clear the goods under WTO rules. What will be the effect on the exporters and importers moving those TEUs?

“The UK importer now pays HMRC an import duty of 6%, in addition to the existing port, harbour, and other fees. If the cargo was pre-sold, can this 6% be charged to the buyer, under some sort of force majeure? Probably not, as the Brexit vote was 2 ½ years ago and a hard Brexit is hardly an Act of God. The net effect on April 1 will be someone paying 6% more for goods arriving on the MSC Kalina than had the goods arrived on March 28; will it be the exporter, the carriers, or the consumers paying the price?”

In the case of the second vessel, US Customs has issued no guidance as to what basis UK goods are to be charged import duty, says Berglund.

The expected hard Brexit has already negatively impacted the UK with Honda announcing in February that it would close its only British car plant in 2022 due to declining diesel vehicle demand and Brexit uncertainty and Nissan recently cancelling plans to build its X-Trail SUV in the UK to mention just two.

For now, it’s a ‘wait and see’.

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