The ongoing shipping crises in the Red Sea and Panama, as well as new cross-border rules due in at the end of the month, could impact food and drink supplies in the UK, an industry expert will warn at a free webinar next week.
Research commissioned by the Institute of Export & International Trade (IOE&IT) has found that the costs of various daily commodities – including oats, sugar and coffee – have already risen due to the Red Sea crisis, with many major logistics providers re-routing consignments around the Cape of Good Hope, South Africa.
At the same time, businesses are preparing for the first set of rules being introduced under the Border Target Operating Model (BTOM) that is due to come in on 31 January. The new rules have been trailed to British businesses by the UK government over the last few months, but there is a “growing anxiety” about readiness and awareness among EU suppliers, according to IOE&IT director general Marco Forgione.
A free webinar on Tuesday 16 January, hosted by IOE&IT, will assess the challenges that are ahead this year for the food and drink sector, including the impacts of crises in the Red Sea and Panama Canal on supply chains, as well as the new rules that are due to come in under BTOM.
Anxiety
Forgione was among the business leaders warning last week that a low level of awareness of the new BTOM rules in Europe was a cause for concern. He told last week’s FT that readiness for the new rules is “low”.
“We have a growing anxiety that the state of preparedness in the EU is very low. Even recognition that things are going to change is very low, and it decreases as you go down the size of business.”
“You would expect big players to be ready, but for a smaller player — an Italian specialist in cured meats, say — it may be harder,” said the British Retail Consortium’s director of food and sustainability Andrew Opie. “Even in the UK government there is concern over whether all EU regional governments are up to speed. It’s a bit of an unknown”.
Added costs
Laura Williams, a trade and customs consultant at IOE&IT who will be speaking on next week’s webinar, told the IOE&IT Daily Update that the new BTOM rules are already having an impact on UK importers’ ability to source food and drink goods.
“It’s been estimated that the new BTOM rules will increase a standard shipment of goods that are subject to new sanitary and phytosanitary (SPS) requirements by around £140 per pallet.
“As a result of this, a lot of UK importers are already finding it difficult to source certain food and drink goods from within the EU. The volume of trade coming over, across various commodities, is being impacted and this could affect what’s on consumer shelves."
A year of change
Traders are also having to grapple with further new rules for cross-border trade, beyond those coming in under BTOM at the end of January.
BTOM itself will see various new checks and inspections introduced at different points of the year following 31 January. UK exporters will also need to prepare to start using the new Customs Declaration Service by 31 March, a new NCTS5 system is being introduced for transit procedures in the summer and there is also a new Single Trade Window being developed.
“Both the UK and EU are introducing multiple new rules and processes for cross-border trade next year, and it is imperative that businesses understand these changes to ensure their trade remains compliant and efficient,” said IOE&IT senior customs and trade specialist Anna Doherty last year.
The IOE&IT published a whitepaper titled ‘BTOM and Beyond’ last year outlining the full range of changes that are due to come in for businesses trading with or from the UK.
Shipping costs
The IOE&IT-commissioned research into the impact of the Red Sea crisis on shipping found that the price of regular goods rose earlier this month, with orange juice jumping by 4.20%, coffee by 1.86% and cocoa by 1.50%.
“While it’s impossible to predict precisely how prices will rise over the coming weeks and months, it is inevitable that we will see the price of products on our shelves being impacted,” said Forgione. “Key indicators such as oil, wheat and rice have already increased by 5%.”
Williams noted that many leading sea freight firms, including Maersk, are no longer routing goods through the Red Sea, with ships going around the Cape of Good Hope in South Africa instead.
“It’s adding on about an extra £14,000 in fuel per shipment, as well as an extra three weeks in shipping times for the freighters,” said Williams. “This started before Christmas, and it can take a few weeks for the supply chain implications to take effect, so we will inevitably see an impact quite soon.”
Many leading sea freight firms, including Maersk, are no longer routing goods through the Red Sea, with ships going around the Cape of Good Hope in South Africa instead.
Free webinar
The IOE&IT’s free webinar next week will look at the impacts of BTOM and global shipping crises on UK food and drink supply chains, as well as the opportunities that are out there for exporters in the sector, including under the UK’s post-Brexit free trade agreements.
The panel will feature:
- Laura Williams – trade and customs consultant at IOE&IT
- James Beringer – corporate affairs and trade policy executive at the Food and Drink Federation
- Ian Mace – head of government affairs and policy at Associated British Foods
- Tee Sandhu – director and co-founder at SamosaCo and a member of the Food and Drink Export Council
- Katrina Walsh – strategy director at the International Meat Trade Association
You can sign up to the event here.
IOE&IT members can also get an in depth explanation of the BTOM rules being introduced on 31 January at a Lunchtime Learning webinar on Thursday 18 January.
