Brexit and haulage: the current state of negotiations
As Brexit talks between the government and the EU continue, there’s still a great amount of uncertainty surrounding what the future will be with regards to road freight, and how this will affect the UK’s haulage businesses.
What stage are negotiations at?
Negotiations are ongoing, but with few aspects having been agreed, the haulage industry is still surrounded by Brexit uncertainty.
The Haulage Permits and Trailer Registration Act was given Royal Assent in July, providing a framework for the regulation and enforcement of existing permit arrangements with EU and non-EU countries, as well as establishing a trailer registration scheme based on the UN Vienna Convention to make sure UK driving licenses are valid in the EU after Brexit.
This legislation is joined by the European Union (Withdrawal) Bill, which provides the government with a framework for keeping or removing EU law. Neither, however, inform what the final deal will look like.
The UK government is making preparations to leave without a deal, but negotiations are continuing.
What could Brexit’s effects on the haulage industry be?
Streamlining regulations was a big issue in the Brexit campaign, with many wishing to get rid of potentially overbearing EU regulations. While getting rid of EU-based regulations could be a possibility after Brexit, House of Commons briefings indicate it’s likely that the UK government will keep most, if not all, of the current EU laws, given that the UK helped create them, and they serve the needs both of the UK government and businesses.
Higher operating costs
Brexit has the potential to make transporting goods between the EU and UK more expensive and time consuming, due to the possibility of taxes, duties and increased administration.
For instance, the 1968 Vienna Convention that forms part of the Haulage Permits and Trailer Registration Act may require businesses to fill out a large amount of paperwork for each driver travelling to the EU – a difficult task for fleet operators with many vehicles. A no-deal would also mean British haulage businesses competing for between 103 and 1,224 travel permits a year, when in 2015, 283,000 UK-registered goods vehicles travelled to the EU.
While taxes, duties and administration might not impact UK companies transporting UK-produced goods within the country, UK haulage businesses operating on the continent may see higher costs and longer journey times as a result, which could mean losing customers – research has shown that border controls between Canada and the USA, even under the NAFTA free-trade agreement, cost around 3% of the value of shipped goods.
These same impacts could hamper the ability of UK haulage companies to pursue international growth, leading to more competition within the UK market, and higher prices could lead to lower consumer spending, reducing the volume of freight delivered across the UK.
According to government statistics, 53% of UK imports came from the EU in 2017, while 43% of all the UK’s exports go to the EU. If companies find it harder to cross the channel, trade could suffer, hurting hauliers.
With Unite figures estimating as many as 60,000 of the UK’s 250,000 lorry drivers originate from the EU, a no-deal Brexit may cause a sharp drop in the number of drivers available to UK firms. This could have the effect of driving up wages as firms struggle to attract talent, but it could also mean companies are simply unable to fulfil their existing contracts, putting companies in jeopardy.
Apprenticeship schemes could plug the gap over time, although more needs to be done to address the shrinking population of drivers – the average age of drivers is 48, 13% are over 60, yet just 1% of drivers is under 25.
What’s the industry saying?
Industry figures are calling for more action on the part of negotiators.
The Chief Executive of the British Ports Association, Richard Ballantyne, reacting to the release of no-deal Brexit advice by the UK government, said: “For parts of the ports industry, namely Roll-on Roll-off port operations, which handle the majority of the UK’s trade with the EU, a ‘no-deal’ could be a serious challenge and lead to significant disruption at the border”, asking EU negotiators to reconsider the government’s white paper released in July.
In June, James Hookham, Deputy Chief Executive of the Freight Transport Association, noted: “Details of whether or not the country will have a Transition/Implementation Period are still unclear, there is still no decision on what Customs arrangements we will have from March 2019 onwards.
“In the event of a no-deal Brexit, it will be the logistics industry, which operates 24/7, 365 days a year, that will have to pick up the pieces of the failure of politicians to agree. No doubt we will face the unwarranted ire of consumers and businesses if goods cannot be delivered on time.”
The Road Haulage Association’s Chief Executive, Richard Burnett, said in July: “There have been warnings that if additional customs checks are imposed after the UK leaves on 29 March 2019, every additional minute's worth of checks at peak times will add about 10 miles to the queues . . .
“Five months ago, Christopher Grayling is on record as saying: “This will not happen. We will maintain a free-flowing border at Dover” . . . Mr Grayling’s comments fly in the face of those made by EU Chief Negotiator, Michel Barnier, who has been quoted as saying “frictionless trade will not be possible after Brexit. This is a worrying time. We need a definitive decision right now.”
Whatever form the final Brexit deal takes, Total Truck Solutions will continue supporting the industry. Visit our UK haulier portal for news, services and more.