Firms Hit by New Brexit Red Tape as IT System Stops Trucks

(Bloomberg) --

U.K. traders are falling foul of a new IT system policing goods crossing the English Channel, as companies grapple with a fresh wave of post-Brexit red tape.

As of Jan. 1, imports from the EU must be processed using the so-called Goods Vehicle Movement Service (GVMS), yet haulers have encountered setbacks such as shipments not loading on the system and reference codes not being accepted. Japanese automaker Honda Motor Co. is among companies that have seen cargoes hit so far.

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“We've got a whole bunch of lorries that aren't clearing because something isn't working, and it's not incompetence on our part,” said Steve Cock, director of customs consultancy at The Customs House, who has had freight waiting to enter Britain since New Year's Day. “It's going to cheese off a lot of people and have a lot of additional charges for vehicles that aren't getting to the U.K.”

The new IT system represents the latest headache for importers due to Brexit, which erected new bureaucratic hurdles between the U.K. and EU, its largest trading partner. Trade with the bloc has suffered due to the extra red tape, and is about 15% lower than it would have been had the U.K. stayed in the bloc, according to modeling by the Centre for European Reform, a think-tank.

Read more: Just a Year of Brexit Has Thumped U.K.'s Economy and Businesses

Her Majesty's Revenue and Customs, the government body responsible for administration at the border, said in a statement that it's aware of a “small amount of user error issues with some of the new customs processes as traders and haulers adjust to the new controls, which we expected and are addressing.” 

To be sure, freight activity is currently low due to the seasonal lull in trading. Current volumes through the Port of Dover -- Britain's busiest gateway -- are comparable to recent years, according to Tim Reardon, head of EU Exit at Dover. Industry figures expect activity to ramp up in the coming weeks, which will be a truer test of the post-Brexit arrangements.

Japanese automaker Honda was one of the companies affected by the new processes, with a shipment of power products and parts held up at the U.K. border due to some goods being incorrectly coded. The shipment has since been released.

“Some teethings problems are not unexpected as the U.K.'s new customs systems come online,” Honda said in a statement. “We are currently looking into the details behind this.”

Another business struggling to move goods into Britain is Angelos Panayiotou's Windfall Logistics, who has a shipment of Arizona Iced Tea, which retails in Tesco Plc supermarkets, stuck in the EU. Panayiotou said he had generated the correct paperwork for the goods but he gets an error message when he tries to log it on the government's system.

“There's no-one to go to help,” Panayiotou said in a phone interview. “You've just got drivers stuck at port, unable to move.”

©2022 Bloomberg L.P.