Parcel shipping between the EU and the UK is likely to become a
lot more complicated after 31 December, particularly for Ireland. In
this QAD Precision Report, we look at what to expect.
Parcel carriers in the European Union and the United Kingdom have
been hit with a double whammy this year. First, of course, was the
surge in e-commerce volumes caused by the pandemic and subsequent
lockdowns. After that came an incredibly busy peak season in November
Governments across the EU have allowed some retail stores to trade.
Others had to close in response to partial or total lockdown measures
aimed at curbing the spread of the coronavirus. Whatever the status of
physical retail across the EU and the UK, many consumers preferred to
order holiday items and gifts online. With that came skyrocketing
This would have been challenging enough. However, Brexit has added a
whole new layer of complexity to parcel carrier operation.
What’s the Brexit Deal Status?
There may be a post-Brexit EU/UK deal on trade and security.
Maybe. Possibly. Most likely. At least that is what the EU’s chief
Barnier said on Monday, 14 December.
Earlier today, Wednesday 16 December, Ursula von der Leyen, the
President of the European Commission said that there was “a
path to an agreement.” However, she also noted that this did not
necessarily mean that a deal would be concluded.
These are positive indications. But it is worth bearing in mind that
last week, a
hard Brexit with no deal seemed to be inevitable.
The situation is, in a word, fluid. At this stage, it seems
anything could happen.
Brexit and Cross-Border Retail E-Commerce
It is true to say that Brexit will impact any EU shoppers who wish to
purchase goods from the UK. Brexit will likewise affect UK consumers
should they shop online at EU e-commerce stores.
However, shoppers in Ireland are likely to feel the brunt of the new
rules far more keenly than those in the rest of the EU. Why? Because
percent of all Irish online purchases are from the UK.
There are a number of reasons for this. Many of the most popular UK
brands and retailers have a presence on Irish high streets. As a
result, Irish consumers trust them.
Despite this, very few have dedicated Irish e-commerce stores.
Distribution centers used to replenish bricks-and-mortar stores are
often separate to e-commerce operations as well.
The high percentage of e-commerce packages coming to Ireland from the
UK is also due to the fact that Amazon does not have a dedicated
Irish marketplace. It is only in the last few weeks that Amazon has
opened Irish warehouses. This is presumably, at least in part, a
response to Brexit. However, Irish online shoppers must still make
their purchases through the company’s UK marketplace — ironic, since
Amazon has its EU headquarters in Dublin.
UK online shoppers will also be more impacted than those in the rest
of the EU. Despite a plethora of homegrown options to choose from, UK
shoppers like to shop cross-border too. In 2019, 50
percent of UK consumers made at least one cross-border purchase.
VAT and Customs Duties
If the two sides do not reach a deal, VAT and customs charges will
make it significantly more expensive for EU shoppers to purchase goods
from UK stores and vica versa.
Even if the two sides strike an eleventh hour trade agreement, it is
as yet unclear whether online purchases under a certain value will be
exempt after the end of the transition period.
Since Irish consumers do most of their online shopping from UK
websites, let’s take Ireland as an example. As things currently stand,
priced at less than €22 will be exempt from extra charges.
However, that amount includes shipping, delivery, insurance and
handling charges as well as the cost of the goods themselves. Once a
purchase passes the €22 threshold, 21 percent VAT will be due.
Anything valued at more than €150 — including shipping costs — will
be subject to both VAT and customs duty. The duty rate will depend on
the type of items purchased. All these additional charges could increase
costs by up to 40 percent.
This is because goods that were previously freely circulated, will
now become imports and exports. E-commerce purchases will require
customs clearance, along with commercial invoices, commodity codes and
It is worth noting that most online purchases will use a Delivered
Duty Unpaid (DDU) carrier service. That means that consumers will need
to pay any VAT and customs duties to the carrier before they receive
Parcel Carriers and Brexit
Parcel carriers have been preparing for Brexit. However, like
everyone else, carriers have no idea what kind of Brexit they are
likely to be dealing with.
Again, Ireland is likely to be impacted more than any other EU
country. This is because goods traded between Ireland and the rest of
the EU were largely transported via the UK’s land bridge.
In early December, DHL Express Ireland emailed customers warning that
the DHL Economy Select (DDI) Service will temporarily pause after 29
December to facilitate the free movement of goods until 31 December.
The service will resume on 4 January. However, from this point forward
all goods entering the UK will need customs processing.
From 4 January 2021, this service from DHL Express Ireland will also
bypass the UK land bridge when goods are going to mainland Europe.
This is to avoid potential delays, although it will add approximately
48 hours to transit times.
in Ireland has developed direct routes to mainland Europe,
bypassing the UK land bridge. DPD has also established new customs
warehouses in the Republic of Ireland. The carrier also plans to
create similar facilities in Northern Ireland.
Companies shipping goods from Ireland to the EU, or from the EU to
Ireland are likely to face increased transit times. In early December
there were already reports of long lines of trucks
backed up at critical ports such as Dover. There are fears that
queues could be up to 100 kilometres long after the end of the
Whether or not the UK land bridge becomes a viable route at some
point again in the future, remains to be seen.
LET’S KEEP IN TOUCH
To subscribe to the QAD Precision Report, and receive notifications
about QAD Precision events, webinars and news, please click here.
UK TRADE CONTENT
IMPORTANCE OF FLEXIBLE DELIVERY OPTIONS AND MULTI CARRIER SHIPPING
A GLOBAL MULTI CARRIER SHIPPING SOLUTION: 3 QUESTIONS TO ASK