Transport trade groups address Brexit’s legacy ten years on

A decade on from the United Kingdom’s referendum on its membership of the European Union, trade associations representing the road transport industry and wider logistics sector have highlighted the impact of the decision on their operations and the UK economy.

Earlier this week Logistics UK noted the significant fall in UK exports both to the EU and globally since the Brexit referendum, as suggested by analysis conducted for the business group by the independent transport economists, MDS Transmodal.

Logistics UK highlighted that total goods trade in tonnage terms with all countries – and in both directions – has fallen by almost 10 per cent in that decade. Imports of goods to the UK have decreased 3.6 per cent, while goods exports from the UK have decreased 20.7 per cent.

A significant proportion of this lost trade is with the EU. By volume, UK exports to the bloc fell by 15.9 per cent in the past ten years. According to Logistics UK, increased border processes and friction are likely causes of the decline.

It said that a lack of alignment with the country’s key trading partners, including frictions that have resulted from Brexit, have held back the UK economy by an estimated £12 billion, equivalent to around £400 per household in extra economic output.

Its analysis suggests that tackling the UK’s current ‘trade intensity gap’ – how much it trades relative to its economy’s size and 2019 level – could be worth approximately £12 billion in the long term.

The group has launched a campaign to urge the government to generate growth by tackling border frictions and streamlining trade. Ben Fletcher, chief executive of Logistics UK, has urged the government to agree practical steps to ease the situation.

“The UK grows when it trades, but unnecessary trade friction is increasing costs, reducing competitiveness and holding back growth,” he warned.

“In the current climate of geopolitical uncertainty, we need to ‘control the controllables’. Fixing the friction in the trade we already do could generate billions for the economy, drive growth and raise living standards, with our analysis showing that closing the UK’s trade-intensity gap has the potential to boost the economy by £12 billion.

“Removing Brexit red tape with our closest trading partner would go a long way to addressing this challenge.”

Mr Fletcher highlighted the importance of efforts to remove non-tariff barriers with the EU, which he said should be a focus of the EU-UK summit planned for this week, which has now been postponed in the wake of prime minister Keir Starmer’s resignation.

“It’s essential that the summit maintains momentum on the removal of costly border checks for meat and dairy products, as well as agreeing further reductions in trade friction such as addressing slow digital border processes and restrictions that limit the number of days HGV drivers and other logistics workers can spend in the 29 Schengen Area countries,” said Mr Fletcher.

Logistics UK highlighted the £5.1 billion annual boost to the economy that the government expects could be achieved via a comprehensive sanitary and phytosanitary (SPS) agreement between the EU and UK.

The trade association’s own analysis, meanwhile, suggests an agreement could reduce export costs by up to 5-8 per cent on affected agri-foods and save £150-£250 on each consignment – particularly significant for groupage operators that pay fees on each smaller shipment that are combined to create a single load.

It re-emphasised the importance of tackling the so-called 90/180 rule which prevents non-EU nationals from spending more than 90 of any 180 days within the Schengen area, warning that this limit includes holidays – and that HGV drivers making frequent or extended runs to the continent can quickly burn through their allowance.

Logistics UK also argued that digital processes should be streamlined in a ‘single trade window’, interoperable with EU systems, so that UK businesses trading internationally are not duplicating efforts by submitting the same data to numerous systems.

“More than half of UK-EU goods trade moves via the Short Straits, and the EU accounts for around 40 per cent of UK exports,” Ben Fletcher concluded.

“A targeted effort to reduce trade friction would have a significant and immediate economy-wide impact and drive valuable growth for both economies.”

Meanwhile the Road Haulage Association (RHA) said that ten years on from Brexit, the focus must be on what comes next.

RHA managing director Richard Smith said leaving the EU had been a “slow burn” for firms “grappling with ever-changing rules”.

“For voters, Brexit was a moment at the ballot box,” he said. “For road freight and coach operators serving Europe, it remains an ongoing process.”

He highlighted a number of changes still to come, including the imminent new rules on tachograph use for vans, and the “troubled rollout” of the Entry/Exit System (EES), designed to help enforce the 90/180 rule.

“Hauliers in Northern Ireland, meanwhile, still grapple with the imperfections of the Windsor Framework, a complex border that magnifies trade changes,” he said.

“The RHA didn’t take a public position ahead of the 2016 referendum. Then, as now, strongly held views across our industry varied widely.

“Some foresaw the trade frictions of leaving the customs union and wanted to avoid them; others felt the EU had opened our economy up too much, exposing a high-wage, high-regulation UK to competition it wasn’t ready for.

“Even so, you would have no trouble filling a room with hauliers ready to agree that leaving the EU hasn’t gone well.

“The data is unambiguous. Far fewer goods now move between the EU and UK, meaning less work for all hauliers. Road goods vehicle journeys to Europe remain around 18 per cent below their 2017 peak and are still trending down, worse still for UK-registered vehicles.

“Even where there are goods to move, new trade barriers make the process time-consuming, costly and painful. It’s common to find businesses that used to ‘do Europe’ but have given up, as it’s no longer worth the hassle versus domestic work. For those that still go cross-Channel, remaining profitable is a challenge. It is hard to see that changing soon.”

Citing the current political uncertainty and postponement of the UK-EU summit, Mr Smith said the talks, when they occur, would nonetheless remain a key opportunity to drive progress, including on SPS and the “outrageous delays” faced by hauliers at the border.

“The sooner a deal is done the better,” he said, “but it will not be the end of the story. Other paperwork and border checks will remain, and it covers only one form of goods movement.

“That’s a starting point: the end goal must be an environment where moving any goods to or from the EU is far simpler. Without that, restoring the relationship to growth will be difficult for hauliers to deliver.”

He reiterated the RHA’s previous call for a professional drivers’ exemption to the 90/180 rules, which he said was the “most pressing” of the opportunities to improve prospects. Left unchanged, he warned, EES would limit the work British operators could take on, drive up costs, and damage supply chain resilience.

He also welcomed progress on youth mobility, and emphasised the importance of UK/EU alignment with regard to the digitisation of trade.

Mr Smith said the message from the road transport industry was “not to mark the decade since the referendum by looking back at old debates”.

“In the more turbulent world we now live in, a stronger, more workable UK-EU trade relationship is both necessary and achievable. Our sector stands ready to help deliver it,” he concluded.