As Theresa May signs the ‘divorce papers’ from the EU, triggering Brexit, concerns from the industry have focussed largely on processes for managing customs declarations. Withdrawal from the single market and customs union will inevitably mean the re-instatement of frontier declarations and even if a favourable trade deal is negotiated, we can assume that all export/import transactions to/from countries with the EU will be accounted for and processed in the same way as currently for movements to/from the rest of the world.
Likely cost of best case scenario
Currently import/export declaration to the rest of the world number 90 million per annum to/from UK. HMRC statistics estimate this will increase to 300 million per annum, with declarations required on current trade with countries in the EU
An addition 210 million imports/export declarations, at a cost, of say, £25 per declaration would mean an overall extra cost of circa £5.2 billion
Given that 4% will be subject to inspection, as specified by HMRC, we can expect 8.4 million shipments will be disrupted and accordingly delayed, annually. This, according to HMRC equates to an additional £3.4 billion per annum
This begs the question, is the market preparing to absorb an additional cost of £8.6 billion per annum on its existing trade to/from Europe?
This is the likely cost in a best case scenario, where a trade deal is secured and no duties or taxes are applied, which puts the challenges ahead in context.
A clear stance on immigration
Immigration is another crucial issue for crucial issue for our industry where many businesses rely on immigrant labour. Already, we have seen the impact in this area with Eastern Europeans in particular heading home as the value of the pound drops and the sense of future uncertainty grow. How surprising then, given that immigration was one of the central planks of the Brexit campaign, that the PM’s letter made no mention of immigration. This may be because the issue is seen as non-negotiable on both sides, but certainly it’s a significant omission and one where we must seek clarity as soon as possible.
UKWA will of course continue to play its part in advising government throughout the negotiations, but while acknowledging the importance of brokering a new deal with Europe, Peter Ward’s message is that there is a whole world of important commerce beyond these shores– with fresh challenges and opportunities for the UK’s logistics industry to grasp. This is a great time for the leading trade association for logistics to be leading from the front!