The United Kingdom referendum on EU membership, commonly referred to as Brexit, has brought with it significant political and economic change that has had significant ramifications on logistics and transportation businesses.
Due to this development, there have been new regulations, tariffs, and border checks which have resulted in increased costs for companies shipping between the UK and Europe. While larger businesses can absorb such expenses with ease, smaller enterprises have been severely impacted.
Increased Customs Duties and Tariffs
Since Brexit, trucks were able to arrive from Europe without incident; but since this change occurred many companies will need to file customs documents to prove their products meet EU standards as well as pay an administrative fee which adds further to costs and delays projects. Furthermore, new checks at borders between UK and EU may lead to delays in getting goods to consumers.
As part of its withdrawal, the UK no longer forms part of the European Single Market, leading to changes in trading regulations and duties that have altered trading between EU member countries and the UK. Businesses previously capable of freely moving goods between both locations now face more paperwork and additional fees that have significantly raised costs of doing business while making it more challenging to remain competitive.
These challenges are especially pernicious for smaller firms, which face greater barriers to international trade and more volatile market conditions than larger firms. Due to this dynamic, smaller firms often struggle to quickly adapt to shifting conditions in the trading environment resulting in poorer export performance. Data presented in Panel A of Table 4 show this: following Brexit referendum firms became significantly less likely to export sales as a share of total revenue dropped and new exporters saw their percentage of overall sales declining (Column 1). Finally, larger firms became increasingly dominant on international markets with rising shares (Column 2)
If the EU and UK cannot reach an agreement by the end of their transition period, Britain could find itself losing the four freedoms of single market membership and falling back under World Trade Organization rules; which would likely result in higher tariffs and additional red tape for businesses.
Decreased Demand
The Brexit referendum resulted in an immediate decrease in demand for log cabins, with buyers worried that leaving would mean increased taxes and bureaucracy. Partly this decline was driven by new customs duties and tariffs being placed on goods traded between the UK and EU countries, increasing supply chain costs; but also due to non-tariff barriers being put in place – extra, time-consuming paperwork requirements that must be fulfilled when import/exporting products between regions.
These additional administrative processes have resulted in decreased customer trust and sales, as they worry that businesses will pass these higher costs onto consumers. Furthermore, these requirements make it harder for smaller firms to remain competitive within their markets.
Leave campaigners promised during the Brexit campaign that leaving would give Britain back control of its laws, making them more business-friendly and giving back control to Britain itself. But as Britain prepares to exit from Europe, this claim has proven false: instead of taking back control, previous Conservative governments incorporated thousands of EU laws – known as retained EU law – into British legislation which covered issues like working hours, equal pay, food labelling standards and environmental standards – instead.
Brexit has had one of the most striking repercussions for UK citizens by restricting international travel. Prior to its implementation on 1 January 2021, UK passport holders could freely traverse all EU member states as well as Switzerland and Norway; but since the EU referendum resulted in Brexit becoming official on this date, travellers have only been allowed 90 days in any 180-day period in these countries.
An Leave vote could also threaten to fracture UK unity, leading to another referendum on Scottish independence, reinvigorating Welsh nationalism, and further isolating London and southeast England from more Eurosceptic Midlands and north Scotland. Additionally, such a vote might cause the pound to drop against major currencies, decreasing affordability of properties for foreign investors.
Increased Supply Chain Costs
The UK’s Brexit vote has had a profound effect on logistics and transportation services, in particular customs regulations and tariffs that have raised supply chain costs significantly. Companies now pay more for shipping, inventory storage and customs clearance; as a result many have had to increase prices in order to remain competitive – leading to increases in consumer bills for similar products.
Brexit has had an adverse impact on supply chains costs and delays in goods deliveries for businesses of all sizes, particularly small and midsized ones. This has been due to compliance requirements under new regulations as well as limited access to EU’s customs database; additionally, Brexit decision has seen an increase in border crimes with 5,373 reports of HGV theft or cargo rustling since 2023 alone.
Overall, Brexit has had a negative effect on Britain’s economy and trade. The exact extent of this effect will depend on how negotiations unfold: if both parties can reach an agreement that benefits both parties equally then economic effects could be limited; but if Brussels insists on making an example out of Britain to dissuade other nations from leaving then their effects could be more profound.
If the UK wants to remain within the European Single Market, it must negotiate a trade deal similar to Norway’s. While this option would allow access to European legislation without being able to change it, it would still leave Britain with less access than if they remained part of the EU.
Assuming the UK leaves the EU, its forest certification requirements could remain the same; however, leaving may result in more costly wood from Europe, due to higher customs duties and tariffs imposed upon British imports.
Changes in Customs Data
The United Kingdom’s exit from the European Union has significantly altered how customs data is collected and shared. Companies exporting to EU members now must submit information into a separate database and pay additional fees, increasing costs further. Furthermore, EU’s customs system is only accessible by members states, restricting what kind of data can be shared across borders.
These changes could also impede on the availability of certain technologies that could limit a company’s efficiency of operation. For instance, if one software program was critical in running its business but is no longer available in the UK, that business may need to find another solution in order to remain effective.
Even as Brexit presents transportation and logistics companies with challenges, they can still remain profitable by remaining aware of new regulations and tariffs, streamlining their supply chains, reducing costs and looking out for any possible trade agreements that may emerge in the future.
Brexit’s impact on the UK market can be seen across various industries, such as retail, manufacturing, and logistics. Some sectors have been more severely impacted than others depending on how its exit will impact trade relationships with other nations; construction in particular has felt its full force due to being highly dependent on imported materials.
However, rental property has largely remained immune from Brexit’s effect. Rental yields have been relatively consistent throughout this transition period, reflecting steady demand for affordable properties. Furthermore, sterling’s fall against the US dollar has helped drive demand among overseas investors, making the UK more appealing as an investment destination.
However, it must be remembered that the full impact of Brexit won’t become evident until after its two-year process has concluded and access to EU single markets reduced significantly from what would have been possible under status quo conditions.