Capitalists And Money

Retailers warn they could burn goods stuck in EU

clothes in wardrobe

UK retailers could abandon goods EU customers want to return, with some even thinking of burning them because it is cheaper than bringing them home.

They say the new EU trade deal has put costly duties on returns at a time when firms are already struggling.

UK High Street and luxury brands have a mounting volume of goods stuck with courier services on the continent.

None of the retailers would comment on the problem.

Adam Mansell, boss of the UK Fashion & Textile Association (UKFT), said it’s “cheaper for retailers to write off the cost of the goods than dealing with it all, either abandoning or potentially burning them.”

Since 1 January, lots of European customers have been presented with an unexpected customs invoice when signing for goods they’ve ordered from the UK. These new customs charges are a result of the new EU trade deal with the UK.

Added costs

“It’s part of the ongoing small print of the deal,” said Mr Mansell. “If you’re in Germany and buying goods from the UK, you as the German customer are the importer bringing goods into the EU.

“You then have a courier company knocking on the door giving you a customs clearance invoice that you need to pay to receive your goods.”

Many customers automatically reject the goods, refusing to pay the additional surcharges, leaving couriers to take them away.

About 30% of items bought online are returned, according to figures from Statista. That has meant large volumes of goods are heading back to the UK.

Adam Mansell, boss of the UK Fashion & Textile Association
Adam Mansell, boss of the UK Fashion & Textile Association

When goods arrive back at depots on the Continent, there is new customs paperwork to complete. “Export clearance charge, import charge arrival, import VAT charge and depending on the goods a rules of origin document as well,” said Mr Mansell.

“Lots of large businesses don’t have a handle on it, never mind smaller ones.”

The BBC reports that it has seen a document that states four major UK High Street fashion retailers are stockpiling returns in Belgium, Ireland and Germany. One brand will incur charges of almost £20,000 to get the returns back.

Couriers and freight businesses that ship from the UK to Europe are also experiencing delays getting goods to the Continent because of the new customs clearances.

“It’s a bigger change than we thought possible,” explained Shona Brown from Speedy Freight, a courier service. “Before, we’d get the order to Germany and off the driver would go.

“Now we’ve got to do export entry detailing where was it made, the driver needs to go to the customs office at Dover, then customs in Germany on arrival and then sort out the VAT. There are so many hoops to jump through, it’s so laborious.”

“You’ve got to have manpower to figure out what to do. And with people working from home it’s difficult. For small businesses, it is a huge thing for people to do,” she added.

Ulla Vitting Richards runs her sustainable fashion brand VILDNIS from the UK. She has stopped exporting to her fastest growing market, the EU, because of the new customs processes.

“I’ve been involved in logistics before. I expected it to be bad and I am used to shipping to the USA which is difficult. But this is just mind-blowing,” she said.

“Every day there is another layer. In the first two weeks we couldn’t get answers. For two years we were told to get ready for Brexit. But for these we couldn’t prepare.”

She added: “I don’t think we can increase prices but we might just have to say that we can’t make the business with the EU work. It is a real shame. There is a huge interest in sustainable fashion in Europe and we might have to walk away from it.”

Ulla did speak with the Department for International Trade for help and advice. She was told that setting up a subsidiary distribution hub in Europe might be a good idea: “He told me we’d be best off moving stock to a warehouse in Germany and get them to handle it.”

Retailers in the UK and Europe that trade across the new customs border are all still adapting to the rules. Hauliers and customs agents are facing a steep learning curve too.

The government said: “Now the UK has left the EU customs union and Single Market, there are new rules and processes businesses will need to follow.

“We have encouraged companies new to dealing with customs declarations to appoint a specialist to deal with import and export declarations on their behalf – and we made more than £80m available to expand the capacity of the customs agents market.”

It added: “Most businesses use a specialist such as a customs broker, freight forwarder or fast parcel operator to deal with this.

“The government will continue to work closely with businesses to ensure they are able to trade effectively under the new rules.”

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Retailers warn they could burn goods stuck in EU

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