Research and analysis

IFF Executive Summary (2017)

Published 15 July 2025

This report was commissioned under the Conservative administration (2010 to 2024), and conducted in 2017.

HM Revenue and Customs (HMRC) Research Report 820.

1. Context 

1.1. HM Revenue and Customs (HMRC) commissioned IFF Research to conduct quantitative surveys with freight forwarders and small to medium-sized enterprises (SME) businesses, along with qualitative research amongst SMEs, to inform their understanding of the costs associated with trading with non-European Union (non-EU) countries.

1.2. The key questions to be addressed by this report are:

How much does it cost for SMEs to start trading with non-EU countries and how much of a burden is it? 

What does the UK freight forwarder market look like, and what services are offered?  

What are freight forwarders’ charges for customs-related services? 

1.3. In Spring 2017, surveys of 500 SMEs businesses and 200 freight forwarders were conducted, followed by 40 qualitative depth interviews with SMEs.

2. SME research findings 

2.1. Amongst those who had started exporting to non-EU countries in the past 18 months, key areas which required additional investment or preparations to be made included transportation (40%), building relationships with agents or distributors (40%) and export administration (35%).

2.2. These businesses were asked to provide a breakdown of the costs attributable to starting to trade with non-EU countries for the first time, including both preparations that related to customs and other expenses. The mean direct cost of preparing to export was £2,220, with an average of 130 hours of staff time required to make these preparations. The median values reported were £50 of direct cost and 5 hours of staff time.

2.3. Half of SMEs (50%) mentioned facing at least one type of administrative challenge when they started to export to non-EU countries (such as paperwork, understanding regulations), and 3 in 10 (28%) experienced a financial challenge (such as the payment of tariff costs).

2.4. SMEs who had recently started importing frequently reported needing to invest in similar areas to those who had started to export: developing relationships with agents or distributors (48%), transportation (40%) and import administration (39%). The mean direct cost of preparing to import was £4,190 (although the median cost was nil), and the mean staff time required was 58 hours (median: 5 hours).

2.5. Administrative challenges were experienced by one in three (34%) SMEs who had recently started to import from non-EU countries, with a similar proportion (31%) having faced at least one financial challenge.

2.6. Businesses reported relatively low levels of awareness of Rules of Origin. Whilst 7 in 10 (69%) said that they had heard of them, only 4 in 10 (42%) said that they knew any details about them. Of those who import goods and are aware of rules of origin, 4 in 10 (42%) said they have required proof of origin from a supplier in the past.

2.7. Four in five (80%) SMEs who trade with non-EU countries had used the services of a freight forwarder in the last 18 months. Around three-quarters of SMEs that use freight forwarding services for their trade did so ‘always’ or ‘most of the time’, and the clear majority (80%) said this was due to the convenience of using a freight forwarder.

3. Freight forwarder research findings 

3.1. 91% of freight forwarders offered both import and export services, with 82% providing services both inside and outside the EU. 44% of freight forwarders mainly handled freight transported by sea, 26% mainly dealt with air freight and 26% mainly dealt with freight transported by road.

3.2 On a per unit volume basis, freight services via sea were the cheapest and services by air were the most expensive across each of the EU and non-EU destinations for which carriage costs were provided.

3.3. Freight forwarders provide a wide variety of services to their customers but the bulk of their charge to customers relates to the cost of the carriage of the freight.

3.4. On average, consignments move through airports faster than seaports, regardless of whether they are stopped or delayed for any reason, and through EU ports faster than non-EU ports. Half (48%) of freight forwarders who mainly transport goods by sea said that consignments to non-EU destinations could spend more than 4 days at a seaport if stopped, compared with a fifth (21%) for consignments within the EU.

3.5. Freight forwarders were positive about their capacity to expand their services within the next 2 years; a majority (79%) said that had plans to become bigger and most (73%) said it was feasible for them to significantly scale up their services in the next 2 years.