With the dust settling on Brexit, what should businesses be doing, and not doing, to make the most of export opportunities? The international delivery expert ParcelHero shares its top five tips and traps for exporters.
The international delivery expert ParcelHero has compiled a list of its Top 5 opportunities and pitfalls for exporters in 2023.
ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., says: ‘Post-Brexit taxes and regulations have made many businesses wary of selling overseas. UK exports, however, were worth £802.7bn last year. Those companies that have never exported or have suspended their international sales following Brexit are losing out. We’ve been analysing the latest export trends and can now reveal our top tips for exporters, as well as the pitfalls and tricky issues still to be resolved.
1: New FTAs – Do make the most of the 70+ free trade agreements (FTAs) the UK now has in place. From Albania to Vietnam, there are many new agreements already operating, including a £38.8bn total trade deal with Switzerland and a £20bn total trade agreement with Canada. Other newly minted deals include agreements with Singapore and Japan. FTAs with Australia and New Zealand should also come into force this year.
2: Trade with Germany – Do keep pushing your products to Germany. Not everyone realises that it’s now our second-largest overseas market, after the USA. UK exports to Germany were worth £50bn in 2022. Top sellers were aircraft, generators, pharmaceuticals and cars. Forget Mercedes and BMWs, we exported £1,838.92m-worth of motors to Germany in 2021.
3: The Chinese luxury market – Do consider re-entering the Chinese market. We’re sticking our necks out on this one, but now China’s strict Covid lockdown laws have been relaxed, its hunger for luxury goods appears to be returning. Before the pandemic, China was a lucrative market for companies such as Jaguar-Land Rover, Burberry and Ted Baker. Providing tensions don’t escalate over Hong Kong or Taiwan, China should return to being a growth market. Last year, we exported £27.9bn of goods to China, making it our 6th largest export market.
4: Freeports – Do consider the opportunities created by the Government’s new freeport economic zones, such as Freeport East. Goods imported into freeports are exempt from tariffs; manufacturers can import raw materials tariff-free, only paying them on finished products for the UK market. Goods can be re-exported without paying UK duties. Freeports will also offer lower property taxes and lower national insurance rates for new staff.
5: Return to EU markets – Do consider trading with the EU or returning to this market if you quit it post-Brexit. Yes, it’s more difficult than previously, because of new tariffs and red tape, but some issues are improving. Last year, UK goods exports to the EU were worth £330.2bn. That’s still a slump from 2019’s £363.5bn pre-Brexit figures, but not so far off 2017’s £337.6bn. Road vehicles, pharmaceuticals, generators, industrial machinery and electrical machinery top the charts for UK exports to the EU.
1: EU e-commerce issues – Don’t rush into returning to e-commerce trading with the EU without doing your homework, particularly if you are a small seller. It’s a potentially lucrative market, of course, but it still remains challenging for e-commerce sales. Cross Border Europe’s 2022 report on EU e-commerce states: ‘Brexit has had a negative impact on cross-border trade to and from the UK. UK customers lost faith in cross-border commerce (-35%). For e-commerce sellers, Brexit basically means more bureaucracy and tax.’ It’s still a great market, but if you do fancy a return, platforms such as Amazon and eBay offer the easiest route back in.
2: Regulatory divergence – Don’t get caught out by new split regulations as the UK diverges from the EU. Many British products sold in the UK will soon need to have packaging and stamping to show they meet UKCA (UK Conformity Assessed) regulations. However, it won’t be possible to sell UKCA-passed products within the EU without reassessment by EU bodies. The new UKCA mark was to have been mandatory from the beginning of this year, but the Government recently extended the period until 31 December, 2024.
3: Northern Ireland trade – Don’t treat Northern Ireland (NI) as being the same as the rest of the UK. To avoid a hard border with the Republic of Ireland, NI has, in effect, remained in the EU’s single market for goods. If you plan to move goods between GB and NI, you’ll need an EORI number that starts with XI. To add to the confusion, labelling requirements are set to change. For example, the UKCA markings mentioned above won’t be valid for goods sold in NI, which will still require the EU’s CE marking, and/or potentially a UKCA NI mark.
4: The US market – Don’t assume the US is a natural replacement for lost EU sales. It has its own complications. We sold £142.3bn of goods to the US in 2022. However, products sent to the US valued at over $800 face tariffs, and the much-vaunted US-UK trade deal has yet to come to fruition. Additionally, Biden’s new Inflation Reduction Act includes billions of dollars of subsidies for electric cars and eco-friendly products. However, these will only be available to consumers who buy American-made products. That could impact on UK (and EU) exports.
5: Volumetric weight – Don’t get caught out by extra charges incurred by volumetric weight corrections on overseas shipments. International carriers bill items based on the combined size and weight of the parcel, using a formula called volumetric weight. To add to the confusion, each carrier uses different criteria to calculate this weight, depending on which service is selected. Fortunately, ParcelHero’s new volumetric tool not only calculates the typical volumetric weight but, if you enter the specific carrier and service you are thinking of booking, it will calculate the exact volumetric weight you will be billed for.