Brexit – New borders for the logistics industry
Brexit will redefine British foreign trade because companies from every industry will be affected by the economic consequences. Almost half (48 percent) of UK exports go to EU countries. For imports, this dependency is even greater at 55 percent. The logistics industry currently contributes over £ 121 billion to gross value added, making the UK one of the top 10 nations in the World Bank’s global Logistics Performance Index. Ireland, as a special case, will be particularly affected by Brexit as 80 percent of the trade between Ireland and Continental Europe is transported by road through the UK.
In the short term, the decline in transport volumes will not be dramatic. However, the mid-term view is that a significant slump in freight volumes is to be expected given that a decline in trade will also reduce consignments. Once the free movement of goods is abolished, customs duties will make products more expensive and therefore less competitive. Investment in logistics centres may fall, which could benefit the logistics industry in Continental Europe.
International operators must expect higher costs as the reintroduction of customs duties will be accompanied by direct cost increases. In addition, there will also be indirect costs, such as waiting times for customs clearance and additional administrative expenses.
If a company is reliant on key suppliers in the UK, it could check whether they can be replaced by EU suppliers. This approach should be considered particularly if deliveries from the UK cause a sharp increase in production costs or if supplies need to be sourced in the EU so that products made in-house can in turn benefit from EU provenance when they are exported.
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