Posts

Early Brexit chaos just “tip of the iceberg” says cross-border trade specialist

Problems in the first few days since Brexit are the “tip of the iceberg”, according to cross-border eCommerce trade expert Hurricane Commerce.

Hurricane says that the issues caused by lack of complete and valid customs data and VAT now being payable on low value goods into the UK will cause severe challenges over the coming days and weeks.

Last week, DPD temporarily suspended parcel deliveries to the EU due to lack of data, stating that 20% of items had incorrect or incomplete information.

Several UK online retailers, including luxury food merchant Fortnum & Mason, have temporarily stopped taking orders from EU countries due to the extra customs paperwork now needed.

And some EU retailers have ceased taking UK orders following the January 1 change making overseas suppliers who send parcels containing goods valued at £135 or less to the UK responsible for paying any import VAT that is due.

Customer satisfaction has also been put under increased strain with consumers in the EU complaining about unexpected VAT charges and clearance fees, and UK consumers being asked to pay higher delivery charges to cover the extra work caused by Brexit.

Another major hurdle resulting from the Brexit trade deal concerns ‘rules of origin’ with the threat of tariffs due if goods do not meet the complex requirements or are not wholly made in either the UK or EU.

Martin Palmer, Hurricane’s Chief Content and Compliance Officer, said: “Online merchants and marketplaces, postal operators and carriers are starting to see the reality of Brexit and the ending of VAT exemption on low value goods by the UK Government.

“With the EU also removing the low value VAT threshold in July, the compliance pressures on all parts of the cross-border supply chain are set to intensify even further with similar issues to be experienced in all EU countries to those current being experienced in the UK

“The first week and a half since Brexit is just the tip of the iceberg.”

Martin added: “We predicted for the last six months of 2020 that many businesses were going to face serious challenges post January 1, while others did their planning and put the best possible systems in place.

“There is simply no escape from the need for complete and valid customs clearance data including product descriptions, HS6 codes, shipper and consignee details and country of origin.

“Retailers which offer Delivered Duty Paid (DDP) give themselves the best chance of keeping their customers happy by avoiding the doorstep shock of unexpected fees for customs duties and import taxes.”

Hurricane Commerce has developed a series of API solutions to help ensure seamless cross-border eCommerce trade covering data enhancement, duty and tax calculation, prohibited and restricted goods screening and denied parties screening.

Its customers include some of the world’s leading postal operators, carriers, online merchant and marketplaces.

 

Hurricane in the news:

Tamebay – Early Brexit chaos just “tip of the iceberg”

Air Cargo Week – Hurricane: Early Brexit problems “tip of the iceberg”

Sky News Business – Brexit trade problems ‘just the tip of the iceberg’, e-commerce expert warns

Retail Times – Early Brexit chaos just “tip of the iceberg” says cross-border trade specialist

Eminetra – Brexit’s trade problem is “just the tip of the iceberg,” e-commerce experts warn 

Q Radio – Brexit trade problems ‘just the tip of the iceberg’, e-commerce expert warns

2021 – a year of huge change for cross-border eCommerce

If 2020 was the year of the Coronavirus pandemic, for those involved in cross-border eCommerce trade 2021 will be the year of sweeping regulatory change.

The changes come thick and fast, starting on January 1 with Brexit and the full enforcement of the US STOP Act.

Both make the provision of complete and valid customs clearance data absolutely essential.

Ten weeks later will see the implementation of Import Control System 2 (ICS2) requiring postal operators to provide entry summary declarations on goods into or through EU customs territory.

As if that was not enough to occupy the minds of everyone involved in cross-border trade, both the UK and EU are removing the exemption from VAT on low value items.

And there is also the launch of the EU’s Import One-Stop Shop (IOSS) for retail merchants and marketplaces to contend with.

Combined, this plethora of regulations – all impacting in the first half of 2021 – will test postal operators, carriers, merchants, marketplaces and platforms to the absolute limit.

We know from our work with customers across all of these different segments of cross-border trade that some have invested the time and resource to get prepared for January 1.

They have tackled head-on the knowledge that the compliance landscape will look very different in just a few days’ time to what they had been used to.

For postal operators, good planning and preparation in terms of data enhancement means avoiding the nightmare scenario of parcels being stuck at customs resulting in huge delays and additional costs including warehousing, storage and returns.

For merchants and marketplaces, meeting the higher threshold for parcel data will be essential if they want to ensure the frictionless passage of goods to their end customers. Failure to do so will inevitably result in lost customers and reputational damage.

The final quarter of 2020 has seen increased activity among those whose businesses depend on seamless cross-border trade as the realisation dawned that January 1 really was going to mean a different way of doing things.

And while events like Brexit grab many of the headlines, the reality is that some or all of the regulatory changes outlined above will impact the way different postal authorities, carriers, merchants and marketplaces – irrespective of geography – conduct their business in 2021 and beyond.

Below is a recap of the big changes coming in 2021 and their timescales:

January 1 – Brexit: complete and valid data (including HS6 codes, product descriptions and correct values) will be required from the UK into the EU and vice versa.

January 1 – UK Import VAT Threshold: New regulations will make an overseas supplier who sends parcels containing goods valued at £135 or less to the UK responsible for paying any import VAT that is due.

January 1 – US STOP Act: the USPS has made it plain that from this date parcels will be refused entry into the United States and returned to origin if they do not meet the higher threshold level for advance electronic data (AED).

Martha Johnson, a spokesperson for the USPS, said: “Postal shipments containing goods not accompanied by AED will be considered inadmissible.”

March 15 – ICS2: Postal operators will no longer be exempt from having to make entry summary declarations into the Import Control System before moving goods into or through EU customs territory.

Under ICS2, shipments without the right data will no longer be allowed with the likelihood of severe delays in customs and increased costs.

July – EU VAT Exemption Removal: Abolition of exemption from VAT on low value items under €22. The changes mean that EU and non-EU sellers will charge VAT at the point of sale for consignments of €150 or below.

July – Import One-Stop Shop (IOSS): Modernising of VAT for cross-border eCommerce via the Import One Stop Shop (IOSS) making the retailer, web shop or marketplace liable for the declaration and payment of VAT to the country of destination.

Hurricane Commerce was founded in 2016 to provide customers with industry-leading solutions to changing and evolving regulations and laws impacting cross-border eCommerce trade.

From this starting point, we have created our lightning quick Zephyr API which enhances the quality of parcel data.

Zephyr can process over 700 million requests a day and can, on an item by item API call base, provide for a real time feedback with response times of 100 milliseconds. The screening of a file consisting of a maximum of 10,000 items that is sent to Hurricane takes no more than 15 minutes.

Meanwhile, our Aura API covers the three areas of duty and tax calculation, prohibited and restricted goods screening and denied parties screening.

An API call via Aura is super-fast with throughput tested at 640 transactions per second. One single call can perform these three critical cross-border functions, presenting the data back in real-time.

To find out more about Hurricane’s solutions, contact sales@hurricanecommerce.com.

 

Hurricane in the media:

CEP Research – 2021 will be a year of huge change for cross-border eCommerce

Tamebay – Regulatory change to test cross-border traders in 2021

 

UK and EU flag over London

Cross-border trade operators need to get Brexit-ready or face severe delays at customs

Planning for Brexit Day ranges from “excellent” to “chaotic”, according to a cross-border eCommerce specialist.

Hurricane Commerce says the discrepancy between those who have put in place robust plans and those who haven’t is huge – and time is running out to get Brexit-ready.

Postal authorities, carriers, eCommerce merchants and marketplaces all face severe impact on their businesses if they are not able to provide complete and valid data on parcels from January 1.

Martin Palmer, Hurricane Commerce’s Chief Content and Compliance Officer, said: “This is not just about the UK and trading into the EU; it is also about the remaining 27 EU member countries and their cross-border trade into the UK.

“The phrase ‘My shipment is stuck in customs’ is often used by businesses and the ever-growing number of private citizens using international eCommerce retailers.

“The perception is that customs officers and their bureaucratic requirements are bringing the world to a grinding halt. The reality is quite different. Most customs authorities operate sophisticated, automated clearance facilities taking just a few moments for a shipment with the correct data to clear customs.

“The real problem is usually that the exporter or importer has not complied with the requirements to import a shipment into a country and have failed to supply full and accurate data and documentation.

“The problem is only going to be exacerbated by Brexit. We know that while some postal operators, carriers and eCommerce merchants are ready for the changes, many more are a long way from being prepared. The state of readiness ranges from the excellent to the chaotic.”

Some of the main reasons for delays in Customs clearance include:

  • Missing or incomplete data – Customs clearance in most countries is automated. Missing or incomplete data will result in an automatic failure.
  • Vague or misleading descriptions of contents – Product descriptions need to be accurate and detailed.
  • Missing and incorrect HS 6 codes – The World Customs Organisation Harmonised System that uses code numbers to define products. Many Logistics Service Providers (LSPs) will refuse to accept shipments without provision of this information.
  • Incomplete shipper and consignee data – Ensuring full details of shipper and consignee name and address data, including collection and importer details if relevant, is essential.
  • Contents require licences or other specialised paperwork for import – Every country has unique requirements, practices and restrictions for international shipping and determining which commodities can be shipped into and out of a country.
  • Unrealistic valuation of contents – One of the most common duty and tax disputes is an incorrectly declared value. Values should represent the actual transaction value or a realistic market value. An error in value can cost you considerably in import delays and fines.
  • Missing Country of Origin (COO) – Customs require to know where the commodity was manufactured in addition to where it was exported from. The COO may influence the amount of duty and tax that may be applicable to be paid.
  • Denied Parties (DPs) – Denied parties are individuals, organisations and entities that have been placed on a governmental list that limits the ability to do business with them. Most governments have DP lists as well as international organisations such as the United Nations, and the EU. Shipments originating from or destined to an individual, organisation or entity appearing on a DP list can result in clearance delays, substantial financial penalties or even jail time.

Martin added: “Anyone who leaves their Brexit preparations until the last minute is asking for trouble. We are now less than 80 days away from this seismic change in the trading relationship between the UK and the EU.

“Customs authorities themselves are having to scale up massively to cope with the huge increase in requirement for customs declarations and there will inevitably be some major challenges as both sides get used to the new norm.

“It therefore means the more prepared those involved in cross-border eCommerce trade are, the more likely your parcels are to get to their destination as seamlessly as possible after January 1.”

Hurricane Commerce’s industry-leading solutions are helping customers, including postal operators, carriers, eCommerce merchants, marketplaces and platforms across the key areas of data enhancement, duty and tax calculation, prohibited and restricted goods screening and denied parties screening.

The company, founded in 2016, has brought together leading professionals from logistics, compliance and technology.

Lyngsoe Systems and Hurricane Commerce join forces to ensure frictionless cross-border trade

Two companies specialising in cross-border trade technologies have teamed up to help postal operators prepare for a wave of new regulations coming into force over the coming months.

Among them are the implementation of ICS2 (Import Control System 2), requiring entry summary declarations on all parcels and packets entering the EU, and the EU’s VAT modernisation package and launch of the Import One Stop Shop (IOSS).

Lyngsoe Systems is offering its customers Hurricane Commerce’s Zephyr data enhancement solution to complement its own Manual Imaging Capture Station (MICS), which provides a scalable solution for optimising import, customs and VAT collection.

MICS removes bottlenecks by separating data entry from the physical handling of items, automates data capturing and registration, raises throughput utilising existing floorspace more effectively and lowers the cycle time of import and clearance.

Hurricane’s Zephyr API enables the efficient checking and completion of cross-border shipment pre-advices. It identifies invalid descriptions, returns a status code for each imported consignment, and includes a product description, HS6 code and, if required, 8 and 10-digit import and export codes.

Zephyr can process over 700 million requests per day with 85% accuracy and achieves average response times of 100 milliseconds.

Villads Thomsen, CEO of Lyngsoe Systems, said: “A smooth cross-border eCommerce process calls for combining the different data sources readily available today.

“Lyngsoe Systems is excited to complement our MICS platform with eCommerce data analytics from Hurricane to achieve a frictionless cross-border trade.”

Martyn Noble, CEO of Hurricane Commerce, said: “We are delighted that Lyngsoe Systems has chosen our game-changing Zephyr solution to complement its own industry-leading offering to postal authorities.

“Our solutions are helping postal operators, carriers, logistics providers and online retailers capitalise on the huge growth opportunities in eCommerce while staying compliant in the face of ever-increasing global regulations and laws.”

Lyngsoe Systems and Hurricane are hosting a one-hour webinar, “Data Enhancement and Machine Learning in Office of Exchange” on Thursday, November 5th (2pm GMT/ 3pm CET). To register visit https://lyngsoesystems.com/mics2020/