Supply Chain Recruiters face a new challenge with regards to preparing businesses for Brexit…
Between February 2017 and January this year the number of UK firms registered as Authorised Economic Operators soared by 26%. That sounds impressive until you realise that the UK only has 679. There are 6,330 in Germany.Germany.
This belated uptake is of course a response to the challenges of a possible post-Brexit world, but it is important to appreciate that the case for AEO status isn’t just about Europe, or even primarily about duty and tariff procedures. AEOs, and comparable ‘Trusted Trader’ systems, are being developed and implemented world-wide under a World Customs Organisation framework developed in the aftermath of 9/11 to strengthen the end-to-end security of international supply. AEOs accordingly come in two types – AEOS for security and safety, and AEOC for Customs simplification – a business can hold either or both.
What are the benefit of AEO’s?
AEOs form a cornerstone of the EU Union Customs Code (UCC), which is supposed to be operational by the end of 2020, although there are the usual software development delays. The EU has, and the UK will seek, mutual recognition of AEO schemes with the US, China, Japan and Canada, with others forthcoming. AEO systems go a long way towards eliminating checks, physical inspections and fiscal reconciliations at borders through the adoption of electronic systems. AEO firms therefore enjoy the equivalent of a ‘green lane’ at borders, while Customs and Border authorities can focus on more problematic consignments.
Even if the UK does not in the end leave the Customs Union, AEO status still has the potential for simplifying non-tariff border procedures, ranging from livestock welfare to reconciling the varying duties payable on alcohol, tobacco and fuel and the movement and release of bonded goods. Besides operational simplification, AEOs can benefit from having to supply smaller – and cheaper – guarantees against deferred payment of duties and tariffs. Meanwhile, customers in the EU and elsewhere are increasingly looking for AEO status in their suppliers and shippers because proven compliance with Customs and security requirements reduce the risk of supply hold-ups at borders, as well as demonstrating a general level of excellence.
Gaining AEO status
But gaining AEO status is, rightly, rigorous – some 95% of firms fail on their initial application. Besides financial probity and solvency the firm needs to demonstrate a track record of compliance with Customs and security procedures and standards, and procedures for disclosing any irregularities. Significant investment in, and redesign of, internal systems may be required, but importantly HMRC is also looking at the people, especially those responsible for implementing and then maintaining AEO-compliant systems. Changes to the ‘responsible person’ have to be notified to HMRC, and as Customs procedures and security threats change over time, so must AEO practices.
Unlike some countries, the UK doesn’t currently have any recognised Customs qualifications, so HMRC says “you must be able to demonstrate and give evidence of practical competence for the previous three years” before applying. Courses are available leading to ‘AEO Certified Practitioner’ (through, for example, the Chartered Institute of Logistics & Transport, and the Institute of Export), and certainly any AEO should be looking at an ongoing training commitment, as well as other HR issues such as deeper background checks on staff who could compromise safety and security.
A more efficient route?
Many businesses may find the need to recruit a ‘responsible person’ – or persons, if they are going for AEOS and AEOC – at the least as ‘interim executives’ for the application and implementation stage if not for the longer term. That isn’t going to be easy – by definition there are few in the UK with live experience of AEO implementation and operation, while ‘poaching’ from the larger pool in Germany and other EU countries could be a little problematic post-Brexit.
Nonetheless, such people do exist. Bis Henderson Recruitment has a network and track record of success, built up over 30 years, for identifying and recruiting specialised supply chain professionals such as these. If your firm is contemplating going for AEO status, contact us now for more information.
AEO accreditation is not currently mandatory and therefore deciding on whether to obtain this accreditation needs careful consideration by every business. At Bis Henderson Recruitment, we can’t make that decision for you but we can provide experienced people to support you with your application and ongoing compliance.
ALISON KIRKPATRICK, Senior Recruitment Consultant