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Logistics and Brexit – What are the Ramifications?

5th February 2018
This month we are nearing the business end of Brexit negotiations, with the British government in the process of deciding where their focus on trade will lie after the UK makes its departure from the European Union.

Until the post-Brexit picture becomes completely clear, weighing up the ramifications for the various sectors affected by the split is difficult. But that doesn’t stop us making some educated forecasts on how the land will lie, and one industry which looks certain to be impacted on more than most is logistics.

Freedom of movement, tariffs on imports and customs controls are important facets of logistics; and in the UK they all look subject to change as a result of the UK’s increased economic independence. In this article we examine how logistics in the UK could change as a result of Brexit.

Freedom of movement

After the UK’s departure from the EU, workers from other EU countries may no longer be free to live and work in the UK as they are now.

Looking close to home, the workforce of the logistics industry could see its make up altered significantly in the post-Brexit era. According to research from the Freight Transport Association (FTA),  workers from other EU countries are an important means of addressing driver shortages in the logistics sector, currently making up a 10 per cent share of commercial drivers in the UK. With the future unclear for these drivers, many could be considering a move back to the continent.

In the case of commercial drivers, this could lead to an earnings increase for British drivers as a result of expected driver shortages. There is also the possibility that the government could address the problem by creating special immigration laws to attract overseas drivers to the UK.

Imported goods

The UK relies on imports for many products based on natural resources which it cannot readily access on home soil – fuel and petroleum products, for instance; which are key to the logistics sector.  Government figures show that 28 per cent of the UK’s imported fuel finds it way to the UK via EU countries – namely Sweden and the Netherlands. What the UK’s exit from the EU’s Single Market could mean is an extra tariff being placed on fuel by those EU countries, resulting in higher costs which could send tremors through the logistics industry.

It must be hoped that exit negotiations can address these concerns, as although more eco-friendly fuel is increasingly seen as a viable alternative, it is optimistic at best to assume that UK logistics can combat fuel price hikes by relying solely on more sustainable methods, many of which are still undergoing research and development.

Customs controls

British logistics operators look certain to encounter stricter border controls with EU neighbours once the UK makes its exit. The most prominent example lies in Northern Ireland - where services and goods were once traded freely across the border with the Republic of Ireland. It is now feared that there could be a heavy cost for companies which operate routes across the border, with an impact felt in the logistics sector.

With the UK’s post-Brexit trade position undetermined, there is  seemingly endless uncertainty on the horizon for the logistics sector. But according to FTA deputy chief executive, James Hookham, the show must go on. He told the Supply Chain 247 platform that the government has to “ensure that its mission is to keep Britain trading”. 

Mr Hookham concluded: “There is no way you can take time out in the supply chain. Access to the single market is the most important thing. So much depends on how severe border controls are and what duties are imposed.”