Now available: the freedom of Southampton
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TALKS are being held concerning the assembly of products ranging from computers to heavy goods vehicles at Southampton Freeport.
Will freeports take off to play their part in regenerating Great Britain Ltd? It is far too early to say. Southampton, the first freeport to be so designated, looks a hive of inactivity. There are no deals so far to announce.
Southampton has had a
number of approaches from freight forwarders, but none from hauliers/warehousemen.
It has a manager — Andrew Kent, who was at one time ports manager at King's Lynn and has experience in the marketing and commercial worlds; an assistant, John Ryder; and a secretary. They can give personal service to inquirers. And we always will give personal service," Andrew told me.
There is nothing to prevent a freeport's getting into haulage itself; a modest effort in this direction on behalf of importers looks a possibility. But there are no plans at the moment for Southampton to do this. A number of hauliers have depots near the free zone.
However, a boost to activities could be coming along from November 1.
There are positive and extremely significant vat advantages for traders who use freeports, Andrew claims. He told a Freeport Southampton seminar that from that date freeports will be the only areas in the UK where goods can be stored specifically to postpone the payment of the tax.
No vat is paid for the whole time goods remain in the free zone and the reduced credit period can still be obtained even after they have been delivered from the free zone into the UK, he said.
This advantage comes about because of the change in vat arrangements for imported goods. In principle the tax will have to be paid on the point of importation, where previously it could be postponed for some time.
It will still be possible to apply for credit arrangements with HM Customs and defer payments, but this credit period is likely to be one month less than at present. Vat will also have to be paid before the goods are sold and these two factors combined can detrimentally affect the cash-flow of importers and agents.
"Vat of 15 per cent on highvalue goods is more than most rates of duty and will tie up a great deal of cash," he said.
Another advantage offered by the Free Zone is that goods can be easily transferred for storage into the Southampton facility from any port or airport in the UK, thus avoiding the immediate vat payment.
"We hope that a considerable amount of our business will be handled through the port of Southampton, with all the attendant benefits both for the people directly employed within the port and the local community. We also expect to see major volumes of goods moving through the free zone which have been handled at a wide range of other UK ports, most probably those along the South and East Coasts", he said.
These ports together handle a large majority of the UK's trade with the rest of the world.
"We also see considerable opportunities to develop jointly with the UK Airports authorities, and with major airline operators, a package for the free zone handling of air freight through Heathrow,Gatwick and, of course, our local airports at Eastleigh and Hum.
"Southampton is the only free zone which can effectively serve the South, South-East and East of the UK and therefore has huge industrial and consumer markets.
"Where Southampton 10 years ago was not well served by roads, the motorway and dual-carriageway system connecting direct into the docks now makes it possible to move goods by motorway to all major centres of commerce and population in the UK. Heathrow can be reached in under an hour.
"In addition, the geographic location of Southampton makes it a natural base for a European centre of operations in a worldwide trade context."
Andrew concluded: "Southampton has the finest deep water port facility in the UK, and the existence of scheduled shipping services converging on the port from all over the world should reduce distribution costs considerably for Free Zone users."