In the wake of Brexit, there has been much uncertainty as to how the UK’s departure from the EU will affect the logistics industry. Now, this isn’t unwarranted as a large proportion of our national trade industry functions in direct relation to EU countries. In fact, 2017 found that 44% of all UK exports were destined for EU countries – so it’s understandable that we’d feel anxious. However, it’s important to remain pragmatic.
The first thing to note when considering how Brexit will affect our logistics industry is that we are yet to actually see the effects. This is because, at present, we are in still in a transition period – meaning that no consequences will be seen until the end of 2020 at the very earliest. Currently, the UK is still part of the Single Market and Customs Union, ensuring that haulage providers are still able to reach their EU destinations with no additional preparation. Whilst we are in this period, the government will continue to negotiate with EU officials to determine what processes will be necessary for logistics companies going forward.
Unfortunately, we have little control over how the coming months will progress, but we can attempt to prepare for a variance of outcomes. Our concerns can be addressed by considering three distinct questions.
How will we import goods into the UK from the EU?
The importation of goods into the UK will be tricky depending on the agreed decisions. However, the widespread concern arises from one singular fact: the UK is heavily reliant on EU for several vital resources. In fact, a more than substantial 53% of UK-imported goods and services derive from the EU. It is, therefore, no surprise that the public is worried about future trade deals as we don’t want to suffer shortages of vital goods. A pivotal consideration in this regard is that, for many, the obtaining of medicinal products, which, in 2018, made up 7% of goods imported from the EU – equating to a massive £18 billion.
However, this issue exceeds these apprehensions alone. Should the UK no longer be apart of the Single Market and Customs Union, we may witness a notable increase in tariffs. Meaning that when a logistics company incurs these costs, they will then have to further charge consumers.
As you would expect, this could be a notably negative outcome for smaller logistics groups – as they would struggle to compete with those with higher financial ability.
Will Brexit affect the current logistics workforce?
This question has one defined avenue of thought; how will UK trade function without the support of EU haulage workers.
This concern has escalated in recent weeks as the government introduced the idea of a points system that will determine if individuals can immigrate into the UK.. However, the issue with this, for the logistics sector particularly, is that haulage drivers are not considered a skilled occupation. So, in pursuing this action, we could rapidly decrease the prospective workforce numbers which at present is particularly worrisome as the industry is facing a shortfall of 60,000.
How will the exportation process into EU countries be affected?
Undoubtedly, a significant change that will be seen in the months succeeding Brexit will be how border and customs control function. As consumers, the majority of us have benefited from the notably relaxed procedures put in place at EU borders. It is somewhat expected that this will no longer be the case, as many assume that we will soon see the introduction of EU visas.
However, these developments exceed consumer travel alone. If more complex border controls are implemented by EU countries then we could see billions spent on the additional costs, as such the logistics sector will feel the ramifications directly. What’s more, increased security measures could cause for extended transit times, having an overarching effect on the entire industry.
Of course, these respective issues will be dependent on the agreements made between the Prime Minister and the EU officials – but it’s not all bleak. There are still months of negotiations and, as such time for things to change.
What’s more, you won’t be alone! The Road Haulage Association has already stressed the need for progressive negotiations on the matter and has even appealed to the Prime Minister in written correspondence. The Chief Executive, Richard Burnett, has proposed a ‘Market Access Agreement’ which would allow UK haulage providers to continue to travel across the EU without the need for additional paperwork and permits.
If you have any questions regarding the future of haulage post Brexit, speak to one of our experts.