Logistics sector faces major ‘no deal’ Brexit bill

Logistics UK, formerly the Freight Transport Association, predicted last month that a failure of London and Brussels to reach a deal on the UK/EU future relationship by the end of the transition period could add more than £240 million to the industry’s annual bills, thanks to World Trade Organization (WTO) tariffs on new vehicles, parts and equipment.

Talks were still ongoing at the time of publication, with prime minister Boris Johnson insisting a trade deal was still possible, though the time remaining to reach consensus was said to be extremely tight in order to ensure any agreement could be ratified before the end of the year.

David Wells, Logistics UK’s chief executive, said the costs of no deal could not be borne by the sector.

“More than 70 per cent of HGVs are manufactured in the EU, and new vehicles will incur a 10 per cent tariff if the UK leaves the EU without a deal at the end of December,” he said.

“That is an estimated £7,000 or more per vehicle, and with around 48,500 trucks bought by UK businesses every year, that’s a total tariff of £240 million which has to be found from somewhere.

“Add on the four per cent tariff on tyres for vehicles and around the same level for spare parts from the EU, and that equates to a massive tax on logistics companies already reeling from the impact of the Covid-19 economic downturn.

“This could be the final straw for many businesses in our sector – as the industry that drives the heart of the UK economy while operating on two per cent margins, we simply cannot afford these sorts of sums and they will inevitably be passed on to the consumer in higher prices.”

He continued: “This is just the tip of the iceberg, with a raft of new tariffs applying indirectly to logistics and other sectors involved in the supply chain, and to the direct costs of thousands of goods from new cars to fresh foods unless the UK agrees a free trade deal with the EU.

“Prices of many everyday items that we buy from the EU will rise as a result, and that inflationary pressure would crush any hope of swift economic growth at a time when we need UK plc to be standing strong. Government needs to agree a deal with the EU so that our sector, and the economy at large, can start to build back better with confidence.”

Meanwhile, the Road Haulage Association (RHA) had compiled a list of government resources on preparing for the end of the Brexit transition for traders and businesses, as well as its own Brexit Operator Checklist covering a variety of issues pertaining to cross-border operations.

The materials were made available via the RHA website.

The association has also launched its own Customs Brokerage service, initially focusing on ro-ro traffic and electronically connected to all 26 major UK ports.

“Many companies already work closely with their customs brokers and they will easily be able to adapt to the new regime,”said RHA chief executive Richard Burnett.

“But following an extensive industry survey, we have established that over 63 per cent of operators are unprepared for the customs changes…

“The massive shortfall of customs agents means that there is definitely a need for operational guidance and practical customs solutions.”