Fixed Pricing for Road Transport

If you are a wholesaler, manufacturer, or retailer, as a new year commences this normally means as ‘shippers of goods’, you’ll start considering your freight prices and examining forecasts and trends from previous years. While in our last blog I considered managing last minute transport requirements, this one is to discuss the benefits of agreed fixed pricing.

Freight pricing has always been turbulent but nothing like we have seen in 2021, with the uncertainty caused from Brexit, driver shortages, fuel price fluctuations, the pandemic, inflation, and interest rates on the increase coupled with the rise in demand, all resulting in unprecedented increases in the overall cost of road freight.

The recent volatile nature of freight costs has recorded the highest prices ever for road transport, which has been widely publicised, and resulted in many manufacturers reporting widespread failures in contractual based commitments and increased spot pricing. With the expectation that road pricing will remain at high levels, businesses are being warned of further supply chain disruptions in 2022. The recently released TEG Road Transport Index illustrates this, commenting, ‘the continued increase of the average price-per-mile for haulage vehicles peaking at 30.3 points in December 2021’.

As a digital road freight business, it has however been encouraging that whilst our pricing follows the trend for spot pricing, we are able to demonstrate and provide freight solutions significantly under market pricing due to scale and the accessibility of the FLS supply chain, ultimately from engaging vehicles close to collection points, (regardless of origin) reducing costs and CO2 through reduced empty mileage.

Any company moving goods needs a dependable supply chain across each mode of transport and securing stable pricing for your lanes is a fundamental key to success, rather than working continually with volatile ‘spot market’ quotations. In 2021 we saw an increase in the shippers of goods looking for instant spot pricing, due to the inability of their road freight provider to supply vehicles or continue to deliver services at the contractual based commitments. So, when looking for fixed pricing, more so than ever it’s not only operational price commitments that is required but the ability of the logistics supplier to demonstrate understanding of market pricing, plan, anticipate and have the ability to deliver services, at the same price for the duration of the agreement.

Although historically you may find shippers willing to provide annual rate cards, based on the previous year pricing, now more than ever it is difficult to predict price in advance, and movers of goods will only acquire these rates and confidence from providers that can demonstrate a robust data driven approach.

FLS can support your future planning in pricing  

I believe the only way a logistics business can provide accurate transport pricing to the movers of goods, is by holding a wealth of data to understand market pricing and trends. To deliver volume requirements you need to combine this data driven approach with a scaled supply chain.

Data is the most important aspect of pricing at a rate that’s not only competitive but sustainable and at FLS we see this as the key factor when reviewing and proposing a regular pricing structure (rate card).

Using our Carrier Portal platform FLS evaluates our pricing data gained from 13,000 carriers, enabling not only instant live comparisons and competitive pricing but the identification of trends and geographical cost fluctuations allowing FLS to provide sustainable fixed pricing. Our Carrier Portal technology provides FLS with insight into not just overall network capacity to deliver, but price expectations against availability by vehicle type and location at a touch of a button.

While insight and availability are key to our delivery of pricing to our customers, these have also resulted in a significant increase in the number of vehicles available to FLS as many carriers are adopting FLS as their ‘go to source’, for securing loads whether for set locations, back loads, outbound loads, or full outsourced usage of their trucks.

Newly appointed Commercial and Legal Manager Zainab Latif, who will lead the provision of contractual commitments, states ‘FLS has been growing at a significant rate over the past 5 years but always understood the value of gathering and assessing data to create a fantastic tool to support shippers of goods to not only secure fixed pricing going into 2022, but also to have the vehicles and technology to provide constant delivery. Fixed pricing with FLS of course manages your costs but also removes the time and hassle of research into carriers, quality checking and managing a supply chain to ultimately deliver your requirements’

If you are a mover of goods and have a requirement for regular pricing commitments, for tender or benchmarking, please contact our commercial team.

Ieuan Rosser – CEO

Brexit Update – 31st Jan

The UK will be exiting the European Union, following the result of the national referendum on 23 June 2016, which is now currently scheduled for 31 January 2020.

The current rules on trade, travel, and business for the UK and EU will continue to apply during the transition period, and customs clearance documentation is not required. So from an import and export with Europe point of view, it is business as usual for FLS including rates, vehicle availability and transit times.

As previously advised we would suggest that you should be providing commercial invoices and packing lists for your European shipments in readiness for future customs clearance requirements.

Once any deals, and requirements are released we will be providing all customers with full details and will be available to talk through what might affect your business and its supply chain.

… your business can take some actions now to prepare for 2021.

You should also decide how you want to make customs declarations and whether you need our support with this. As we’ve heard a no-deal Brexit, is still on the cards, and if implemented will involve a significant increase in customs administration. HMRC is recommending you engage a customs partner to assist you during this period and FLS is perfectly placed to assist you with your customs activity during this period and beyond whilst still providing first-class freight transport options.

A summary of issues, concerns and actions follow below:

Whether you trade with the EU, operate in the EU or rely on companies based there, It’s going to affect your business and FLS will do our best to keep you updated with all Brexit-related developments in the logistics industry and to make your operations as Brexit-proof as possible.

Day 1 No Deal Scenario

Main Concerns

In a no-deal scenario: –

• Businesses will not have enough skills and capacity to comply with customs declarations on day 1
• Agent capacity is unlikely to meet demand
• Many small businesses may cease to trade

Summary of Day 1 easements

• Agents may be reluctant to take on business from new customers lacking knowledge of international trade and/customs procedures

HMG Government objectives:-

• Maintain security
• Facilitate the flow of goods
• Protect revenue and ensure compliance with standards

Day 1 easements:-

• RoRo locations
• Transitional Simplified Procedures
• Guarantee Relaxations

Longer-term:-

• Data-driven solutions are being reviewed for smarter borders

Health Warning

• Many matters are still under discussion
• Some look good on paper but are unproven
• Nothing about Ireland
• More changes are expected: –
• Policy
• Procedures

Ro-Ro Day One – Import

• The importer must have an EORI number
• Pre-lodge import declaration in CHIEF or use EIDR
• Entry Reference or EORI number to be provided to the carrier
• Safety and Security declaration to be submitted and ENS reference to be provided to the carrier prior to boarding
• Authorities indicated that additional checks will be kept to a minimum – intelligence-led
• As goods pre-entered and have safety and security declarations submitted, they should be free to leave the UK port of arrival
• Goods have to arrive into the UK- entry updated in CHIEF by close of business on the next working day

• Arrival creates the tax point –monies to be collected
• Carriers have to have the ENS or EORI number no legal requirement for this to be passed to the ferry operator.

Ro-Ro Day One – Exports

• A combined customs export and safety and security declaration will be required
• Pre-lodge any supporting documents on relevant systems
• Exporter or f/fwdr advises hauler if P2P granted
• For interventions requiring a physical goods check the cargo must be taken to Designated Export Place (DEP)
• Hauler checks in for boarding
• General rule no departure message generated
• High-risk goods require a full departure message
• Check EU import processes Transitional simplified procedures
• Traders can register to use TSP to delay full declarations at RoRo locations
• TSP will be reviewed 3 to 6 months after 29 March 2019
• 12 Months’ notice will be given when HMG decides to withdraw

Transitional simplified procedures

To be eligible, traders must: –

• Be established in the UK
• Have the intention to import goods from EU into the UK
• Have an EORI number

Traders are not eligible if: –

• Goods are imported from outside the EU
• Goods are subject to a Customs Special Procedure or control
• They are an intermediary or acting on behalf of someone else
• History of non-compliance

Registration Process

Traders will require the following to register: –

• EORI number needed in order to trade with the EU
• Unique Taxpayer Reference (if applicable)
• VAT registration number (if applicable)
• Business name and UK address
• Contact details
• Online Registration available from 7th February TSP Declaration Process

Controlled Goods

• Controlled goods mainly need: –
• A licence
• Excise products such as tobacco or alcohol
• Send a simplified frontier declaration before goods are imported
• Ensure goods are accompanied by fulling supporting documentation e.g. licences etc

• Send a supplementary declaration by the fourth working day of the month following the arrival of goods into the UK
• HMRC will collect by direct debit on the 15th day of the month after the goods have arrived in the UK.

TSP Standard Goods process (Transitional simplified procedures are currently suspended)

• The trader makes a declaration directly into their commercial records when goods cross the border
• The trader will provide the hauler with their EORI number as proof that goods are subject to a TSP process
• This is followed by a supplementary declaration by the 4^th working day of the month following the arrival of goods in the UK
• All Duties and Taxes will be taken by Direct Debit on the 15th day of the month following the arrival of goods into the UK

Changes to CFSP  (Customs Freight Simplified Procedures)

Forwarders alternative to TSP

• The problem has been the question of Customs Representation where forwarder uses their own Deferment
• Easement to allow customs agents to act as a direct representation whilst using their own CFSP authorisation
• The trader will be solely liable for VAT
• The policy is time-limited, but HMRC will give 12 months’ notice period when this policy changes
• Applies to all ports in UK and trade lanes
• Easement limited to goods being released to free circulation

Duty Deferment

• Traders must have a duty deferment account to use TSP or agents CFSP: –
• Direct debit mandate required
• Allows HMRC to take a monthly payment of duties
• Direct debit taken by 15th day after the month that the supplementary declaration is submitted

Day 1 easements:-

• Traders will not be required to meet CCG criteria
• Traders will have until 30 June 2019 to submit a financial guarantee
• Traders can still apply for CCG, those with AEO-C can still seek a reduction/waiver from the guarantee
• Traders will not be required to meet CCG criteria nor provide a financial guarantee for:-
• Inward Processing
• Outward Processing
• Temporary Admission
• End-use
• Customs warehousing
• Still need to meet criteria for the special procedure
• The policy will be monitored, 12 months’ notice will be given of traders

Guarantees for transit

• Requirements for transit are governed by the CTC
• CCG will be required to cover several transit movements
• An individual guarantee can be used for several movements
• An individual guarantee can include a guarantor undertaking from a bank or financial institution and a cash deposit
• The level of guarantee depends on the territories being transited
• As guarantees can take several weeks to set up, traders should contact the appropriate financial provider-NOW

Parcels –day 1

• Low-value VAT relief on parcels removed
• For shipments valued at £135 or less, the overseas sender is liable for VAT
• An overseas trader must register and account for VAT showing an identifier on their paperwork
• Goods above £135 will incur VAT with declaration
• LVBI is still available in the short term

Value-added tax

• Basic VAT procedures to be kept the same where possible
• Postponed VAT accounting for imports to be reintroduced (for VAT registered traders only)
• Import VAT to reclaimed quarterly
• Non-postponed accounting will incur VAT immediately
• Import VAT statement similar to C79 will be available from the digital services: –
• The statement used to support VAT return
• The problem what to use as evidence of export where no departure message generated

If you move goods into or out of the EU, you must get an EORI number.