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New EU legislation - imposition or opportunity?

26 August 2015

The introduction of the Union Customs Code (UCC) imposes some unwelcome financial and operational constraints for thousands of UK businesses. Operationally release of goods from some premises will be delayed and affect services, according to Langdon Systems.

New European Union legislation from May 2016 is intended to standardise the movement of trade across EU member states, simplifying Customs rules and improving security and safety of both inwards and outwards goods. Failure to be compliant with the new conditions of the UCC and one of its cornerstones, theAuthorised Economic Operator (AEO) scheme, could damage the logistics industry, which is worth over £74billion to the UK economy.

Transport and logistics play a vital role in the UK and global economy – in 2014 Britain was ranked fourth in the World Bank’s list of top logistics performers – but it is estimated that of the 196,000 UK businesses involved in the sector currently less than 400 are AEO authorised, well behind their main European competitors like Germany which has in excess of 11,000.

However, while the change may be considered an imposition for many businesses, it should be viewed as an opportunity for logistics providers to expand their operations by offering extended services to those businesses unwilling or unable to go through theAEO process.

Businesses also need to be aware that significant trading partners with the EU have adopted, or are developing, an equivalent standard and some firms, in particular those based in the US, are choosing not to associate with those that don’t have AEO accreditation. So what’s the imperative?

Mandatory Guarantees will be enforced to be able to operate Customs Procedures and pre-notifications and dwell time before release of goods. These will apply to all businesses that fail to operate to AEO standard.

They will be costly and apply not just to a Customs Debt but in some cases an undertaking to cover all business debts will be required. It is likely that this will deter companies from operating their own facilities and look for third-party logistics providers. That’s not to say they can unload the liability as due diligence will limit any liability to a sound provider.

This new Customs requirement does depend on where in the international supply chain a company sits operationally, even if a logistics provider does not provide Customs Warehousing etc. services, when picking up from someone else who does, they may well face lengthy delays and incur additional penalties if a driver exceeds their operating times.

Langdon Systems Customs Manager, Dave Bradbury, said: "AEO status will become a necessity for many businesses trading internationally. As well as the financial implications, failure to attain AEO status will result in delays of release for all goods from a Customs Procedure and the possibility of lengthy ones where further scrutiny/examination is required. It is important therefore that those providing logistics services are aware of the implications and impact on them when dealing with businesses authorized for Customs activities.”

However most freight forwarders, transport companies and warehouse owners involved in importing and exporting goods often have little experience of what the new legislation entails - Langdon Systems’ AEO (C) solution will fully address these challenges.

The company provides a dedicated service for those intent on achieving AEO (C) status for businesses established in the UK and other EU Member States and is urging them to ensure their operations are compliant by the May 1st2016 deadline.

Around 40% of Langdon Systems’ existing client base have already taken advantage of its AEO programme for their Customs and logistics operations and the company is currently rolling out the offering to non-clients to help firms avoid the pitfalls of not being accredited, including withdrawal of existing Customs Authorisations.

The core programme is designed to take businesses through the complete AEO cycle from the application process to accreditation. The approach is not that of a traditional ‘training course’ in that it offers a meld of different learning opportunities within a framework centred on a supportive structured workshop environment. The emphasis is on producing a comprehensive AEO package to present to HMRC with the ultimate goal of gaining AEO certification.

The four-day programme is interspersed with guided learning opportunities, assignments and assessments. It offers not just knowledge but the time and space for practical application. The events themselves are a mix of tutorial led input (including that from HMRC), exercises and peer group evaluation at key stages in the development of a bundle containing all the evidence required to support an AEO application. The programme can also be tailored to be delivered in-house for larger businesses with a number of delegates and/or with a specific need.