With delegations from the European Union and the UK currently ensconced in talks concerning the terms of the latter’s withdrawal from the EU, the immediate future of business and trade across the continent is currently up in the air. Whilst both parties you’d hope would be able to strike an agreement in the name of stability and common profit, there’s still the very real possibility that a ‘Hard Brexit’ could occur and the separation proceeds without any form of arrangements being reached.
As much of an upheaval as this eventuality would be for all aspects of commerce on a global scale, it’s the question of logistics that would keep many business owners up at night. Looking at figures taken from this April, Britain imports £38.3 billion/€43.6 billion worth of goods and sends £26.5 billion/€30.1 billion the other way as exports. These vast sums of course rely on a supply chain on an equally large scale, so what are the key factors that the negotiations should focus on in order to maintain this mutual flow of wealth?
Whilst Britain may no longer possess the industrial workshops of days gone by, it’s still a nation that relies on resources primarily sourced from abroad. Although this is not something specifically unique to the UK, it remains significant when we consider that Britain is a net importer of raw materials. Even pre-Referendum, the trade deficit in this respect came to more than €1 billion so who knows how this figure could increase should future tariffs be applied?
Indeed an area in which this could be a major issue can be seen in regards to petroleum products. Whilst the UK does have its own reserves within the North Sea and has agreements with numerous other non-EU states over such resources, the fact remains that approximately 27% of fuel imports come from Europe. Of this 27%, two of the top three countries exporting to the UK are within the EU’s common market-Sweden and the Netherlands, so it stands to reason that the cost of doing business with them is set to rise.
Should we not be able to maintain these key imports at the same price, then there’s a real possibility that many businesses will struggle as suppliers are forced to pass on the spike in expenses to consumers.
UK & European borders
Another prominent issue is that there will need to be clarification on the status of UK and European borders for the transport of goods.
There is particular concern for the Irish border as the border between Northern Ireland and the Republic of Ireland will be the only physical border between the UK and European Union. In February 2017, Michael Dux, the former European commission customs lawyer, suggested that checks could be made on vehicles carrying goods worth over three hundred euros into Northern Ireland from Ireland. This could lead to long delays and would make the scheduling of logistics is a real challenge.
Furthermore, the economy of Northern Ireland is largely dependent on exports. Around 52% of exports from Northern Ireland go to the European Union so Brexit would have a real impact on a large number of brands both large and small. Around 52% of Northern Irish exports go to the EU overall, and 38% of this figure goes to the ROI.
Currently, EU nationals count for around 10% of the commercial haulage driver workforce here in the UK, which is quite a significant number when you consider the vast amount of commercial vehicles on the roads.
Despite Theresa May making assurances that EU citizens living in the UK won’t suffer from Brexit negotiations, many of these migrant workers are still worried about the impact leaving the EU will have on their position and are seeking more secure prospects elsewhere back on the Continent.
Furthermore, the haulage industry is attracting less potential home-grown employees and without overseas labour to supplement their ranks, a shortage of drivers within the logistical world could potentially be on the table.
Hard or Soft Brexit?
One solution to Brexit could be staying in the European Single Market and using Norway as inspiration. It is possible that the EU may offer a compromise similar to its agreement with Norway. This solution means that the UK accepts some obligations and costs of EU membership in return for commercially benefitting from the European Single Market. No doubt many commercial and enterprising bodies would welcome this outcome, if only to avoid being cast out of such a lucrative trading club into the unknown.
Thankfully though there’s plenty of time for commercial stakeholders to voice their concerns and hopefully their expert insights will be taken on board and a compromise can be reached for the benefit of all parties.
This article was contributed on behalf of Truck Locator, an online marketplace for new and used commercial vehicles across the UK.