Return to Sender: Is Europe’s cross-border e-commerce boom about to fizzle?

Customs to take the lead

Although shippers have varying levels of familiarity with the tax scheme, at least one consortium of ports and Airports in Belgium are banking on a new digital initiative being developed by the country’s Ministry of Finances, which oversees customs. According to an introduction to the service published by the ministry, BE-Gate aims to simplify data exchange by enabling e-commerce stakeholders, including importers, exporters, transporters and declarants, to share a number of notifications through a single transaction. Data is exchanged in a “customs-approved” data format, and can easily be shared with the ministry of Finance, and other stakeholders.

Cleared goods are released immediately upon arrival, while customs officers are presented with any pre-submitted information for packages requiring additional screening. Steven Verhasselt, commercial director at Liege Airport, is optimistic that early use of BE-Gate will allow shippers to familiarize themselves with the system before the €22 exemption is annexed and all e-commerce imports are subject to VAT.

With an overarching customs framework in place, software-as-a-service (SaaS) companies are also working to help airlines and forwarders configure their IT systems to interface with platforms like BE-Gate.

“The need to capture as much customs data early in the supply chain and to efficiently transmit the required data from seller to broker and customs is not only an opportunity to reduce costs but almost becomes an operational necessity,” said Martin Meacock, director of product management and customs for Descartes’ European region.

The trendy features like order-tracking that SaaS companies provide not only appeal to customers, but can also help forwarders cut down the time it takes to book a shipment with instant-capacity booking options, which is a boon to a time-sensitive e-commerce shipment’s supply chain.

Regarding changes to the VAT exemption, some forwarders are making attempts to get ahead of changes to exemption.

“It gets really difficult [for shippers] to deal with in a lot of ways,” said Rick Keller, CEO of U-Freight America. “There’s a certain valuation of commercial goods that can ship with no duty or tax, but the VAT amounts don’t apply at the same dollar amount or euro amount, and then your VAT percentages can vary.” Rates fluctuate between 17 and 27 percent depending on the country and are known to change. “It’s hard when you have 5,000 people with 5,000 packages,” he said.

U-Freight has done well in pivoting its value proposition to become more accommodating to small- and medium-sized enterprises (SMEs) in 2018. Last year was the busiest to date for the U-Freight Group’s cross-border e-commerce segment, largely due to its new partnerships with companies like online e-commerce platform Easyship, which caters to smaller merchants.