Brexit: five issues for the road haulage and logistics industry to consider

A guide to the potential implications of Brexit for the UK logistics industry

19/09/17

That’s a shame, because it’s one of the most important decisions to face the country in a generation. The outcome could have far-reaching consequences for the road haulage industry.

Indeed any change to the relationship with the EU could profoundly affect those who make their living delivering goods across international borders.

Below is a guide to the potential implications of Brexit for the UK logistics industry.

Trade

This is the battleground for so much of the Brexit debate: the likely impact of leaving the EU on the UK’s balance of payments.

According to the government, 44 per cent of all UK exports find their way to EU countries. The implication is clear: leave the EU and that figure might diminish, putting a significant dent in the UK’s GDP.

For logistics companies, the consequences seem obvious. Reduced trade with mainland Europe may equate to less demand for road haulage – even if it doesn’t result in reduced exports overall. That’s because the UK might negotiate trade deals with other, non-EU countries which may not be so easily accessible by road.

On the plus side, supply chain expert Professor Alan Braithwaite – a Fellow of the Chartered Institute of Logistics and Transport (CILT) – says any changes are unlikely to happen immediately. “Established patterns of trade are difficult to change quickly because of capacity,” he remarks. “And all the time trade flows, we will need logistics.”

Border controls

Even if the movement of UK trucks through Europe remains undiminished, many in the logistics industry expect stricter border controls if we leave the EU.

“Over time, Brexit will create barriers at borders for the administration of trade in both directions,” explains Prof Braithwaite. “That will impact logistics efficiency, because goods will move slower.”

That said, Jack Semple, the Road Haulage Association’s director of policy, maintains there is uncertainty about precisely how border controls would change as a result of Brexit.

“It’s hard to predict at this stage how significant these controls could be,” he asserts. If the UK negotiates to rejoin the European Free Trade Area and remain in the European Economic Area, it could benefit from a continuation of the rules governing free movement of goods and people.

A driver shortage

Talking of the free movement of people, one potential knock-on effect of leaving the EU – and tighter migration controls – could be a reduction in the number of EU citizens working for UK-based companies.

Semple, whose organisation is remaining neutral in the debate, observes that this could have a negative impact on the road haulage industry, which relies heavily on drivers from EU member states.

With less opportunity to recruit such drivers, he says that the industry’s ability to serve the economy could be compromised. But he’s quick to identify a solution: more investment in recruiting and training UK drivers through schemes such as the Trailblazer apprenticeship programme.


Legal implications

As with so many aspects of Brexit, it is difficult to predict the legal ramifications of a vote to leave.

Transport lawyer Richard Pelly, director of Pellys Transport and Regulatory Law, says that the UK’s transport and road safety laws are unlikely to be amended dramatically in the light of Brexit. “The fundamentals of safe and compliant operation are not going to change,” he states.

One area where Pelly does envisage some adjustment is in relation to employment law governing EU workers non-resident in the UK –including freight drivers.

His advice is that haulage operators need to be prepared for any changes by making sure they are fully compliant with current legislation.

“Now would be a good time [for operators] to review the systems and records in place to ensure that such drivers are properly employed, properly inducted and properly supervised,” he says.

Costs

It’s possible that Brexit could increase operating costs for logistics companies. Trade tariffs within the EU would raise the bottom line for exporters – a financial hit they might try to pass on to third-party transport providers.

Moreover, reduced freedom of movement around the continent will impair operating efficiency, and inevitably reduce hauliers’ margins.

A further area of concern is fuel prices. The AA has suggested that a weakened pound as a result of Brexit could increase the cost of fuel in real terms, but it has also been quick to state its neutrality on the in-out debate.

As it happens, most experts agree that the biggest influences on fuel costs are the global oil price and the fuel duty imposed by the UK government. Neither of these will be directly affected by a vote to leave the EU.

This article has been compiled using information available to us up to 23.05.16

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