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Logistics costs to rise with ‘Brexit’

LONDON: April 27, 2016. International delivery company Parcel Hero calculates that should Britain withdraw from the European Union it will cost the country £11 billion in extra tariffs on an import volume of £220 billion.

The company says the cost of consumer goods will rise by around 32 percent if the UK follows the Norway model. Currently a typical pair of Levis 501 jeans that costs £56 in the UK costs £71 in Norway and £81 in Switzerland; and a £59 pair of Nike shoes costs £77 in Norway and £88 in Switzerland.

According to report author David Jinks, Parcel Hero head of Consumer Research, while much of the 'Brexit' debate has been focused on sovereignty and immigration, the most immediate and noticeable impact of any departure would be a significant increase in the cost of sending and receiving items with Europe and beyond.

Parcel Hero 1The report says that a rise in delivery fees and higher import costs following a UK exit will hit SMEs and start-ups particularly hard while making it more expensive for UK Internet retailers and online marketplace traders to do business with the EU.

"What might look like an exit could in fact become a wall between the UK and EU," said Jinks.

Once Britain is outside the EU, Parcel Hero expects a 30 percent rise in the cost of importing goods. The company breaks this down to an average 5.0-9.0 percent increase in the dutiable price of an item; plus VAT of 20 percent when buying from countries within the EU; increased transport costs; and additional 'Customs clearance' charges.

This will result in an extra cost of £163,000 for an SME based in Britain as the price of a typical £150 purchase from the EU would rise to around £195, says the report.

Parcel Hero lists other negative outcomes apparently overlooked by politicians advocating a Brexit including:
• Businesses and consumers will face a mass of new red tape: Customs forms with proof of origin for every shipment arriving in the UK would be required.
• SMEs and Internet traders will find EU suppliers three times more likely to prefer to trade elsewhere in the EU than with the UK.
• British exporters seeking to price goods competitively could easily fall foul of the Union's protectionist anti-dumping rules and face extra duties.
• Britain might not qualify for the many favorable trade agreements negotiated by the Union with key countries and markets around the world, including the planned TTIP between the U.S. and EU aimed at removing.

"If the UK votes leave the European Union, it could result in a 'perfect storm' scenario in which there could be significant issues with Customs and taxes that could impact on both the people and businesses of the UK and those wishing to deliver into the country. This would undoubtedly make an independent UK a less attractive market," Jinks added.

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