MAKING A SUCCESS OF BREXIT
The ease of goods trade between the UK and the EU is absolutely critical to the transport, logistics and distribution sector. The EU is the UK's most important trading partner in terms of export value, but also in terms of volume - as the UK continues to excel at e-commerce, the EU is the UK's most important destination for the export of small packages.
Any changes to the trading relationship with the EU will be faced by the transport, logistics and distribution sector in the first instance. There are concerns that leaving the customs union and the single market will cause additional costs and delays, requiring a huge increase in staff and capability. There will be a particular effect on Northern Ireland, the only region of the UK with a land border with an EU member state. The practicalities of delivering these changes without a transition period as the UK leaves the EU are serious concerns.
It is important to maintain the smooth flow of goods through the ports. There are serious concerns that there will be delays on in-bound and/or out-bound movements of goods that will compromise the ability of the haulage sector to maintain the service levels that supply chain customers require. Many ports simply do not have the space required to introduce customs controls or immigration controls on movement of goods and people between the UK and EU.
At present, EU regulation on the transport, logistics and distribution sector covers a huge variety of issues, including the condition of vehicles, additional 'blind spot' rear view mirrors, speed limitation devices, warehousing, and the training, health and safety of drivers. There are aspects of EU rules that the industry would like to see dropped or reformed, but on the whole the rules governing logistics operations are widely accepted by the industry. On a practical level, it allows UK drivers to operate under the same rules in the EU and vice versa. This is particularly important in Northern Ireland, and has encouraged competition and service expansion.
The transport, distribution and logistics sector faces severe skills shortages, with an aging worker population and the percentage of companies reporting difficulties in hiring goods vehicle drivers as high as 60%  . EU workers have helped fill roles as drivers and as workers in packaging and distribution supply chains. Continued access to these labourers will be important.
A range of transport infrastructure projects currently in operation or under construction have been built as a result of EU funding, with EU investment in rural rail networks in Cornwall, studies into South Wales railway electrification, and low carbon vehicles. New domestic systems of funding for transport infrastructure will have to be designed.
For transport, distribution and logistics companies, growth in trade – domestic or international - means growth in opportunity. New international trade agreements which boost trade volumes could support growth in this sector, with a deal with America particularly highlighted as an opportunity. As businesses in this sector will need to adapt to any changes in demand, they should be closely engaged in the process of new international trade agreements.
If the UK leaves the EU without an interim arrangement or new deal, the transport, distribution and logistics sector is likely to experience the brunt of this impact. The UK and EU's legal obligations to treat each other as a third country would be in place immediately, and companies in this sector would be expected to facilitate this change in partnership with government. The capacity of IT systems, human resource, space and physical infrastructure to support these additional burdens – such as new customs checks at the border - are very much in doubt. A temporary implementation period to allow adaptation to new systems is absolutely necessary, and a new deal vital.
For transport, distribution and logistics at the CBI, contact: Thomas Barlow on 0207 395 8149 or Thomas.Barlow@cbi.org.uk