Chapter 6
IN THIS CHAPTER
Scoping out the big-picture issues around transport and logistics
Dealing with changes to border controls
Having the right paperwork for vehicles travelling in Europe
Preparing the business for supply chain disruption
Transporting goods to and from non-EU countries
Most industries will be touched by Brexit in one way or another, but some are bracing for a much greater impact. The United Kingdom (UK) transport and logistics industry is one such industry that faces significant challenges as a result of Brexit.
From big-picture issues like restricted access to qualified drivers, to nitty-gritty questions like “What happens when our delivery trucks reach the European Union (EU) border?,” businesses operating in the UK transport and logistics industry face an uncertain time.
The bottom line: All businesses need to be prepared for some degree of logistics disruption. This chapter helps you assess how your business may be affected. (If you just want to know about popping over to Europe in the family car, check out the sidebar “Driving the family car in Europe after Brexit.”)
In this section, I walk you through some of the wider issues currently impacting the transport and logistics industry in the UK.
Until self-driving trucks become the norm and we all accept the dominance of our machine overlords, the movement of goods around the UK and across Europe still relies on human drivers. Yet, the industry is already experiencing a significant shortage of drivers for heavy goods vehicles (HGVs), also known as large goods vehicles (LGVs).
According to the 2018 Moore Stephens/Barclays UK Logistics Confidence Index — which registered a big decline in confidence in the industry in 2018 — one in five UK logistics companies were expecting their driver numbers to drop across the following year, as a result of older drivers retiring and drivers from the EU choosing to work elsewhere (thanks, in part, to the weaker pound).
Data from the Confederation of British Industry (CBI) shows that 14 percent of HGV/LGV drivers in the UK are EU nationals. What’s more, 60 percent of drivers in the UK logistics industry are 45 or older.
Figures from the Freight Transport Association (FTA) in 2018, show that the UK logistics sector is heavily reliant on access to workers from Europe. The figures are pretty eye-opening:
So, when the UK government announced its plans to stop giving EU workers preferential access to the UK jobs market, and prioritize skilled workers from anywhere in the world earning £30,000 a year or more, the logistics industry responded harshly. (See Part 2 for more on UK–EU negotiations and what Brexit means for the free movement of people.)
The FTA’s head of skills, Sally Gilson, was quoted as saying that without easy access to non-UK workers, “schools, shops, hospitals and retailers, as well as manufacturers and homeowners, will all find it harder to access the goods they need in order to conduct their daily lives.”
Sure, in an ideal world, logistics vacancies in the UK could be easily filled by UK citizens, by attracting school and college leavers, targeting people who want a change of career, or targeting areas of high unemployment.
But in the real world, the physical location of logistics vacancies often doesn’t correspond with high-unemployment areas. And the truth is, many British workers are simply attracted to other career paths. That’s why, just as in the agriculture sector, the logistics industry has come to rely on non-UK workers, benefiting, in particular, from easy access to EU workers.
Relying solely on UK employees in these low-unemployment areas could spell disaster for logistics companies — because competing for a smaller pool of UK employees in a low-unemployment area invariably means having to offer higher salaries to fill positions. That’s if UK workers can even be tempted to switch careers… .
And so we come back to the government’s plan to allow unskilled workers from the EU visa-free access to the UK jobs market for a 12-month period. (Circle back to Part 2 for more on the movement of people after Brexit, and see Chapter 7 for guidance on employing EU citizens after Brexit.)
Initially, this low-skilled worker scheme was targeted specifically at agriculture and other related sectors. However, given the outcry from the logistics sector, the government may move to include transport and logistics workers in this scheme (notwithstanding the point that HGV drivers are obviously skilled, qualified workers!). What is clear is that the logistics industry is pushing hard to retain easy access to European workers.
In the months leading up to the originally intended date for the UK’s departure from the EU (March 29, 2019), warehousing operators reported a surge in Brexit-related demand.
In January 2019, the UK Warehousing Association (UKWA), reported the following:
In effect, businesses across the country were seeking additional storage so that they could stockpile goods and spare parts wherever possible, in the event of a no-deal Brexit and delays at British ports. Companies as diverse as Bentley, GlaxoSmithKline and Premier Foods (which includes Mr Kipling’s cakes) all confirmed they were planning to stockpile goods in the run-up to Brexit.
This will no doubt come as a relief to generations of Brits who have been raised on Mr Kipling’s Battenberg, Cherry Bakewells, and Viennese Whirls. Even if we can’t have our figurative Brexit cake and eat it, too, we can at least continue to have our literal cake and eat it!
If this all sounds a bit doom and gloom, there are some bright spots emerging from the logistics industry. For example, many transport firms are investing in new technology like big data analytics and artificial intelligence to help them plan more efficient routes, maintain a more efficient fleet of vehicles, and ensure that vehicles are operating at maximum capacity.
The hope is that this approach will help to reduce transportation costs for logistics companies and the businesses they serve. Unfortunately, those companies that are unwilling or unable to invest in new technologies may experience trading difficulties, become uncompetitive, and risk being left behind.
In addition, Brexit may result in reduced competition from EU-based transport and logistics companies, opening up new market opportunities for British firms.
Now that you have a handle on the big-picture issues facing the logistics sector, this section explains what all this may mean for your business, whether you run a logistics company, you’re a florist, you’re an online retailer, or something else.
If the UK government agrees on a withdrawal deal, which includes a transition period, then it’ll be business as usual in terms of the flow of goods for the duration of the transition period, while the longer-term arrangement is negotiated.
However, if no withdrawal deal is agreed upon and the UK crashes out of the EU with no transition period, then — literally overnight — the process for border checks would, in theory, have to change as soon as the UK exits the EU.
Even if the UK authorities are able to agree on a withdrawal agreement, and secure a free-trade agreement with their EU counterparts in the long term, it’s still likely that border controls may change in one way or another.
For goods entering and exiting the UK, moving to and from Europe, this may mean increased paperwork, potentially new customs duties, and stricter checks on the goods being transported. Circle back to Chapter 5 to read more about the paperwork and customs payments side of things (including the potential impact on value-added tax [VAT]).
On certain cross-channel routes between France, Belgium, and the UK (such as the Eurotunnel route between Folkestone and Calais, and the ferry routes among Dover and Calais and Dunkirk), juxtaposed border controls apply. This system allows the participating countries to conduct their border control checks before vehicles board the ferry or train (as opposed to when they disembark on the other side, as in normal border controls). In layman’s terms, this means that UK officials are able to conduct border controls in, say, Calais before vehicles reach the UK, and French officials can conduct their customs checks in, say, Folkestone, before vehicles arrive in mainland Europe. This system has worked perfectly well, and it ensures a smooth passage of vehicles and minimal delays.
So, will this system continue after Brexit? We don’t know, and it potentially depends upon what’s agreed on in future trade negotiations (see Chapter 4). However, it’s worth noting that the Netherlands is likely to join the juxtaposed control system, to cover direct train journeys between the UK and the Netherlands. In other words, the system looks like it’s set to expand, so it makes little sense to scrap it altogether.
Any introduction of increased checks on paperwork and goods at borders will probably mean delays for goods entering and exiting the UK.
This will be felt keenly at ports like Dover, which is the UK’s biggest port for roll-on/roll-off ferries (meaning cargo is driven onto the ship instead of being craned on in shipping containers). On these short crossings, where the volume of traffic is extremely high, even brief delays have the potential to cause chaos.
Start introducing customs checks for these vehicles, and you’re looking at potentially huge delays. Checking documents can delay a vehicle by as much as one to three hours, while physically inspecting the goods inside can take even longer. Some estimates have suggested up to eight hours for this process per vehicle.
One often-quoted statistic coming from Brexiteers is that customs checks for vehicles arriving into the port of Southampton from outside the EU take only six seconds, so why should we panic about EU goods potentially being subject to the same sort of checks? But, in fact, that statistic is rather misleading. Customs declarations are processed at Southampton within an average of six seconds, but that’s not the same as goods being cleared for customs. Typically, it takes a full hour for the goods to go through customs clearance at Southampton — and that’s only if all the right paperwork has all been completed in advance.
Add an hour onto the processing time for trucks going in and out of Dover and — because of the frequency of Dover ferry crossings and the sheer volume of trucks passing through the port each day — we could see significant traffic jams choking up the motorways in Kent, and delays on the movement of goods. Even if the UK waves through EU trucks heading into the UK, assuming the EU is conducting its own customs checks on UK vehicles, it’ll still mean delays.
Motorists in Kent will bear the brunt of this — the motorways surrounding Dover will become parking lots for waiting trucks. But businesses around the country will also suffer if they have to wait for their goods to arrive, run out of stock, or are late delivering to customers.
Away from Dover, at other major ports like Southampton, Felixstowe, and London Gateway, 90 percent of goods are either coming from or going to non-EU destinations, so it’s hoped the disruption at these locations may be minimal.
After trucks have actually made it through ports and are on their way to their final destination, they may still experience delays traveling through Europe.
In addition to all the disruption this could bring to the UK supply chain, it’s worth noting that many European companies rely on the UK for major parts of their supply chain.
There’s also the fact that food exported to the UK by EU counterparts would literally rot during transport in the event of significant delays. We’re talking about millions and millions of pounds of perishable goods, so either way the UK and the EU will need to find a suitable answer.
We know that the Northern Ireland “backstop” — and in general the need to avoid a hard border between Northern Ireland and the Republic of Ireland — was a huge bone of contention during the UK–EU withdrawal negotiations (see Part 2).
The effect of Brexit on the peace process across Northern Ireland and the Republic of Ireland is beyond the scope of this chapter, although it’s obviously a major concern for all parties — Northern Ireland, the rest of the UK, the Republic of Ireland, and the EU. Let’s look instead at what may change for goods crossing the border between the two countries.
If a withdrawal agreement, including a transition period, is agreed, then in the short term nothing will change. Goods and people will still be able to move freely across the border without any kind of checks. Any longer-term arrangement will have to be agreed upon by both parties as part of ongoing trade negotiations. (See Chapter 3 for more on the “backstop” and the Northern Ireland border.)
The government has also proposed that a technologically advanced, nonphysical border could be implemented to track the flow of goods — which, theoretically could involve using satellites to monitor border crossings and a computer system to allow goods to be declared before they leave warehouses. Unfortunately, at the moment, the technology doesn’t really exist to do this, meaning it could only ever be considered as a very long-term, highly theoretical solution.
And let’s remember that the UK government’s plan is only half the story; EU rules would obviously apply for goods flowing in the reverse direction, from Northern Ireland (part of the UK) into Ireland (part of the EU). One big concern is that, without border checks, goods could illegally enter the EU via Northern Ireland. So, in theory, Ireland would need to check goods arriving from the UK, which would involve some form of border presence. At the time of writing, it’s unclear how this will play out in practice.
According to government advice published in March 2019, once the UK leaves the EU (regardless of whether we exit with a deal or no deal):
In the event of a no-deal Brexit:
All the above is in addition to any extra customs paperwork that may be required for the goods being transported (see Chapter 5). And haulage drivers will continue to need to carry their vehicle registration documents and passports as before.
www.gov.uk/guidance/prepare-to-drive-in-the-eu-after-brexit-lorry-and-goods-vehicle-drivers
www.gov.uk/guidance/transport-goods-out-of-the-uk-by-road-if-the-uk-leaves-the-eu-without-a-deal-checklist-for-hauliers
It’s also a good idea to sign up for DVLA email alerts at https://public.govdelivery.com/accounts/UKDVLA/subscriber/new
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To summarize the potential disruption UK businesses may face:
Given all that I outline in this chapter, it’s likely that the costs associated with transporting and storing goods will increase due to factors such as the following:
Any increase in costs will impact a business’s bottom line, so it’s important that companies manage their costs carefully (which may mean looking for new suppliers), maximize cash flow wherever possible, and plan for future increases in costs as early as possible.
Be sure to update your website, terms and conditions, and service contracts in line with changes in anticipated delivery times. If you know it’s going to take longer to deliver items to your end customers, you must communicate that clearly.
And if unexpected, one-off delays arise on a particular delivery, be sure to communicate openly and clearly with your customers on what’s happening, what you’re doing to resolve the situation, and when you expect it to be resolved.
In the run-up to and aftermath of Brexit, companies must keep an open line of communication with their logistics suppliers (and vice versa — logistics companies need to keep their clients up to date on the latest events and what it means for their services).
If you transport goods to and from non-EU countries, it’ll be business as usual for your logistics — at least in terms of customs procedures.
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