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TECH NEWS
Brexit Flickr Creative CommonsBrexit and the bike industry: how the situation is evolving
Since we looked at how the new Brexit rules were affecting UK brands, retailers and distributors two weeks ago, things are continuing to evolve. What does it look like the situation will be, in terms of supply and pricing, over the coming months?
If Britain leaving the EU wasn't enough to contend with, an ongoing shortage of shipping containers in Asia since the start of the COVID-19 pandemic has had a knock-on effect of price increases, making it even harder for brands to absorb the already escalating costs of Brexit with tariff fees and new customs costs.
Stock that brands have built up in anticipation of port delays (because of lengthier customs processing) are dwindling as a result of the continual high demand of bikes—which, on top of shipping container shortages, has meant delays for customers after purchasing.
We previously reported on how the UK’s new rules on VAT are impacting brands and retailers in the EU selling to customers in the UK—with some having suspended sales to consumers temporarily, and others stopping altogether. Pages with Brexit rules and FAQs are popping up on websites as they try to effectively communicate to customers their approach in following the new guidelines.
There has been some confusion regarding who pays what charges — company or customer — and whether those charges are taken at checkout or upon delivery with courier.
> Planet X customers on the continent being asked to pay UK VAT amount as well as EU VAT
We reported yesterday that Ribble admits its information “could have been clearer” around the 14% post-Brexit tariff applied to bikes moving between the UK and EU that fall outside of the new 'sale of origin' rule, and has offered to refund the tariff amount for EU customers who ordered between 1st-17th January.
David Stacey, Ribble's Commercial Director, said: "We’ve removed all UK VAT from the pricing that any European customer will see, so they aren’t paying for that twice. The customer also gets a pop-up message when they’re in our Bike Builder, which is the process every customer has to go through to buy a bike from us.
"That pops up to tell the customer that because of Brexit and the changes, they will be liable for local taxes and they will need to work that out with their local customs office when they receive the bike.”
Italian clothing brand La Passione also states on its website that for orders over £135, UK VAT will need to be paid to the courier upon delivery, and warns that the courier could charge an additional management fee.
Canyon has simply changed its pricing to cover any applicable duties or customs handling fees, so you see the whole amount you will have to pay at checkout: “The benefit is the pricing you see on our website and during checkout is the final pricing, and there are no additional fees once your Canyon order arrives with you,” the German bike manufacturer added.
Prices are rising, but not in a uniform fashion, as brands attempt to absorb some of the additional costs. As we reported, taking the Canyon Aeroad CF SL 8 Disc as an example, the price increase of 9.21% is not as much as the 14% import duty; but still, it's a significant increase for customers.
One EU bike brand, that wishes to remain anonymous, has made road.cc aware that new customs costs are based on the volume of the parcel being shipped rather than weight. Although bike boxes are quite light for their size, calculating the shipping in this way means that considerable fees are being levied. This is a particular issue for lower end bikes, as the increased fees are proportionately greater relative to the cost of the bike compared to higher end models.
Mitigating that 14% import tariff (if a sizeable proportion of a bike's frame and components are made outside of the UK and EU), plus the new customs charges is difficult for many brands to fully cover themselves.
Added to this, freight rates have risen to new highs due to the shortage of shipping containers transporting goods from Asia into Europe. The cost of shipping a 40ft container from Asia to Northern Europe has increased from $2,000 in November to more than $9,000, according to the Financial Times.
The slowdown in global trade and economic shutdown in Europe in the spring of 2020, due to coronavirus lockdowns, meant less containers were shipped back to Asia. Then in the second half of 2020, western demand for Asian-made products soared, and so did freight rates as shippers became desperate for available containers. Port delays are causing a further rise in prices, as freight operators are charging extra to compensate for longer waiting times.
For Ribble’s UK customers, this issue surrounding the shipping container shortage has meant lengthy lead times after purchasing.
David Stacey commented: “These factors are definitely not new, since about October time we’ve been experiencing major delays at ports.
“Not all of that is to do with Brexit, it’s to do with several other factors, mostly COVID and the furloughing of people at ports, and this has created a massive knock-on effect of container shortages and shipping delays, and therefore supply and demand dictates the price rise [with containers]."
This is an issue the brand has been battling for months now, but Brexit complications has exacerbated these inter-weaving problems. Stacey added: “It’s really difficult as a UK manufacturer, because we’re totally reliant on those constituent parts arriving with us. We basically build to order, none of our bikes sit on a shelf in a box. Every single customer who orders a bike from us has it hand-assembled from its constituent parts, and we’re just being crippled really by these delays. It’s been very, very difficult.”
> road.cc Sportive & Endurance Bike of the Year 2020/21
This all coincides with an increase in the numbers of us cycling and buying bikes, as the UK government has supported and encouraged cycling (amongst limited other forms of exercise) to continue through the pandemic, and the related lockdowns.
> 12 ways that lockdown has changed cycling
Ribble’s CEO Andy Smallwood said: “We’re still tracking at a very high level of demand. We forecast on a very regular basis, but it takes time to react to an increase in demand, and that’s compounded by delays as well.
“We are well placed to meet the demand, although there is obviously lead times involved, and that has an impact on what product will be available.
“That’s not just us, that’s the whole bike industry. Lead times are growing and availability is tough.”
> Bike at Bedtime: Drops Le Col Ribble Endurance SL R Disc
Any well-made plans made before the new Brexit rules arrived on 1st January 2021 have only helped to a limited extent.
Smallwood added: “We bolstered stock around multiple Brexit timing points in order to cover us for any delays. But with the bike industry there’s been significant growth, so that’s eaten into any buffer stocks we put in around Brexit. From a stock perspective and delays it wasn’t a case of being unprepared, just a case of other factors outside of that which has impacted us.”
Are the buffer stocks from other brands on the verge of completely running out? Perhaps then, we will see an even bigger hit from customs delays and shipping container shortages, as there’s no back-up stock to hide the damage?
There is also another issue emerging, relating to transporting imports from the EU, that could have implications on the bike industry in the coming months.
Increasing numbers of freight groups are rejecting contracts to move goods from the EU to Britain, according to a recent report by The Guardian. This is explained to be the result of the burdensome new financial guarantees, known as T1s, that apply to goods being exported to the UK. Alongside this, customs declaration and Rex (registered exporter system) documents to certify the origin of the product need to be provided, and cause added complications and paperwork for these freight companies—and these shippers are simply not interested.
We'll be following the developments over the coming weeks and months, and will provide updates when any significant changes happen with the current situation. Are you a bike brand, distributor or customer with a story to tell about Brexit and the bike industry? Get in touch at info [at] road.cc
Anna has been hooked on bikes ever since her youthful beginnings at Hillingdon Cycle Circuit. As an avid road and track racer, she reached the heady heights of a ProCyclingStats profile before leaving for university. Having now completed an MA in Multimedia Journalism, she’s hoping to add some (more successful) results. Although her greatest wish is for the broader acceptance of wearing funky cycling socks over the top of leg warmers.
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153 comments
This comments thread is at 149 posts (at point of my posting this comment) and yet nobody's even mentioned helmets!
I'm glad that we are so adaptable...
What is the tariff rate on helmets now?
Whatever it is it'll be worth paying because they save so many lives.
Ordered the new diamond front rack from Allygn.de last week (Wed 20th Jan).
https://www.allygn.de/products/diamond-rack-coming-soon
Arrived today (25th so 3.5 working days later) no form to fill in, no extra taxes, no problems.
Can't help but think some people are making a big deal out of Brexit when it really isn't....queue the abuse from the anti-Brexit people
Unfortunately anecdotal does not equal fact.
That pretty much sums up the intellectual level of the average Brexiteer.
Does this paperwork not "factually" exist because it doesn't support your view?
Could be photo-shopped
It didn't at the "time" of you original post!
If it's actually manufactured in the UK or EU then there will be no issues. Looking at that rack it seems it's made in the EU hence the ease of purchase.
It's the products manufactured outside the EU/UK that then have to cross borders more than once that cause problems.
Nothing that's insurmountable of course.
That is simply not true. Any online orders coming from EU manufacturers to UK customers should now have the relevant rate of UK VAT applied and the seller should be registered with HMRC for remittance of same. Additionally any orders over £135 also attract import duty between 0% and 20% depending on the type of item. At present many EU retailers are simply ignoring this requirement and sending out goods as per pre-Jan 1st regulations (many others have looked at the paperwork and are simply refusing to ship to the UK); if you're lucky they go through on the nod, as has obviously happened in this instance, if you're not you can be faced with a demand for VAT, import duty and courier service charges on the doorstep before being given your item.
These are facts, by the way, but feel free to put ROFL emojis in your response if it makes you feel better.
Maybe you're right and Mason Cycles are running some elaborate smuggling enterprise.
https://masoncycles.cc/blog/information-for-our-eu-customers
Or maybe there's an alternative explanation.
If the product meets 'Rules of Origin' requirements there are no tariffs to pay.
You pay no VAT in the country you buy from as exports are zero rated for VAT, you then pay VAT on import at local rates.
Companies can manage this themselves if they choose to or send it without VAT paid and let the customer/courier sort it out.
Like I said not a problem.
So in other words if you order goods from the EU that were previously subject to zero import duty or UK VAT, you can now be obliged to pay both on the doorstep before being handed your goods, along with admin fees for the courier. So, for example, a £200 coat bought from a German website (which would previously have cost the UK buyer £200) could attract 12% or £24 customs duty. VAT at 20% is then applied to the total of £224, giving a VAT bill of £44.80. Once the courier has added its £11.50 admin fee, the UK consumer must pay £80.30 to the courier on the doorstep before it will hand over the item – adding around 40% to the coat’s price. Strange definition of "not a problem" you have there.
This of course is a very personal thing and really should read "not a problem for me (and fuck the rest of you!)", but only works until it does become a problem for "me". The British fishing industry would support this viewpoint.
You seem to be struggling to understand my original post.
If you buy a product that is manufactured in the EU you will not pay any tariff or customs duty.
That is the specific situation I was referring to. That is the specific situation applicable to the rack in question.
Previously you would have paid VAT at the point of purchase so would have paid VAT in the country you purchased from.
So the current situation is zero import duty and UK VAT whereas the previous situation was zero import duty and VAT at the rate of the country you bought it from.
The EU are brining in the exact same system as the UK for VAT later this year (they have delayed the original implementation date of 01/01/21).
If the coat is manufactured outside the EU/UK then yes you will now have to pay additional customs duties if the product is supplied from the EU.
You do not necessarily have to pay anything to the courier if the company sorts the duties out for you.
Canyon are doing just that.
https://www.canyon.com/en-gb/customer-service/brexit-information.html
And you are desperately cherrypicking. Yes that rack in question was made in the EU, so no tariff. To qualify for zero tariffs, goods must contain a high percentage of parts or value-added that “originates” in the EU or the U.K. The main idea is that a product whose value was largely created in China, for example, cannot simply be re-exported from the U.K. into the EU without a tariff.
For cyclists that means most bikes, generally having groupsets and frames made in the Far East, will be subject to tarriffs, even if they're assembled in Italy and sold under the aegis of an Italian brand. This was not the case previously.
All bikes and groupsets made outside the EU were previously subject to tariffs. This has not changed.
Cyclists have been paying 14% tariffs on non-EU frames for decades. This is essentially a tax as there is no large scale frame manufacturing to protect.
The only thing that has changed is for products imported to the EU and then re-exported to the UK. Those products now attract tariffs twice.
Most major brands import finished products direct to the UK so will be unaffected. Canyon are the most notable exception.
If you're buying an EU manufactured product there should be minimal difference post Brexit. Most companies should start sorting out the VAT themselves (as Canyon are already doing) especially once the entire EU shifts to the same system later this year.
If you're buying a non-EU manufactured product then you need to find a supplier who imports directly to the UK to avoid the double tariff.
FYI. Replying to a post about an EU manufactured rack with information about the tariff rates for EU made products is clearly not cherry picking.
If some of us hadn't been so f***ing stupid as to want to leave, there wouldn't be any of these problems to be surmounted. There can be no argument with that!
And more great news for those of us living in the EU: Stolen Goat today send EU customers an email apologising that they won't be sending goods to EU customers for the forseeable future. They said that enough EU customers have refused the goods on delivery due to the fees charged that they (Stolen Goat) are paying twice and it's just not economical.
I also had a response to an email to Sonder enquiring about a Camino frameset. They told me that due to the financial and administrative burden they will no longer be selling frame-only bikes to EU customers.
Brexit: the gift that keeps on
givingtaking away.Mastercard to push up fees for UK purchases from EU
https://www.bbc.co.uk/news/business-55796426
I'd better get a VISA card...
Class, If only the HMRC came here, to the road.cc ccomments section to solve the brexit issue- there would have been no issues!
Come on Plumbers and PE teachers, solve Cv19 whoile you are here and OUTRAGED at another polar opinion
Quite, how dare plumbers or PE teachers have an opinion on things that affect them, and wish to debate it with others who may have similar or differing opinions. Bastards....
Oh look, yet another clueless fuckwit.
If you think you're so fucking clever then feel free roll up your fucking sleeves and get stuck in - there's MOUNTAINS of extra paperwork to deal with and we could do with some extra people. It'll be unpaid, but since you voted for it I'm sure you won't mind.
Fingers crossed for wishful thinking over reality it is then.
Taiwan is very different from UK and not valid as a diversionary strategy.
At that point you make it clear that you have no clue as to the discussion, and you have neither hope nor intention of finding out.
I wonder why you think that folk will take the time to read your rambling chatter.........
So ... we had four and half years in which to make sure we were prepared, during which time many were pointing out exactly the problems that we are now experiencing, and somehow these "non-issues" are just going to magically right themselves.
Yes, the pandemic is making things worse ... which is why so many people were calling for the government to bite the bullet and extend the transition until such time as it was not such a big issue. That way, they might have been focussed on both better handling the pandemic AND making better preparations for what Brexit was going to bring.
Forgive me for not sharing your blind faith.
You can also find multiple products from 'Third Countries' in UK supermarkets including perishable products.
This clearly indicates that many of the bureaucratic problems currently being faced by UK businesses are far from insurmountable.
That's not to say that all businesses will be viable outside the EU but not all businesses would have been viable within the EU.
As you say, things will be far clearer soon.
You either forgot or deliberately ignored my previous comment on this semi-alt.fact.
Yes, we still receive/send products from/to originating in third countries but that simple fact hides a complex network of logistical systems.
Most bikes and components are made in 'third countries' but if Brexit, coming on top of Covid-19, wasn't a complete and deliberate fuck-up of the supply chain with continental Europe then this article wouldn't even exist!
And if it really was such a beneficial thing to leave the EU (and, I can tell you for nothing, at this stage I so dearly wish we could see an upside to all this) then why do we have to wait 12 months, or however long it will be, and the government spend an estimated £200 billion of our money, so we can get back to something like 'normal'?
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