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How will Brexit impact Logistics?

Sep 18, 2016

There's a concern in the Logistics Industry as to what impact Brexit will have. This is not surprising since the UK has immense power as an importer and exporter due to the numerous treaties it has in place with countries around the world. Companies based in America and exporting from the UK, or with frequent shipments grouped with UK imports and exports, could be impacted.

Brexit-comical trade cartoon.jpgThe most immediate impact will be an appreciation in the value of the U.S. dollar, which would hurt U.S. exports. At the same time a stronger U.S. dollar makes imports more affordable, and could increase containerized imports to the U.S. Overall it could result in a reduction in LTL shipping in the US. The currency changes and changes to the global economy will impact shipping patterns and volumes in general. 

Trade agreements and Brexit

The UK has negotiated very favorable trade treaties and import duty rates for several countries for decades. Because it’s no longer part of the European Union, these agreements are no longer valid. New treaties will need to be signed with the numerous countries that trade with the UK. 

The UK is the 5th largest economy in the world and one of the largest nations that trade with the US.

They have historically received preferential treatment by the US in exchange for their alliance in dealing with the EU. This will now change and the US will need to find a new EU ally trading partner. 

Procedural pains during the transition

Now that the UK will set its own protocols for containers that appear at terminals, shipments passing through the UK may face bottlenecks and delays. There are many key issues involved such as:

  • visas
  • work permits
  • fiscal arrangements including tonnage tax
  • border controls at ferry terminals
  • collaboration with European navies

Since the EU will no longer preside over these issues in the UK, most vessels passing through the Atlantic Ocean will experience additional problems while procedures and processes change. 

Shipping accounts for 95% of the UKs international trade so it will be a very slow change. Since the UK is an island nation with a diverse population, shipping is not likely to disappear from the country’s international trade any time soon. However, logistics managers, freight forwarders, and freight brokers should take note of these impacts and how they will affect the course of business. The British International Freight Association plans to lobby and make efforts to defray overly complex importing and exporting procedures. However, rate increases and delays with processing container and intermodal shipments are no less evident. 

Although it is too soon to know exactly how the Brexit vote will impact Logistics, it is certain to result in many changes around the globe. Currency rates will fluctuate, import and export patterns will adjust and shipping patterns will transition. There will definitely be many changes to international trade relationships, treaties, rules, duties, tax rates and fees. 

To navigate all these changes smoothly contact American Group for the most up to date information at 866-553-6608. We’re here to make Shipping.Simplified.