Breaking up is never easy: Brexit and its potential impact on the logistics industry

Breaking up is never easy: Brexit and its potential impact on the logistics industry

By Andrew Austin, Group Operations Director, Priority Freight

The battle lines have been drawn and in less than four months from now Britain could start the process of separating itself from the European Union (EU).

A lot of the public debate, particularly in the tabloid media, has focused on freedom of movement and the nation’s so-called ability, or inability, to control its own borders. Beyond this rather emotive subject, another freedom – free movement of goods – is an equally important factor for the UK economy and central to an effective and efficient logistics network operating throughout Europe and the wider world.

What impact would ‘Brexit’ have on the international logistics industry? At this stage, it’s difficult to predict with any certainty – and this ambiguity is a concern in itself. What we can state with some confidence is that Britain operating outside the EU would add complication and cost to the supply chain and inhibit movement of goods across our borders.

Rather belatedly, British businesses have woken up to the potential ramifications of Brexit. The leaders of many of the biggest companies in Britain have come out strongly in favour of staying in.

The UK automotive industry is a case in point – 77% of members of the Society of Motor Manufacturers and Traders (SMMT) consider remaining in the EU the preferred option. Nissan, BMW and Toyota have all recently made clear their strong preference for Britain to remain part of the club. The automotive sector supports 800,000 jobs across the UK and contributes £15.5 billion to the UK economy. When the SMMT asked what potential reform would be most beneficial to their business, the most popular response (from 66% of respondents) was ‘Better regulation and reduction of red tape’.

Rather than reducing red tape, Brexit would mean the opposite, as the country would have to take on the challenge of negotiating its own trade deals with the rest of the world.

Those campaigning for Britain to leave from an economic perspective say that Britain will never reach its true potential within the EU – unshackled, Britain would soar as an open economy that continued to trade with European countries and the rest of the world.

The reality isn’t that straightforward. The EU is currently in free-trade talks with the US, China and India, from which a ‘sovereign’ Britain would be excluded. The EU has 53 such deals. Britain would have to try to replicate them, which would be a huge challenge. The US, China and India have made it clear that they would prioritise a deal with the EU over any agreement with Britain.

Brexit would most likely lead to an uplift in demand for specialist logistics services, such as managing complicated and unfamiliar customs procedures, as businesses get to grips with life outside EU-negotiated free trade deals. Whatever the outcome of the June referendum, Priority Freight, with its multi-lingual team operating 24/7, 365 days a year, from several offices across the globe, continues to serve as a reassuring voice and trusted partner during a period of instability and concern.

Ultimately, if you believe in free trade and freedom of movement, the benefits to Britain of its EU membership have probably never been in much doubt. In a world with a network of international treaties and obligations, sovereignty is an opaque concept. Britain outside the EU would still have to comply with the rules – of which it would have no future role in formulating.

Voting to ‘Leave’ or ‘Remain’, either way it’s a big decision, and one that needs some serious thought, not least from those within businesses that have come to rely on the free movement of goods.