On 20 July 2015 the UK government published the results of research into the challenges faced by small and medium enterprises (SMEs) from interaction with Customs when importing from and exporting to countries outside the European Union. The research results are to be used to help further facilitate cross-border trade in goods by introducing cost effective improvements for SMEs and their intermediaries. The UK Customs authority HMRC aims to reduce trade barriers for SMEs and improve customer experience.

The research report revealed that the experiences of SMEs and their intermediaries at the UK border is generally positive. The main barrier to trade for SMEs is considered to be the interaction with Customs authorities outside the EU. This comes mainly from unfamiliarity with the language and the Customs regulations and requirements of the non-EU countries.

SMEs entering the non-EU import or export market tend to follow a set procedure that they are accustomed to, without necessarily wanting to find out all the details of the Customs procedures in a particular country. They find it difficult to find relevant information when expanding into new overseas markets. They often acquire knowledge of Customs procedures by trial and error and make costly mistakes.

Both SMEs and intermediaries recognize that there are varying standards of professionalism in the freight forwarding market with SMEs in some cases experiencing poor quality service. This is connected to the lack of formal qualifications required in the sector and a low cost of entry into the business. Some more regulation and a minimum entry requirement is therefore needed.

Every non-EU market has different rules and difficulties and SMEs commented on the lack of country-based import and export information. Contractual and qualify issues were seen as a part of a steep learning curve for import and export outside the EU, with language and cultural issues adding to the difficulty of negotiating contracts. As a result of these difficulties most of the SMEs surveyed used intermediaries in part or all of their import and export procedures.

With regard to improvements to UK Customs procedures many SMEs complained of the negative impact of delays when goods are held by Customs. This could cause extra costs and reputational damage. The uncertainty of not knowing when goods would be released meant that extra costs would be incurred for example paying for trucks to wait at the port in addition to storage charges and compensatory discounts for customers. SMEs often did not know the goods had been held up in Customs until they were contacted by customers about late deliveries.

Currently notifications are made by UK Customs through the online system CHIEF (Customs Handling of Import and Export Freight). This is usually not accessed by SMEs directly but by their intermediaries, and even some of the smaller intermediaries do not use it owing to the set up costs involved. SMEs and intermediaries therefore want a more timely notification system when goods are held in Customs, giving the reasons why they have been stopped and the likely length of the delay.

Intermediaries also commented on the difficulty of getting through to Customs experts; the limited opening hours of Customs helplines; and the difficulty of getting through to speak to someone. A clearer contact system and more access to experts was requested.

SMEs have difficulty with the complex system of commodity codes and need the help of intermediaries to determine the correct codes. They felt that Customs challenges to classifications were an attempt to gain more revenue rather than a desire for accuracy. Intermediaries wanted more guidance on classification of new or complex goods.

Intermediaries were concerned about communication between UK border agencies and the difficulty of contacting different departments. There was also a need for more communication between the border agencies and the National Clearance Hub (NCH) as this was not always notified of consignment clearance status. There was difficulty in speaking to the correct person at the NCH and in tracking documents sent to them. A more automated, integrated system for communication between agencies and the NCH would improve the process.

Other problems reported included fluctuating shipping costs which were difficult to justify to customers; lack of consistency in packing materials used by non-EU suppliers which led to breakages or to goods being regarded as suspicious and held up by customs. The introduction of an international packaging standard was suggested.

SMES and intermediaries both noted that 24 hour ports were only staffed by the border agencies during the day, so there were long periods while the ports were operating but no support was available from the agencies. Additional staffing hours at the ports and on helplines would improve the situation. Another problem was a bottleneck at certain ports resulting from a lack of haulage. This could be solved by more investment in port infrastructure.

Generally SMEs could benefit from more country specific information and would be interested in opportunities for training to tackle the procedures themselves. With regard to the problems resulting from regulations and procedures in non-EU countries, although these could not be directly affected by the UK the SMEs suggested that a UK presence in overseas ports could improve communication.