Since the vote to exit from the EU in 2016, the team at HBC Logistics are often asked: will Brexit affect shipping and logistics? If you are a business owner or manager who deals with any sort of imports and exports, or works with businesses within the European Union, then it’s likely that Brexit will have some sort of influence on your organisation, but the severity and type of events you’ll need to deal with will vary a lot depending on many factors. While it’s nearly impossible to conclusively answer the question ‘will Brexit affect shipping and logistics?’ there are certain scenarios we can look at that might tell us a little more about the potential impact on your business, so you can at least prepare for the short term.
Will delivery times get longer?
If you deal with EU countries as suppliers, and your business model relies on things arriving quickly from mainland Europe, then you may need to make contingency plans in case things slow down. At the moment, we enjoy free trade between the UK and the EU, and even if we get a free trade agreement as part of the Brexit divorce bill, there will essentially be a border where there wasn’t one before. You simply might not be able to rely on the same level of frictionless logistics that you had before for a number of reasons.
Customs checks and inspections could slow things down
Many things are sent to and from the UK on roll-on roll-off vehicles, i.e. lorries that cross the channel are loaded in the EU and at the other end, they simply continue their journey on the UK roads. With a border in place, there is likely to be a lot more checking of paperwork and physical inspections, both at the UK port and for vehicles going into the EU. Container freight is also likely to need additional checks and scrutiny, so switching to this method isn’t guaranteed to speed things up.
If there are any issues with things like paperwork, lorries are likely to get held up in the UK, which could cause a bottleneck and affect the supply chain of many different businesses. While the UK government is putting plans in place for this kind of Brexit scenario, it’s worth considering whether you can make any changes to your business to account for these extra lead times, for example, holding more stock.
At the moment, vehicles that arrive from non-EU countries take about 20 minutes to get through ports in the UK, so this is probably the amount of time you can expect vehicles to take post-Brexit. While this doesn’t sound a lot, it’s worth remembering that 2.6 million lorries a year go through Calais, so long delays could soon build up.
The impact on domestic freight
When people ask: ‘will Brexit affect shipping and logistics?’ they are often thinking about freight that goes between the UK and the EU, but when we leave the EU, there is likely to be an impact on domestic freight too.
Fuel price increases
One potential impact of Brexit could be a rise in fuel costs, caused by the introduction of tariffs hitting the transport companies and making it more expensive to distribute fuel. Unfortunately, this will hit logistic companies hard, even if they only trade domestically, so when the UK leaves, it could affect all sorts of businesses. This price rise may lead to you needing to increase your own prices to make a profit.
Cost of wage increases
Around 10% of drivers in the UK are from EU member states so can currently work in the UK freely, but if there is suddenly red tape stopping them from working here, then you may need to look at hiring locals. Unfortunately, within logistics, there is already a labour shortage, which may mean you need to offer much higher wages to tempt drivers from the competition. You may also need to invest in more training if you want people to step into different roles.
So, will Brexit affect shipping and logistics?
The bottom line is that it’s very hard to know definitively what will happen when the UK leaves the EU. Even the government doesn’t seem to know.
A lot will depend on the kind of deal we get, if any, if we remain in the single market, for example, this may make things like trade agreements easier, although we simply don’t know the long-term effects it might have.
Whenever Brexit happens and whatever its effects on the global market, it’s important to look for ways that your business can be prepared, whether it’s rethinking your just in time delivery strategy, or planning to take on extra staff. While it can be difficult not knowing what the future holds, by keeping up to date with the latest news, you can at least make a plan for different scenarios.