The UK is a big player in the supply of parts to the superyacht industry. The industry turns over £658 million annually, providing six thousand direct jobs, from chandlers, paints, electronics, food provisions, marine-specific engineering, to management and design. British, OZ, NZ and South African crew make up a significant percentage of yacht crew in the global fleet. Engineers often feel comfortable in purchasing vital parts and components from UK companies. Chief Stews go for brands they know and trust. Relationships are built over years of career development. English is the lingua franca of the yachting industry, but it is often a case of cultural familiarity that bonds crew with their suppliers.
Shipping parts has just taken on a whole new level of complexity. The free deal only applies to goods Made in the UK or goods assembled in the UK with a minimum of 55% of the value added in the UK. You can’t supply a laptop tariff free from the UK to a yacht in France because the UK does not manufacture laptops. Too bad if the client needs a UK keyboard which is not available in the EU. The customer ends up paying duty twice.
Goods have either to be customs cleared at the first port or airport of arrival. For UK exports this is often Calais, at which point VAT is payable, the goods customs cleared and then sent on their way for delivery. However, if the goods are going to Italy or Spain, the truck will need a transit bond to enable a clearance to take place in the country of destination. This means someone has to put up a bond, which is the trucker or forwarder. And if the yacht sails away with the goods uncleared, and the VAT and potential duty unpaid, the bondholder has to stump up the cash . So truckers are not releasing the goods until clearance has taken place. This can add days to transit if not prepared well in advance.
Couriers such as DHL and FedEx pay for the T1 transit bond. If you are using a consolidator, they will charge a percentage of the bond fee. With two customs clearances, one on export and another on import, plus guarantees, only high paying cargo can absorb the extra costs.
Orispace Logistics is offering two solutions: one a stop-gap solution and the other a long term logistics package.
Orispace co-ordinates with the consignee of the goods and their broker, ensure the customs clearance is in place at destination before the goods are dispatched, and keeps tab of the VAT paid, updating the consignee’s accountants with VAT reclaim schedules. This minimizes the inconvenience caused by the end of frictionless trade post Brexit.
A more integral solution available to parts suppliers is to hold stock in an EU warehouse and distribute from there. This enables suppliers to offer next day delivery to many EU destinations or economy 2-3 day services. In addition, goods can be delivered VAT and taxes paid. By smart clearing in batches, clearance fees are minimized.
No logistics package post-Brexit will be as good as when the UK was in the single market. Inevitably, UK distributors will need to have a two-stream system, one for the UK and one for the EU. The advantage of having a dedicated EU distribution and logistics system is that it opens the mind to the huge EU single market. Rather than isolating UK companies, Brexit will actively encourage them to integrate their operations with the EU logistics networks.