A Letter to our EU Customers
Dear Customer,
It has been six weeks since the UK departed from the EU. Our leaving the Single Market now means that the UK is seen by the EU as a ‘third country’, and as such is treated in the same way as every other country in the world when it imports traded goods.
Since the Single Market was formed in 1986, UK businesses have enjoyed the freedom of movement of traded goods and a tariff free exporting environment.
These benefits are no longer available and therefore all traded goods are required to be processed by each EU nation states customs authorities and impose any import charges if applicable.
Consequently, the disruption in January was substantial and these new trading processes and procedures became quickly overwhelmed. For us as a company it meant in many cases that there were significant and unprecedented delays in some of our shipments dispatched to our customers in Europe.
The backlogs in the number of parcels waiting for customs clearance or rejected for not having the right paperwork, grew hugely.
We are very sorry for the distress and significant inconvenience experienced by some of our European customers. I can assure you that we are working very hard as a team to find solutions to these operational problems. We are making progress and beginning to see an improvement in the flow of our shipments and delivery time scales.
We are working very closely with the senior team at UPS and we believe they are doing all that they can to repair the logistical problems that they have faced in recent weeks, which are being exacerbated by the significant restraints and restrictions they are required to manage as a consequence of the COVID19 pandemic.
In this message we want to be open and transparent providing you with the facts we have gleaned so far in order that you can make informed commercial decisions.
In our view the changes fall into two key areas namely:
- a) Speed of shipment delivery
- b) New costs and trading routines.
A, Speed of Delivery
We have worked closely with our freight partner UPS for some years who have proven to be an efficient and reliable logistic supplier for us. For the reasons expressed above, the backlogs caused by the post Brexit arrangements created an unprecedented disruption to the normal UPS efficient service.
They are confident that they will progressively reduce backlogs and restore their service standards back to expected delivery timescales. Realistically this is going to take a few weeks to achieve.
B, New Costs and Routines
As a result of the UK leaving the EU, there are new costs (VAT, import duty and brokerage fees) and processes that need to be followed.
Diamond Golf has also introduced new shipping rates designed to help soften the impact of some of these additional costs, depending on the size of a customer’s order.
VAT
As a ‘third country’, any order we export into Europe will have VAT or sales tax added at the border by customs authorities.
We appreciate this is a new routine for our European customers and creates changes to how they administer their business and account for transactions with us financially.
Since January 1, VAT is now due at the port of entry for all orders shipped from UK to Europe. Different EU countries charge VAT at different rates.
Our VAT-registered European customers are now responsible for the VAT payments on their Diamond Golf orders. Before this was Diamond Golf’s responsibility.
Customers who are not VAT registered need to consider that some countries use the VAT number to verify or identify the company involved. Therefore, non-VAT registered business may be required to provide some other form of identification before their parcels are released by customs.
However, we are not EU tax experts so we would recommend our EU customers speak to their accountant or financial adviser for clarification and confirmation of your local tax rules.
Import Duty
While the Brexit process concluded with a ‘free–trade agreement’, this only provided ‘tariff–free trade’ for goods manufactured in the UK. Few if any of the products, we sell are sourced from the UK with the vast majority being imported from overseas.
Consequently, these products acquire import duty to be paid at the border before the goods are released by national customs.
The percentage amount of duty charged depends on the type of product and the country from which the products originated. For every product and variety of product made in the world, there is a global classification code and every country in the world has previously agreed or accepted a percentage import tariff rate with the EU for that product.
Diamond Golf sells around 3,000 different products and currently we do not have the duty rate for each. However, we understand that for grips, shafts and heads this figure is 2.7% – which covers the majority of our sales into Europe. We will over time build our knowledge and understanding of the tariff regime applying to the other products in our portfolio.
UPS will calculate and pay your VAT (sales tax) and your import duty charges before the goods reach the border.
For this service UPS will now charge a brokerage fee based on the value and make up of your order. As each of the 27 countries in the EU has different border rules and regulations then the UPS brokerage tariff for this service can vary from country to country.
However, broadly we are seeing that their base brokerage fee is EUR 15 to which VAT at the national rate is then added.
Therefore, the bill UPS will prepare for you has three elements:
- a) Sales Tax or VAT
- b) Import Duties
- c) UPS Brokerage F
UPS are usually unable to release the goods until this account has been paid.
A new UPS system for payment of this bill requires:
1, you receive their tracking number when the order is in transit. The tracking number should be emailed to you by them. If you are not receiving this email, can you please contact our sales and service team who will ensure that you are properly set up onto the UPS system to receive email notifications from them.
2, Once your order has left the UK, the ‘tracker’ will update. Then a new link will appear on the green tracking flag. If you press this link you will be able to view the UPS bill and if you choose make arrangements to pay it. We understand that payment will help support the swifter transit of your order through customs, speeding up delivery.
UPS also provided a further option to support this process. If you wish you can open a customer account with them and when your order appears on their system, they will email their bill to you to pay.
New Diamond Golf EU Shipping Rates
Recognising the cost impacts of Brexit, Diamond Golf has recently introduced a new shipping rates for European customers with the possibility for free shipping or discounted charges (50%) dependent on the size of your order.
We believe if a customer receives free shipping then this will offset the new marginal costs of import duty and brokerage, while the 50% discount shipping fees will make a significant contribution to these new costs.
As a business we have chosen to absorb these shipping costs, together with other freight fees, introduced prior to Brexit to share the new financial burden and reflecting our wish to support our European customers.
Conclusion
Diamond Golf strongly believes the significant disruption caused by the introduction of these new trading arrangements will soon begin to subside and deliveries times will normalise over the next few weeks. The new procedures and marginal costs are here to stay.
We believe that as we journey forward together, we as a team will learn to understand and master these new processes allowing us to better support our European customers do the same. Our hope is that the new shipping rates will help our European customers offset the new marginal costs they will now incur and that overall, we will remain price competitive.
Throughout Diamond Golf’s 43-year history, we have shaped our business around an ethos which is focused on striving to provide excellent customer service and technical support. This has helped us establish strong enduring business relationships, some now decades old.
We are exceptionally proud of the technical and specialist service and support we freely dispense to those looking for a sounding board or seeking a technical solution. We hope all these important things remain valued by all our customers.
Thank you for your patience and understanding during this challenging and difficult time. If you have any questions or require support please contact our sales and service team, they will be delighted to assist you.
With best wishes,
The Diamond Golf team