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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
We have established that 'Third Country' supply of products is commonplace.
This isn't an 'alternative fact'. It's just a fact.
I'm not disputing that the logistics underpinning this are complex.
My point is that there is no reason that such logistics cannot be implemented by UK companies.
This will take time to implement and there will be disruption in the interim.
The benefits of Brexit, in trade terms, will be in improved trade with countries outside the EU.
Trade deals take a long time to negotiate and implement.
The costs of Brexit, in trade terms, are therefore front loaded while the benefits will take time to establish.
This much should be obvious, making demands for instantaneous benefits seems fatuous at best
Speak for yourself.
It's a different story for anyone trading commodities, especially perishable food.
But of course it's fine, we can go without certain types of food for 12 months, just so we can be outside the EU.
Is it any wonder that despite all the facts, persistent pro-Brexiters appear to be in complete denial, divorced from reality. Fucking jokers.
Unfortunately anecdotal does not equal fact...
And did anyone see this one?
https://www.theguardian.com/politics/2021/jan/23/brexit-hit-firms-advise...
Businesses like Daniel Lambert wines in Bridgend?
https://twitter.com/DanielLambert29/status/1352887380827643904
And today he has RT'd another wine trader saying that "The Brexit papers don't care about the objective reality of leaving the EU. For some reason neither does the government."
But I'm sure some people will think that, as successful businessmen who do cross-border international trade all day long, they don't really know anything. Better to get your facts from a spiteful Daily Mail columnist and bigmouth wankers on an anti-vaxx, anti-mask Facebook group. Only then will you know the REAL truth.
I still haven't received my NHS-Brexit cheque - are they delayed because of Covid? Has anyone else got theirs yet?
Rich, mark and John "1 post" Phipps have probably got theirs. Did you choose remain? That might be the problem....
If you announced to your partner that you were thinking of splitting up and going your own way because you felt things weren't working out, and they then threatened to make your life a misery and spoke of punishing you, dragging out the breakup for years, all the while still making new threats and demanding more and more restitution from you for the breakup, would you be on your knees begging to be taken back, or realise what a great decision you'd made?
Are you attempting some kind of analogy?
If so then try a different one, that one's rubbish.
How about this: you share an apartment block with a bunch of other people. You all buy stuff in bulk and each has the amount they requested, no-one makes more money than the others from it and everyone gets their share. Utility bills, insurances etc are split. People share resources, everybody sits around and agrees (or at least accepts) a majority decision on how to things generally work.
But you don't like 'being told what to do' by the others. You decide to move out, get your own place, you prefer blue curtains and don't like the fact that some residents have the heating on more than you and you don't like the foreigners that live in the flat that you mate used to live in. They probably know the landlord and set him up (though in fact he got kicked out for not paying his rent).
But you still want to be in on the bulk shopping 'cause it's cheaper and easier than going to the shops yourself every time. And you want a say in how the shopping scheme is run, which items are ordered when and where from.
You want the same security arrangements, the same cheap rent and don't want to pay more for the gas and electricity. You don't really want to pay for separate insurance, council tax, TV license, Netflix, wi-fi etc.
But the others say they aren't keen because you said you wanted out, you wanted to take back control and make your own decisions, be in charge of your own bills. Then you start posting memes on social media blaming some of the other residents, you tell them not to forget that it was YOU that rescued them in the f**king war and they should stop being so ungrateful. You have some mates round who get drunk, sing offensive songs all night and one of them threatens to beat up the young lad hanging around downstairs "because he looked at me funny".
Is that any closer?
Hmm. I see your analogy has resorted to the racism trope - how utterly predictable on what is fast becoming Guardian.cc.
Also, you incorrectly postulate that the residents are all paying the same amount. Sorry, but you know it doesn't (didn't) work like that.
However you want to look at it, the EU authorities have exposed themselves as bullies at the way they have treated the UK for daring to even suggest leaving, and yet vast swathes of you would fall to your knees and beg to rejoin. It's embarrassing.
Oh please, dry your red white and blue tears. The racism was either proudly on show during the campaign (i.e. Nigel Farage's ridiculous "breaking point" poster), or has been showcased before or since by pretty much every prominent leave supporter- our exalted fuckwit-in-chief being a prime exhibit.
The only appropriate divorce analogy for Brexit is that of a doughy, gammon faced man in his 50's deciding he's going to ditch the wife and kids cos he's sick of the commitments he got himself into, still sees himself as a lad and a total catch, and therefore pictures himself swimming in hotly available 20 yr old nubile women. Then he gets divorced, reality kicks in, the world sees him as the washed up loser he is and he spends his nights washing his clothes in the sink and wanking to porn in his dimly lit bedsit.
I take it back about analogies breaking down....
???
Have you not noticed Johnson's behaviour during the negotiation with the EU? Proposing one thing and denying the next day and acting all hysterical throughout the entire process? You don't have to be a Guardian reader to have seen that embarrassing spectacle. What a farce! People have voted to leave the EU without knowing even what the EU was, thinking they were being anti-elite, while being governed (manoeuvred) by the most exclusive Boys Club you can imagine. And some of them are still going on about the nasty "bullies" in Bruxelles. Unbelievable!
The EU negotiators have acted in the best interest of the member countries and the EU as an entity. It's their job. Why would they do anything else?
If the UK was part of a group that had the stronger hand when dealing with a nation that wanted to go and play by their own rules you can bet your life savings that we would want the negotiators to use that strength to the maximise it for our benefit, not roll over and say "You can have all the benefits of membership without the obligations". What utter fool would agree to that? So no, they're not bullies.
The UK leaving the EU is the biggest shooting-self-in-foot exercise in living memory, possibly longer. We will live with the consequences, not just economic ones such as import and export tariffs, for a long time. But what about the benefits? No-one has yet come up with any. Perhaps if you read and watch something other than pro-Brexit media (particularly if you look at the perspective taken in other countries, including USA) you might see a different perspective.
I'm not a fan of the EU structure per se, but it is blindingly obvious to so many that being part of the largest trading block in the world is better than deciding you leave and then being outside, on your own. Schemes like CAP seem unwieldy and inflexible but a common set of rules across all nations does in fact have its benefits, as we are beginning to discover.
But the lies and misinformation spread by Leave.eu's underhanded, illegal campaign worked because people liked what they heard and not enough of us cared about the things we may lose. Too many people just saw what they wanted - and I'm sorry if you don't believe it but yes, race and immigration were definitely massive cards played by the Leave campaign. Sadly, lots of people liked that idea.
I'm not saying all Leave voters are racists but, just as not all Trump voters are racist, misogynist haters, but they have enabled and emboldened groups like the Proud Boys. In the same way, every Leave vote has certainly enabled and enboldened the malign, darker groups of far-right political players, whether you like that idea or not.
The bollocks spouted about 'being ruled by Brussels', of 'unelected beaurocrats' is also flag-waving, xenophobic bullshit stated by people who don't know what they're talking about. Beaurocrats exist everywhere; they are the essential public servants in all government departments, councils, NHS management teams and so on that make each country's services tick. Those beaurocrats provide continuity and do their jobs while the politicians, parties and governments come and go.
No, they followed the exiting processes that were agreed by all nation-states (including UK) that would swing into action when any member state elected to leave - section 52 and all that.
Spare us the Poor Little Britain routine. UK was hugely influential when part of EU, but insanely decided to jack that in, for... well, whatever reasons the brexiters find difficult to reveal.
The UK didn't "dare to suggest leaving". It left. No one asked it to, and no one stopped it, coincidently completely killing the "sovrinty" argument.
So Mark, maybe you can help me. Why is Brexit a good idea? How will my life, or my children's lives be better now that we have left?
Trouble is with analogies is that they always break down the closer you look. This one pretty much immediately......
Ok, ok, I get it. This site has way too many left-wing followers.
I'll leave it here: Brexiteers won, Remainers lost. It's you (Remainers) that are drying tears, no matter what the colour.
What have you won? The recent changed to the market from Brexit have damaged the interests of bike consumers regardless of how they voted.
Dude, we've all lost. The only winners are disaster capitalists who will be profiting from the chaos. You don't sound like rees-mogg or farage to me. You've lost as much as the rest of us
This isn't just left / right wing politics, lots of businesses already getting hit pretty badly. Plenty of hard facts contradicting your blind rhetoric.
What did you win?
Nothing.
Disputing with Brexiteers is about as worthwhile as with creationists, anti-vaxxers, flat-earthers, anti-maskers, Trump supporters etc. All they can do is quote cherry-picked non-facts, and spout rehearsed stupid arguments. Remember, it tells you all you need to know that Brexiteers voted Johnson in, along with Patel, Gove, Raab- I can't go on, it's too painful. These people are genuinely thick.
A pre-rehearsed stupid argument and then an ad hominem.
You are really excelling yourself today.
I'm struggling to see the problem here, even the dumbest Daily Mail reader will have understood the months of Govt adverts on the telly telling us to get ready for Jan 1st.
Brexit was a fuck up in 2016.
It's a fuck up in 2021.
It will continue to fuck us up for a very long time as we start to suffer the consequences on a small and individual basis.
EDIT: The only benefit so far is the break up of the union.
Why do you see the break-up of the union as a benefit?
I'm Welsh.
Loves Europe, hates Britain.
Loves Europe, hates westminster.
Does that mean that all Brexiters hate Europe?
Me too. Desperately waiting for Wales (and Scotland) to leave the United Kingdom and apply to join the EU in their own right so I can get an EU passport again and keep the rights I was BORN WITH!
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