As the effect of COVID on Supply Chains dissipates, Brexit has created a new Logistics reality. In addition, the departure of the UK from the EU has created a different regulatory landscape. In this article, we’ll look more closely at the critical differences in European Logistics and Road Transport due to Brexit.
Brexit and Logistics: The Fundamental Changes
Logistics aims to move products from A to B as efficiently and quickly as possible. However, the post-Brexit reality has seen three fundamental changes take place, and that’s had an impact across the sector:
– Customs Paperwork Increases The Administrative Burden
– Changing Regulatory Standards NOT Being Consistently Applied
– Supply Chain Disruption Causing Significant Delays
The question is whether these are teething problems or are they set to have a long-term effect.
Brexit and Logistics: The Key Impacts
Worldwide Logistics has faced a challenging time during the pandemic. But only now is the full impact of Brexit being felt on the sector as the new commercial reality becomes more evident.
Additional Expense
Since January 2022, the UK Road Haulage Association (RHA) has recorded a rise in Freight Haulage expenditure. These costs have been traditionally low in the UK but are currently in uncharted territory as Brexit bites.
European Hauliers are also reluctant to pick up return loads, increasing the number of empty runs from around 18% pre-Brexit. This decision has increased Import Freight costs as European Hauliers are now pricing for return trips.
The current issues are causing prices to rise, but it’s not yet known if a reduction in friction will ease the burden.
Supply Shortages
Empty Supermarket shelves, a Wetherspoons Beer drought and KFC closures because of a lack of Chicken… UK Supply Chains are feeling the strain post-Brexit due to chronic labour shortages in warehousing, haulage and food preparation, and ongoing border disruption.
In line with OBR Forecasts of a 15% drop in UK-EU Trade, commercial activity fell by 15.7% in October 2021. Once the UK fully implements physical inspections on food items, this figure is expected to fall further. However, trade deals with Australia and New Zealand could prove a mitigating factor, albeit with Logistics implications of their own.
Workforce And Skills Shortage
It’s not only trade barriers that are causing delays. COVID and Brexit combined have been the catalyst for a significant change in the Logistics landscape, requiring a whole new skill set. Customs and Export experts are in high demand, as are the language skills needed to solve cross-border issues.
While there are enormous opportunities for those with the relevant skills, the driver shortage remains a big concern. The problem has been exacerbated by over one million EU nationals leaving the UK workforce. In addition, new immigration rules make it harder to bring in low-skilled workers. The pandemic also impacted driver training leading to proposals to allow anyone with a UK licence to drive an HGV.
This long-standing issue has prompted operations like Amazon and DHL to offer attractive inducements to drivers and warehouse staff. However, a future rethink of the scope of Brexit could relax the rules to make driver recruitment more straightforward.
Transit Times Increased
Border friction in the form of paperwork and Customs requirements has significantly impacted transit times, particularly for Groupage transport. For example, a double-decker truck carrying 50 pallets means 50 separate Customs checks. And the entire Shipment is delayed if there are any inaccuracies in one piece of paperwork.
However, Freight volumes from Rosslare in the Republic of Ireland to the EU have increased by 500% as land traffic migrates to a more direct route into Europe.
A New Set Of Rules
One of the biggest Brexit impacts has been the reintroduction of a maze of regulatory differences between countries. It adds another layer of complexity for UK companies exporting to the EU.
The Way Ahead With AMCO
Despite the current upheaval and the unique set of challenges facing European Logistics and Road Transportation, there could be some signs of light at the end of the tunnel.
The promised digitisation of Customs Documentation could help ease friction, cutting transit time and increasing efficiency. And now that the initial shock of Brexit has passed, Businesses are taking a long, hard look at their network and distribution options in Europe to speed up delivery and ease the administrative burden.
If your business is navigating the impact of the post-Brexit landscape, AMCO can help. We can handle all your European Logistics from our pan-European bases in Poland, Hungary and bonded facilities in Dunkirk which gives us free EU-wide distribution once cleared here. So CONTACT US today.