Monday 18 November 2019

How Brexit could affect road transport

news_lowres_exitThe United Kingdom is now on course to negotiate its exit from the European Union. Continued EU membership was an issue that divided opinion in the road transport industry, just as it did across society as a whole – and perhaps because of this, many commercial transport organisations and industry bodies, and those who head them, were reluctant to offer an opinion on the matter at all.

A rare exception to that was Ray Ashworth, UK managing director of DAF Trucks, the last truck manufacturer to retain a substantial manufacturing interest in the UK. His considered opinion was that, on balance, the UK should vote ‘remain’. But he warned that: “activists tend to get what they want; pacifists don’t.”

And so it turned out: a slim majority of votes were cast in favour of exit, but the majority of those eligible to vote either opted for the status quo by voting ‘in’, or did not vote at all.

A pre-poll survey by the Road Haulage Association indicated a fissure in its members’ opinion of continuing EU membership: the big fleet managers favoured continued membership, and the small company proprietors did not.

This appeared to reflect a broader split across the population. Taking into consideration what the Guardian identified as a “strong correlation” between areas voting for Brexit and lower median incomes, it would seem that the prosperous wanted in, and the deprived wanted out. If so, the deprived prevailed – which perhaps indicates the nature of a much deeper and unacknowledged issue in the British body politic.

The verdict is now delivered, but at most this means the start of a process, not a single point of departure. Indeed, there is at least the possibility that it may not happen at all.

The referendum is technically advisory, not binding. Execution of the result depends on a hitherto unexplored legal process, the triggering of which has already been delayed until October; and some experts contend that it would require parliamentary approval in order to proceed. Liberal Democrat leader Tim Farron has already pledged to stand on a platform of halting the UK’s departure from the EU in the event of a snap general election.

Meanwhile, as Transport Operator’s July/August edition went to press, a petition to parliament being circulated with a view to triggering a rerun had gathered more than four million signatures; and senior politicians had already suggested that a second referendum may yet be on the cards, on the terms of the UK’s exit deal.

An instant separation was, any case, always going to be impossible. Trade agreements will have to be renegotiated and UK legislation decoupled from EU regulations.

The EU’s powers to legislate for the UK road transport sector and related industries are wide-ranging, covering areas as diverse as Driver CPC, cabotage policy, competition law, roadworthiness checks, drivers’ hours and working time rules, road infrastructure safety, exhaust emissions regulation, the uptake of biofuels, noise pollution, road charging, and vehicle technical standards.

But operators expecting rapid and far-reaching relaxation of the laws that govern their transport businesses are likely to be disappointed.

Tachograph regulations, working time and the Driver CPC are, for example, all enshrined in UK law and are unlikely to be up for rapid reform. Similarly, it is most unlikely that truck manufacturers are likely to launch cheap new ‘Euro Zero’ trucks for the British market producing vast quantities of harmful pollution unhindered by EU regulation.

So that’s what almost certainly won’t change: but what will?

Depending on negotiations, a full Brexit – which included an exit from the European Economic Area – seems likely to be followed by the re-imposition of a ‘hard border’ between Britain and the countries remaining in the EU. Where will that border be?

Between the continent and England, certainly; between Northern Ireland and the Republic, possibly; but also, potentially, between England and a Scotland that somehow manages to persuade the rest of the EU that it is still part of it.

If Brexit were comprehensive, trucks crossing those borders may again require the paperwork that drivers had to deal with prior to 1993 and the opening of the single European market. Carnets to cross borders, finite in number, may have to be applied for.

This would be an inconvenience for those British operators running abroad: but there are now few of them. Roll the clock back the 23 years to those days, and British-registered trucks held far more than half the cross-Channel and North Sea road freight market.

Today, British-registered trucks consist of just 12 per cent (and falling) of the traffic. The introduction of the HGV road user levy, and the UK’s diesel prices becoming a little fairer, have not so far stemmed the tide which has seen distant Poland become the leader in the cross-Channel freight market, thanks to its very low cost base.

What the UK’s exit from the EU should stem is the threat of the big players from Eastern Europe becoming increasingly bold in their stationing of trucks in the UK on a semi-permanent basis to undertake unrestricted cabotage: something that will particularly be welcomed by smaller UK fleets undertaking sub-contract work on behalf of freight forwarders or bigger players.

But in a market where drivers are increasingly difficult to recruit, it is very likely that the flow of drivers from points east will also be cut off. This means British hauliers of all sizes will have to redouble their efforts to train and retain new blood from close to home.

Another consequence of Brexit may be more expensive trucks, and a longer wait for parts.

The inevitable fall in the value of Sterling against the Euro increases pressure on UK market truck companies to raise their front-end prices, and even the British assembler DAF sources most of its high-value components and sub-assemblies from abroad. Oil, traded in US dollars, will go up too.

Some British operators also may not be fully aware that, when a vehicle is off the road, many replacement components are flown or trucked in overnight from central warehouses located on the European mainland. Currently, this is a seamless process, but it won’t be if packages are only released once they have been cleared by customs.

On balance, it would appear that the outlook for British transport operators is a good deal less certain, post-referendum. But is should be remembered that the UK is, according to the IMF, the ninth-largest economy in the world in terms of GDP, and of the eight bigger nations, only one (Germany) is in the European Union.

This statistic needs, however, to be tempered with the knowledge that the single European market that we are poised to exit is (or was before we left), by the same measure, bigger than the USA and second in size only to China.

Industry reacts to referendum result

Commenting on the day following the historic vote to leave the European Union, Road Haulage Association (RHA) chief executive Richard Burnett called it an “earthquake moment” for the country, economy and road transport industry.

Later in correspondence to association members, he wrote: “I want to make it clear that your Association will be keeping close to government to ensure the best deal for UK road hauliers,” he said.

“Rest assured, we are already in the process of arranging meetings with relevant departmental ministers so that we can stress the industry’s needs and expectations.”

The Freight Transport Association (FTA) emphasised the UK’s trade relationship with the EU.

“Even though we are coming out of Europe politically, it remains our biggest export market and the supplier of a high proportion of our imports,” said FTA chief executive David Wells.

“We cannot allow new bureaucratic burdens to hamper the efficient movement of exports heading for customers and imported goods destined for British consumers.”

FTA also highlighted the importance of cross-border trade between Northern Ireland and the Republic, which it said “must not be forgotten in negotiations for the UK’s exit from the EU”.

Meanwhile, road safety charity Brake said it was crucial that “life-saving regulations and standards are not just maintained but improved upon” as the UK begins the exit process.

“Road safety and the battle for sustainable transport in the UK is currently assisted by European Commission regulations and requirements in a number of areas,” said Brake – citing vehicle crash protection standards, driver working hours and air pollution limits as specific areas of concern.

It continued: “Europe-wide links regarding traffic enforcement have never been stronger, helping the fight against unsafe and illegally operated commercial vehicles in particular, but also cross-border enforcement of driver licensing… alcohol and drug driving.”

Mike Hawes, chief executive of the Society of Motor Manufacturers & Traders, added: “Government must now maintain economic stability and secure a deal with the EU which safeguards UK automotive interests. This includes securing tariff-free access to European and other global markets, ensuring we can recruit talent from the EU and the rest of the world, and making the UK the most competitive place in Europe for automotive investment.”

1 comment

  1. Its good to know that road safety and the battle for sustainable transport in the UK is currently assisted European Commission regulations and requirements in a number of areas. This is very helpful. Thank you for sharing this information. Now we have some ideas already.

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