Key Impacts of Brexit on the Transportation and Logistics Industry

A decline in commercial activities

Brexit – Transportation and Logistics Industry

The UK’s commercial transaction with the EU is on the fall with several companies having to deal with checks and customs documents. Since October 2021, Britain’s trade with the EU was 15.7% lower than usual. Moreover, this figure will further rise as the UK is yet to impose many of its post-Brexit border controls this year. Starting this month, imports from European nations will be needed to come with customs declarations. Additionally, food items will require extra physical inspections. The trade deals of Britain with New Zealand, the USA, and Australia are expected to somewhat mitigate the problem.

Additional expenses for UK exporters

The fact that Brexit is adding to the freight costs of exporters in the UK has become more than apparent. Moreover, there has been an increase in freight expenditure from January 2022. John Lucy, the Head of International Transport at the UK Road Haulage Association aptly sums up the situation: “UK export freight costs have been traditionally low. This has since turned on its head, with the price for EU export loads from the UK now in uncharted territory. The number of empty trips from European hauliers is increasing, because they are not prepared to pick up return loads. The upshot is a reduction in supply subsequent increase in freight rates from the UK to the EU, which in turn has increased import freight costs since EU hauliers are pricing it up as a round trip.”

Shortage of workforce

The delays are not happening just because of the trade barriers. Brexit has had a significant effect on the number of immigrants. Following the Brexit, a great number of workers have departed from the UK. Furthermore, the pandemic has also stalled the training process of new workers. In other words, there is a severe shortage of workforce that is very detrimental for the transportation and logistics industry.

Following Brexit over 200,000 European nationals departed the UK in 2020. This naturally triggered an extreme shortage of staff while leading to the much talked about fuel crisis and the shortage of truck drivers.  Added to that there was also a shortage of warehouse staff. The multinationals like DHL, and Amazon are offering special incentives to recruit more workers. The workforce crisis has even prompted certain companies to call on the authorities to widen the scope of interpretation of Brexit so that they can easily recruit workers and retain productivity.

Increased transit time between the UK and the EU

The customs requirement and paperwork have taken a toll on the transit time from the UK to the rest of Europe. This is particularly true for freight moving between the UK and Ireland. Additionally, the impact on groupage deliveries has been particularly worrying. For example, the double-deck trucks can come with 50 pallets. This implies 50 times more paperwork. In the event of inaccuracies in any of the pallets, the entire trailer has to wait until that one item’s documentation is resolved.

Order delays and supply shortage

As a result of all the above factors, Britain is experiencing a supply shortage. This shortage has become all the more palpable in the catering industry. It has taken such a threatening proportion that giants like McDonald’s and KFC are deleting several items from their menu and even shutting shops to deal with the shortage of food products. Moreover, the automobile sector is also going through a difficult time. Its productivity has suffered because of a shortage of semiconductors and other electric components.

Reduced economic growth

According to records from the Office for Budget Responsibility, even before the UK formally departed from the EU at the end of 2020, the size of Britain’s economy shrank by almost 1.5%. This was because of a decline in commercial investments and the shift of financial activities to European countries in view of greater trade barriers.

As per the estimates by OBR, the fall in trade volume will result in a 4% reduction in the size of the UK’s economy in the coming years. However, among all the regions in Britain, Northern Ireland, has fared well. The rest of the country as a whole is struggling to recover from the double threats of the pandemic and economic slump.

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