A key UK government customs system has been overwhelmed within weeks of Brexit and threatens to trigger more disruption as freight traffic increases.
Exporters say they are struggling to acquire transit documents, which allow goods to enter the European Union without delay, because of a shortage of agents with the authority to issue them.
Agents need to put up a financial guarantee, often backed by a bank, to cover any taxes or duties on the goods being moved — but they have almost all been committed.
“No one’s got any guarantees left,” said Peter Hayes, general manager at Carlton Freight, a Liverpool-based freight forwarder which shuttles products such as cars, machinery and chemicals between the UK and EU. “We’ve had to say no to hundreds of inquiries.”
Meanwhile, firms wanting to apply for a transit guarantee or increase the size of their existing one have struggled because of delays at Her Majesty’s Revenue and Customs, the government agency responsible.
One hauler, speaking on condition of anonymity, complained it applied months ago, anticipating a surge in demand because of Brexit, but is yet to receive a response from the tax authority.
HMRC said it is aware of the problems applicants are facing and is conducting an urgent review. In a statement, it blamed delays on a recent software upgrade to its New Computerised Transit System. It also said it is currently processing 230 applications for transit guarantees, and expects them to be completed within a week.
The EU is Britain’s single-largest trading partner, taking 43 per cent of exports in 2019.
Prior to Brexit, the overwhelming majority of goods didn’t require transit forms, allowing them to be shipped to the bloc with minimal disruption.
Now firms are facing days-long delays to cross the border because of incorrect or missing paperwork.
At Ashford, south-east England, drivers have had to wait at a truck park for hours to obtain their transit documents and are regularly being turned back, according to Steve Cock of The Custom House, which has a base at the site and a £200 million ($273 million) transit guarantee.
He expects chaos as soon as freight traffic rebounds from its current subdued level because as much as 90 per cent of goods being moved will need transit documents. “They just can’t cope,” he said.
The transit problem is one of several issues snarling up UK-EU trade. DHL Express, owned by Deutsche Post AG, this week said it was temporarily suspending business-to-consumer shipments that required animal or plant health certificates. DB Schenker, a major German logistics group, has also temporarily suspended shipments due to Brexit.
Ben Moore, managing director of Sealite (UK) Ltd, which exports millions of pounds of LED lights to the EU each year, has had shipments held up by customs officials for days, one because it wasn’t accompanied by a transit document known as a T1 form.
“We don’t even know what it is,” Mr Moore said. “My shipping agent is saying ‘we can’t give you one.’”
He says he expects annual sales will drop by 25 per cent to £8 million because his EU customers, among them French industrial giant Schneider Electric SE and Swiss engineering group ABB Ltd, will go elsewhere.
Jon Swallow, co-founder of Jordon Freight, said his customs broker’s £1.5 million transit guarantee was used up within three days of Brexit.
There is a workaround — which involves setting up a fiscal representative in the EU country where a shipment first arrives and paying duties on entry — but this is an added expense and bureaucratic hassle that firms will want to avoid, Mr Swallow said.
With red tape restricting trade between the UK and EU, about 20 per cent of UK small and medium-sized enterprises have suspended exports to the EU, according to research by accounting firm UHY Hacker Young.
“Exports have just ground to a halt,” Mr Swallow said. “The people who are suffering are the SMEs.”
Thousands of trailer loads destined for the EU will be held up in the coming weeks due to the transit shortage and exports risk coming to a standstill, said Tony Shally, managing director of Espace Europe, a road freight company that moves goods between Britain and the EU.
Mr Shally wrote to Cabinet Office minister Michael Gove highlighting the problem and proposing that exporters are given a short-term 20,000 pounds transit guarantee without the need for backing by a bank.
“Our experience over the last two weeks has been horrendous,” Mr Shally said in the letter. “The situation will only get worse.”
Timeline
2012-2015
The company offers payments/bribes to win key contracts in the Middle East
May 2017
The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts
September 2021
Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act
October 2021
Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence
December 2024
Petrofac enters into comprehensive restructuring to strengthen the financial position of the group
May 2025
The High Court of England and Wales approves the company’s restructuring plan
July 2025
The Court of Appeal issues a judgment challenging parts of the restructuring plan
August 2025
Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision
October 2025
Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange
November 2025
180 Petrofac employees laid off in the UAE
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The essentials
What: Emirates Airline Festival of Literature
When: Friday until March 9
Where: All main sessions are held in the InterContinental Dubai Festival City
Price: Sessions range from free entry to Dh125 tickets, with the exception of special events.
Hot Tip: If waiting for your book to be signed looks like it will be timeconsuming, ask the festival’s bookstore if they have pre-signed copies of the book you’re looking for. They should have a bunch from some of the festival’s biggest guest authors.
Information: www.emirateslitfest.com
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Stormy seas
Weather warnings show that Storm Eunice is soon to make landfall. The videographer and I are scrambling to return to the other side of the Channel before it does. As we race to the port of Calais, I see miles of wire fencing topped with barbed wire all around it, a silent ‘Keep Out’ sign for those who, unlike us, aren’t lucky enough to have the right to move freely and safely across borders.
We set sail on a giant ferry whose length dwarfs the dinghies migrants use by nearly a 100 times. Despite the windy rain lashing at the portholes, we arrive safely in Dover; grateful but acutely aware of the miserable conditions the people we’ve left behind are in and of the privilege of choice.
WandaVision
Starring: Elizabeth Olsen, Paul Bettany
Directed by: Matt Shakman
Rating: Four stars
Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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