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Unease over Brexit intensifies

London, UK: Over 60% of logistics firms surveyed believe that Brexit will have a negative impact on their businesses. And over a third have become more pessimistic since the referendum.

The UK Logistics Confidence Index 2017, prepared by Barclays and Moore Stephens, shows 61% of logistics companies believe the impact of Brexit will be negative. Operators focused solely on the UK are no doubt nervous about UK growth prospects and levels of inward investment, while logistics businesses with cross-border operations will continue to be concerned about future trade patterns and the potential impact of additional customs processes.

Port of Dover at night: Brexit could cause serious disuption to international trade

Despite respondents’ apparent Brexit fears, just under a quarter (23%) say they have taken no action. A fifth (19%) say they have had informal discussions with customers or trade organisations and slightly fewer have completed some background research on the key issues. Only 2% have engaged professional advisers in relation to Brexit. Given the ongoing uncertainties surrounding the Brexit negotiations, it is clearly difficult for operators to know what their mitigation strategies might be, the report says.

While there is evidence of operators considering changing their warehouse footprint depending on how the Brexit negotiations pan out, for example considering Ireland as a possible route into the EU, these are major strategic decisions requiring greater certainty.
“Given the benefits of free movement of both goods and people to the logistics sector currently, it is not surprising that these feature prominently among respondents’ priorities for the Brexit negotiations. A frictionless border is ranked the number one priority, followed by mobility of labour from the EU and satisfactory trade agreements with the EU.”

“At this stage, nobody knows what the future EU/UK trade regime will look like, but border controls and customs duties would almost certainly slow the movement of trucks and the burden of red tape is clearly one of the sector’s greatest fears. With the ongoing driver shortage facing the sector, the impact of Brexit on access to skilled labour is also a major concern for our respondents. Employers fear that drivers may not be able to come to the UK, causing further labour shortages and pushing up wages,” the report says.

No deal not an option
The UK government’s white paper on customs and trade, published in October, is welcomed, though more certainty is required regarding future arrangements: the ‘no deal’ scenario is not an option for the road freight transport sector, says the IRU. Suggestions such as the pre-declaration of goods need further clarification in the light of the consequent administrative burden and increased costs – which would likely fall to the business community and ultimately threaten the economy, it says.

Daniel Kern, who leads IRU’s work on Brexit, said, “We must not forget that road freight transport is the lifeblood of the European and British economies. Although the UK proposals are welcome we need more detail and clarity if the industry is to be able to support trade and economic growth post-Brexit. The possibility of the UK leaving the European Union without a comprehensive deal would be the worst possible outcome for the road transport industry.”
IRU is also pushing for the UK government to be more concrete about any transition period, which should only start once there is absolute clarity on future arrangements and transition arrangements should replicate current practice.