It's a widely acknowledged fact that exporting products into the EU post-Brexit has become exceedingly difficult, particularly for those with certain commodity codes and countries. While some brands have relocated to the EU or split their fulfilment operations between Great Britain and the EU, others continue to face various snags along the way. Brands in Northern Ireland currently enjoy the most flexibility when exporting to the EU.
However, for those based in Great Britain (England, Wales, and Scotland), exporting comes with troublesome triggers.
Some of the snags:
- Commodity Codes:
- Certain commodity codes, such as cosmetics or consumables, pose significant challenges, especially when exporting to markets like Spain.
- Export and Import Costs:
- Brands shipping large volumes into the EU from Great Britain face export charges from some carriers. There are also associated import costs.
- Customs Delays:
- Customs can cause delays in some markets, impacting delivery times.
IOSS and DDP.
IOSS works for basket values below 150 GBP. Anything above that, you will have to speak to your carrier to set up a DDP (Delivery Duty Paid) account, which could cause cash flow issues. Brands that don't offer duties pre-paid into Europe will see negative connotations at checkout.
Carriers support IOSS and DDP; on label creation, carriers using DDP will support IOSS for anything below £150, whilst anything above, they’ll ship using DDP. If you're looking for a solution that's cost effective, we recommend speaking to Royal Mail. They have a DDP solution for anything below 2KG and will be launching a heavier DDP option in the offing. If you're looking for a solution that's more premium, speak to DPD.
The difficulty of shipping into the EU from Great Britain varies based on the product type. Shipping apparel typically presents fewer challenges compared to shipping cosmetics or consumables, which often face stricter regulations and customs requirements.
A straightforward solution is to divide your stock between your GB fulfilment centre and a location in Europe. Alternatively, you could centralise all stock in a Northern Ireland fulfilment centre. It’s important to keep in mind that this option carries some risk due to the ongoing uncertainty surrounding future trade border arrangements.
Case Study Cosmetics GB into the EU - Spain specific:
We started working with a cosmetic brand that holds all their stock with Farfill UK. Following a successful UK launch, the brand decided to open up to a number of EU markets (one being Spain). The products are manufactured in the EU, so re-importing into the EU shouldn't be complicated.
Spain took off massively, however exporting certain commodities such as cosmetics to Spain from a third country presented difficulty. A lot of carriers will accept the products, however there will be massive refusals at customs. Carriers like DPD will not even allow you to create a label for certain HS codes to some markets as there’s too much complexity in clearing certain product categories.
We experimented with various strategies..
- Direct:
For most markets that the client shipped to; Poland, Netherlands, Portugal and a few others they had no issues using DDP or IOSS directly into the markets. It was only when they launched Spain they started facing issues. Prior to the Spain launch we decided to do test shipments with various carriers and none of them could get it into Spain. And none could really tell us why either. We worked out that importing cosmetics from a third country into Spain is extremely difficult, regardless of products being manufactured in the EU. The customer has a valid Spanish VAT number and an EU EORI number.
- Cross Docking Via Ireland:
We figured it's time to get creative and decided to export via Ireland. The client had VAT set up in Ireland. We would export to Ireland and cross dock packages in Ireland to then export into other EU markets.
With the relationship we have with UPS in Ireland, we created the labels in the UK when packing and stuck them onto the packages before palletising them and sending them across to Ireland. When UPS received these packages, they would scan them into their network and overnight them into the EU.
The upsides: it's super fast as you can truck into Ireland overnight and then overnight into the EU via UPS.
The negatives: unless you have a basket size that supports the cost, this will eat into your margins.
- Cross Docking Via Netherlands (Pre-Cleared):
Another solution: using the relationship we have with DPD. DPD has a bespoke solution (called DPD Pre-Cleared) that they're trialling for some of their customers. The perfect use case presents itself!
We built a custom integration into our Warehouse Management System (WMS) for this service. The labels we create are DPD EU labels, but we do not send any customs information to DPD at this stage. This way, once the shipments reach the Netherlands, they are treated as "domestic" within the EU.
The Mechanics of it all:
- Pick orders as normal and at packing, we generate a DPD pre-cleared label. This label allows DPD in Netherlands to scan the package showing that it's on DPD pre-cleared solution.
- We would then palletise all EU packages and truck them to a business called JAS.
- We send a customs documentation of what we've sent to JAS. They use the documentation and pre-clear this into Netherlands.
- JAS will truck this into the Netherlands via France. They will deliver the pallets into a Netherlands DPD facility.
- DPD will break the packages and will deliver them into the EU.
DPD partners with JAS to facilitate the DPD Pre-Cleared service. We now ship all European volume for this client using this cross docking method.
The only downside to this is that it's complicated to set up. The client is required to set up a deferment account in the Netherlands (Article 23). It required a custom integration into our WMS and coincidentally the integration consumed time due to on-site label testing with DPD.
So, the million dollar question is, is it worth it? Indisputably (if you're doing volume from GB into the EU and small to medium size parcel size) yes. Essentially the more you can fit on a pallet the better, the costs for shipping into the EU after costs is a lot lower than shipping direct from the UK into the EU. Don't forget that clearance for the EU is happening in a single market vs exporting to multiple markets.
2023 Shipping Stats (DPD):
DPD shared some of their overall 2023 DPD Pre-Cleared shipment volume.
Approximately 3 million pre-cleared shipments were sent in 2023 with:
- YTD delivery performance is 98.5%
- NL 2023 was 99.8%
- Spain 2023 was 99.7%
- Germany 99.7%
- Poland 99.9%
- Italy 99.8%
- France 99.5%
- Final mile shipments benefit from inflight options and 1 hour sms window, providing a seamless customer experience
- Next day clearance on direct trailers
How can Farfill help?
Time to get your EU ship together? Farfill's expertise in fulfilment and shipping can help streamline operations and enhance competitiveness in this forever changing landscape. If you're a brand or fulfilment centre that has any questions on how shipping into the EU works, feel free to drop us a line, we are all about making sure your ship happens.