A guide to exporting for UK marine businesses

There are numerous reasons for the industry to drive the export of products and services forward. Exporting allows marine businesses to reach a wider customer base, increase revenue, and achieve economies of scale. Exporting and expanding into different markets can help spread the risk from any economic downturns. It can also mitigate the risk of local competition in the UK.

Some businesses enter the export market accidentally – they export a product in response to an enquiry – while other marine businesses are actively targeting new markets.

It may be that your business is well-established in the UK, and you want to have a go at competing in other countries as a way of growing your revenue and profits. Or your business may need to sell excess stock, perhaps because your own market is very competitive or economic conditions have changed.

Expanding into international markets also provides marine businesses with the opportunity to establish partnerships with foreign distributors and suppliers, fostering innovation through exposure to new technologies and global industry trends. By responding to varied consumer demands, marine businesses can refine their offerings and maintain a competitive edge in the rapidly evolving global landscape.

Whatever your reason for exporting, entering overseas markets presents the opportunity for significant rewards, but at the same time can cause complexities. Success in this arena requires a well-considered strategy, detailed planning, and a comprehensive understanding of the associated advantages and challenges.

Every marine business exporting to an overseas country needs to adhere to export regulations and follow regulatory processes governing the purchase and sale of products and services between two or more nations.

You will need to understand the processes involved, obtain necessary registrations and licenses, prepare any required documentation and be abreast of a raft of laws and regulations that need to be followed.

Some initial questions to ask include:

• Are you hoping to export regularly or fulfil occasional orders?
• Will there be any upfront costs in increasing production and if so, if there enough cash flow in the business?
• Does your business have the time and resources to export and how will economic pressures will affect your company’s position?
• Do you have enough financial backing in order to export a large order?

It’s important to create a comprehensive export plan that can be shared with banks, investors or business partners. The export plan will include information about your business and its exporting objectives together with details on any competitors and target markets.

The plan should also include details on your businesses’ finances and any other resources that will be required and should look at how the domestic and export side of the business will work together.

It should also outline factors such as cultural differences or language barriers and any changes needed to your product or service to enable it to succeed and be compliant in a new market.

Carry out market research and visit the strongest potential new markets. Find and meet contacts and potential buyers such as distributors, agents or dealers. A good place to start is to take part in trade missions and visit trade shows.

Find out what the routes to market are and if there are any other barriers you may face.

Regulatory advisors or export consultants can help you understand the best ways to enter a particular market, the most suitable and cost-effective ways to transport your goods, stay legal and connect with new customers.

Also investigate what marketing your competitors carry out, what their sales channels are and look at which countries your domestic competitors are exporting to.

Have they adapted their products or services for different countries and is your business able to adapt your products for different markets?

Bear in mind that adapting a product or service that suits one market into something that will succeed in another can involve significant resources and cost.

A market with the highest potential demand for your product may initially seem the best choice to target, but there could be significant barriers so it may not always be the right way forward. Another seemingly less attractive country may not have the same obstacles.

Research sales trends in the market and trends in consumer spending.

Many marine trade associations carry out regular statistical reports on different aspects of the marine industry such as boat sales or marine equipment sales which will give you invaluable information. Trade associations will also have details of different events and the exhibitors and products on show, which is a great way to see the latest innovations from other marine businesses and see where your products fit into the market.

In addition, the World Bank gives country-by-country data on ease of doing business, whilst Transparency International and the Risk and Compliance Portal – gives market-by-market information on corruption levels.[2]

Once you have carried out your research, contracts with your customers will need to be negotiated defining terms and conditions, pricing and payment methods – currency and bank charges need to be considered, alongside delivery terms. The legal environment in the country you’re exporting to can be very different to the UK and it’s wise to access expertise and make sure proper agreements are in place prior to starting.

You may also need to protect your intellectual property by registering your brand and take out additional insurance in new export markets.

If you are new to exporting, consider using a freight forwarder. They will be able to provide expertise and prepare shipping documents alongside advising on different countries rules and regulations to aid the export process.[3]

A freight forwarder will also manage any customs clearance and payments of import duties. Alternatively, for smaller volumes, a parcel courier may be the way forward.

Whichever option you choose, all necessary documents, such as commercial invoices, packing lists, and bills of landing, will need to be in order to prevent delays and customs hold ups.

If an export declaration is not finished on time or has errors, goods may be left unshipped on the dock, incurring storage costs, delays and fines.

The declaration provides details about the exporter and the cargo contents and enables HM Revenue and Customs (HMRC) to verify that the shipment is adhering to export rules, such as VAT, duty, and licencing obligations.

Many countries now ask that the exporter has Approved Economic Operator (AEO) status which shows that the exporter understands customs rules and declarations and operates secure systems when handling its consignments.[4] The exporter of record needs to be based in the UK in accordance with the UK customs regulations, with the exporter having a permanent place of business in the UK from which it conducts the business’s authorised activities, or a registered office in the UK.

However, the UK export process allows an agent or other third party to act as the exporter of record if the business planning to export does not meet the establishment requirements.

If a free trade agreement or partnership is in effect, commodity codes are used to secure favourable duty rates and to determine the required import tariff. UK commodity codes, also known as tariff codes, describe a specific product and are necessary for export declarations.

The UK has a tariff free agreement with the EU through the Trade and Cooperation Agreement (TCA), which came into force on 31 December 2020. This removes tariffs on goods traded between the UK and Europe provided the products being exported have sufficient local content to qualify. Exporters have to prove products qualify by meeting the country of origin test set out in the TCA.[5]

A Certificate of Origin is an essential document for international trade that certifies the origin of the goods being exported.

Goods are treated as ‘wholly obtained’ if they’re exclusively produced in a country, the UK, covered in a trade agreement without incorporating materials from any other country.[6]

If a business is producing goods for export in the UK using materials from other countries, those materials need to have been ‘sufficiently worked on or processed’ in the UK for the final product to be treated as originating in the UK.

Work out which trade agreements would benefit your business the most and if your business strategy could be adapted to make the most of them.

Conclusion

In conclusion, there are many factors to consider when deciding to export your products or services in a changing global market but there can also be opportunities for your business. There are many consultants and agents who can advise and support you to export profitably and optimise the export process if required. While the initial process can seem daunting, exporting your marine product or service can help the successful expansion of your marine business and the UK industry as a whole.

When it comes to insuring export sales, our team of Commercial Marine insurance experts are here to help and advise. From product liability to cargo, we have a policy to make sure the growth of your business is covered. Get in touch with the team to discuss your business needs today.

Sources

[1] British Marine urges UK Government to stay focused on reducing trade barriers

[2] Online Market research for UK exporters | business.gov.uk – business.gov.uk

[3] How to use a freight forwarder when exporting | business.gov.uk – business.gov.uk

[4] Check if a business holds Authorised Economic Operator status – GOV.UK

[5] Trade: tariffs | Institute for Government

[6] Exporting goods from the UK | UK Export Process