Brexit no-deal would present huge challenges to logistics industry

posted on 20th December 2018 by Justin Burns

As the UK and European Union (EU) set out their forward plans in preparation for a no-deal Brexit – the impact to the logistics sector if this is the decision taken by the UK Government is wide-ranging and complex, as detailed at a logistics conference yesterday.

The Freight Transport Association (FTA) held a ‘Getting Logistics Ready for Brexit’ event for its members and the press in London at the Amba Charing Cross Hotel, where discussions aimed to address concerns and possible issues the industry might face if no-deal.

Delegates heard that the logistics industry faces numerous challenges when the UK leaves the bloc on 29 March 2019, although their effect is on hold due to the deadlock in the UK Parliament with a decision on PM Theresa May’s Brexit deal with the EU not to be voted on until mid-January and no clarity whether the UK will secure a deal or no-deal, or possible holding a second referendum

Delegates heard though that the air freight sector could though benefit in the short-term and also provide much needed capacity for logistics companies looking to move their goods, according to head of global policy, Alex Veitch who said after Brexit, more just-in-time goods might have to move through UK airports as there could be difficulties with using other modes of transport.

He said shippers may need to use air freight due to potential issues arising from delays via Dover and other UK ports (rail, road and sea), while he also noted he hopes the likes of London Heathrow Airport can keep up with extra processing that might arise from increased customs declarations.

FTA head of European policy and Brexit, Pauline Bastidon also told delegates that a tempoerary agreement for air cargo flights to continue operating after Brexit in March between the UK and EU until end of 2019 is nearly though completed and now only needs to be approved by the EU Council and European Parliament.

She said however, it excludes intra-air cargo flights operated within cities in the EU and will only cover point-to-point routes, while it was only a temporary measure and beyond 2019 will still have to be decided at a later date.

Customs is an area of concern and the FTA’s manager for international transport and trade procedures, John Lucy says a no deal could have a “severe” cost impact for customs declarations, estimating that it would come in at somewhere in the region of £4-5 billion.

Panellists on a customs session also explained how a new UK HRMC customs declaration system will have to be developed in the case of a no-deal Brexit, which will not be ready in time for Brexit and an alternative system will need to be used.

Bastidon also noted that a major concern is sanitary and phystosanitary (SPS) checks on goods at border crossing. This includes poultry, shellfish, and other perishables.

In her view, this was more of a worry than customs as if the UK leaves without a no-deal, then more document, identity and physical checks will be needed on freight at ports, slowing the movement of trade down and it could potentially lead to goods sitting for days outside unable to be moved on.

Bastidon said the impact could be “quite significant” and there was “no doubt it would be costly and lead to more red tape and more disruption than any other customs checks”.

Another area of concern is the impact that Brexit will have on the UK’s logistics industry in terms of employment, which even now pre-Brexit is struggling to get the workers it needs especially HGV drivers (52,000 short), warehouse workers and forklift operators.

The UK Government set out its post-Brexit immigration policy yesterday and eyebrows were raised at yesterday’s conference about the new laws which will have cost and skills implications in event of no deal as 90 per cent of logistics workers are below the RQF Level 2 with 88 per cent earning less than £30,000.

The government’s proposals released yesterday state RQF Level 3 and above, plus a minimum £30,000 salary, as it focused on reducing immigration through cutting low-skilled workers, something logistics relies on.

This plan is reportedly being driven to boost UK production rates and encourage companies to spend more on automation and so cut their low skilled employee workforces.

FTA head of skills, Sally Gilson said: “The loss of almost a quarter of a million of European workers currently employed in these logistics roles in the UK as they are no longer deeemed “skilled” by the government – could be catastrophic.”

Ireland was also a hot topic especially the issue of the border between Ireland (south) and Northern Ireland. the FTA’s policy manager for Northern Ireland, Seamus Leheny said: “Brexit is the number one issue for logistics businesses in Ireland. A hard border would create significant challenges for the supply chain.”

He gave an example of the impact it could have on Guinness production and bottling, which takes place in both the north and south and entails two crossings for every truck filled with the Irish dry stout before being shipped around the world.