Brexit: What could this mean for the Transport & Logistics sector?

Posted on: May 27th, 2016

When all is said and done, knowing what will happen, should Britain leave the EU, is very much like sticking your finger in the wind and predicting the weather for the next decade. All of us have an opinion on whether we think Britain should leave or remain, but, despite there being just two camps, our reasons for having that opinion are often extraordinarily diverse and individually motivated. What is good for our job or the sector we work in, doesn’t necessarily marry up with what we believe individually, and, whether we believe that a Brexit would be good for Britain, it doesn’t mean that we think it should happen.

Producing an opinion on what Brexit would mean for the transport and logistics sector is no mean feat. More than any other sector, transport and logistics is both incredibly global: shipping and air freight. But at the same time it is uniquely nationalistic: trains and the road networks. So it is hard to find a single point of view that would satisfy everyone. As such, the aim of this brief is to provide data on the scale of the industry and its links to the EU while at the same time providing opinions from those across it; both for and against Brexit. At the end of the day, it is down to each of us individually to decide which way we should go.

The EU and the transport sector

As mentioned, the transport and logistics sector is a diverse and wide ranging part of the British economy. While there are parts that conduct business solely within Britain, every part is, in some way, affected by our membership of the EU. For the majority operating within the sector, this is due to movement around the EU; shipping, airlines, trucking, and the traversing of national borders, but, for others, it is the regulation and standards administered by the EU and applied to the industry; laws on seatbelts, car speeds, working hours, vehicle emissions and so on.

Maritime businesses alone contribute some £4.4billion to the economy, with a large part of that directly attributable to transport and logistics. PwC has previously stated that 80% of sales, linked to that £4.4billion, come from abroad. Shipping alone contributes some 10 billion pounds annually to the UK economy, directly employing 240,000, and, according to the government’s latest figures, the share of exports going to the EU, from the transport sector, is 44%, representing in crude terms 1,065,000 British jobs.

Similarly, Britain’s access to the free market has been a key factor in the rise of low-cost British carriers over the last 20 years, with the industry benefiting from low labour costs and the ability to operate anywhere in the EU.

What are the potential effects of Brexit?

It is inevitable that, with the transport and logistics sector being so important to the British economy and being tied so intrinsically to the EU, a decision to remain or to leave will have an impact on the sector as a whole.

Forbes believes Brexit could cost the typical SME international shipper £163,000 per year through increased costs, duties, taxes, red tape and delays, adding at least 30% to the price of an average import into Britain. They base their figures on a report issued by Parcelhero, a company well versed in the movement of goods, which also warns that Britain will face £11billion in new tariffs on imports of £220billion.

On the other hand, those in favour of Brexit argue that a decrease in EU oversight would allow for more British centric laws and a decrease in regulation, allowing businesses to operate more effectively, increasing their potential profitability. More importantly, the Leave campaign believes that Britain will be able to keep crucial trade deals and partnerships across the world, without the strength of the EU behind them and. How long it would take to put such arrangements in place, and the impact in the meantime, is an unknown factor. They say that there would be no financial detriment to having to operate as a sole party in agreeing deals, in and outside of the EU.

In the middle of both views, John Grant, director at JG Aviation Consultants, believes that, at the end of the day, the industry has “far bigger issues to worry about” and that “nothing will change at least for two years”.

What do others have to say?

The RMT, Britain’s largest specialist transport union, is in favour of Brexit. Focusing on the individual, it has called the EU “pro-austerity and anti-worker” and, at its AGM in Newcastle back in 2015, voted to campaign for Brexit, with its general secretary Mick Cash declaring:

“EU policies are at odds with the aspirations of this union as the various treaties and directives are demanding the privatisation of our rail and ferry industries… The EU is also secretly negotiating trade deals with the US and Canada which will decimate our health and education sectors and hand huge powers to transnational corporations over nation states and their governments.”

Unison, one of Britain’s largest trade unions, has, however, backed the campaign to stay in the EU. Representing the transport sector’s public workers, amongst others, Dave Prentis, Union’s general secretary, stated:

“Unison may have had its doubts about Europe in the past, but now the chips are down and exit is a real possibility, public sector workers know that the services they deliver, and the public that relies on them, will be much better off in than out.”

Heathrow boss John Holland-Kaye has said that while he wants Britain to stay in a reformed EU, exit would strengthen the case for airport expansion, something that is an important issue for many involved in international transport.

Looking at the broader impact of Brexit on Europe as a whole, Rafal Milczarksi, chief executive of Polish flag carrier LOT, hopes “the EU doesn’t treat Brexit as a one-time event… and that people look at what is worrying the voters around Europe and in Britain in particular.”

Should we stay or should we go?

Although there are plenty warning that Brexit would have a detrimental effect on the transport and logistics sector, and others arguing that things will remain the same, if not get better, what we are really learning from the debate is that no one is certain about what will happen. Staying in the EU provides the safety and security of continuity, there will be no immediate changes to trade agreements, and planes, trains, and ships will be able to continue as normal across national borders. Leaving the EU does not provide for the same certainty, but that is not to say that it won’t come, and if new deals and arrangements are agreed, then they could be at a better value. There may however be a particular period of uncertainty whilst new trade agreements are reached – and these are notorious for taking a long time.

Looking at the question, of whether to remain or whether to leave, is very much one of perspective. It is important then to remember that while you as a business owner may believe it is best for your business to stay in; your employees may be thinking that it is best for them as an individual for Britain to exit.

If you would like to know more about the impact of a Brexit on the transport and logistics sector, the official Britain Stronger in Europe and Vote Leave campaigns will debate Brexit at the Microlise Transport Conference, taking place at the Ricoh Arena in Coventry on 18th May.