Guest Opinion: BREXIT Impact on U.S. Supply Chains Remains A Question Mark

Editor’s Note: Justin Fox is writing on behalf of Farm Machinery Locator, a UK based online marketplace for new and used farming machinery.

As you might have heard at some point over the last year, Britain has decided to withdraw from the European Union. The relative merits and criticisms of such a move is the big talking point here in the UK and across the continent, but there's no denying that from a logistical perspective that big changes are soon to be afoot.

Imports

Like most developed nations geared towards a service based economy, the UK imports more natural resources than it exports. Although possessing sizable oil fields in the North Sea and having other sources of fuel from across the world, a significant proportion of petroleum products (27%) in particular make their way to Britain via the EU.

Being potentially outside the Single Market trading bloc would have repercussions in the form of tariffs and make all goods from EU member states more costly and fuel prices in particular are of major concern for anyone with a stake in the future of logistics. Should fuel sourced from the EU become more expensive, then consumers may be forced to bear the brunt of this price increase as haulage firms seek to keep their revenue in line with their expenses.

What has been suggested by some forward thinking commentators, is that this should serve as inspiration for commercial vehicle manufactures with assets in the UK to deepen their research into vehicles that are less dependent on fossil fuels. The environmental motivation for doing so has long been present but financial pressures have hastened the need for a solution. Not only would the environment benefit from this reduction in pollution, but less costly imports of fuel would also be required.

Exports

Exporting to mainland Europe will likewise require a re-orientation from firms across the UK, with each industry large or small likely requiring some kind of deal to keep trade flowing both ways. Despite the aforementioned transition towards being a nation of service providers, the UK still does have a lot of physical goods to offer.

For example, the UK has more sheep (34 million) than any other EU state. This has enabled the country to carve out a lucrative niche within the EU's wider agricultural industry in terms of meat and wool products and the scale of UK farming overall is nothing to be sniffed at. It is one of the reasons that competitors in many places have decided to focus on other forms of farming produce rather than compete with the UK, although this may soon change if an opportunity is sensed that the UK's share of the agricultural industry is up for grabs though.

Therefore without the same volume of goods leaving the country not only will there be less need for delivery drivers, but many companies will likely have to scale back their operations. Once more, this would reduce the need for logistical expertise as an expense that can no longer be afforded to the same degree. New markets could very well be found elsewhere outside of the EU should new trade agreements be struck, but reaching nations such as New Zealand, Canada, and Japan will require somewhat more effort and investment than a quick drive across the Channel!

EU Workers

Accounting for around 10% of the UK's commercial driving force, EU nationals have long played a key role in the nation's logistical supply chain. However with the permanence of their residency being used as a playing card in negotiations, many have already sought work abroad in a more stable climate.
This issue is exacerbated by the fact that the UK currently has a shortage of British-born commercial drivers, whose services are becoming more and more in demand. Whilst they may benefit from an increase in wages due to their increasing scarcity, will this be enough to attract new recruits into the industry?

There's also the possibility that the UK post-Brexit may make specific overtures to prospective lorry drivers from around Europe and indeed the world to come here with their unique skillset. Plenty of talk has been made about how the new immigration system would prioritise certain trained workers and this is a field that would likely benefit from such an approach to recruitment.

Customs

If no agreement can be found that keeps the UK within the EU Single Market as some form of associate member, then the likelihood is that there will be far more stringent checks for all forms of traffic going both ways.

Such a matter is of even more significance when it comes to the border with the Republic of Ireland, as the UK's only land border with an EU member. Whilst it's been a topic of concern recently from a security perspective, it has to be factored in that both the North and the Republic of Ireland do a significant amount of trade between each other. Without a compromise over this issue, trade and therefore logistics would be greatly compromised to the tune of billions each year.

The Irish situation is definitely a unique challenge within an already highly irregular situation that requires an answer that can't be rushed, but is also needed as soon as possible. Contradictory as this might be, what matters is that negotiators on both teams don't approach talks in an adversarial manner. Finding a solution to this crucial trade matter that is mutually beneficial should be both sides paramount objective to ensure as smooth a transition as possible in this difficult time.

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