2019-01-17

Logistic Consequences of Brexit

“Road hauliers handling trade in goods with Great Britain should be prepared for a black scenario after Brexit" Jan Buczek said, the President of the Association of International Road Transport Carriers in Poland (ZMPD).

According to the still valid arrangements, on March 29th, 2019 Great Britain will formally cease to be a member of the European Union. However, final settlements and business relations based on the existing terms, as part of the so-called transition period, will in fact last until 2021. This time will be used to work out new trade relations between the EU, including Poland, and London. Still, at present partners from both sides are kept in suspense as to how trade and supply chains will operate in the new reality.

In 2017 the volume of trade between Poland and Great Britain amounted to EUR 13 billion in export and EUR 4 billion in import, and London has been one of Poland’s 10 most important trade partners for many years. Our road transport companies contribute to this trade significantly. This is so because they perform in the UK the greatest number of cabotage operations out of all EU member countries. Furthermore, Polish carriers are responsible for 23% of international road haulage to the United Kingdom, and according to ZMPD’s data, Polish trucks make about 1 million transits per year. Polish transport companies handle in the isles 9 millions tons of cargo annually.

In general, each day about 8,000 trucks enters Great Britain and the mere 1-minute-long clearance costs a haulier about GBP 1. With the perspective of introducing extended procedures (customs or phytosanitary clearances), these may become lengthy, resulting in larger queues. For London’s final strategy regarding transport policy is still unknown and Brexit may create an opportunity to change its role in global logistics chains. Another great unknown are drivers' work rules (whether the principles of honouring entitlements, working time settlement, minimum wage will remain in force) and carrier licences (both sides declare to keep status quo, thanks to an agreement similar to the one between the EU and Switzerland). Also, some risk may be connected with the inefficiency of customs services, in particular British ones. They have very little time to prepare for suddenly much extended duties, and in addition they are in the process of reorganising their digital systems (in the Netherlands their implementation took 7 years).

Therefore, at the end of December last year, the European Commission presented an emergency plan in case no agreement with Great Britain is reached. Brussels finds it necessary to adopt adequate measures in order to ensure their entry into force on March 30th, 2019, that is on the day following Brexit. In principle, they will be temporary and limited, and will be adopted unilaterally by the EU. As regards transport, the European Commission adopted a proposal pertaining to granting UK companies permissions (for 9 months) to carry goods to the EU, provided that London grants similar rights to EU road hauliers along with ensuring fair competition.

And as regards customs, emphasis was put on the importance of member countries taking all necessary steps in order to be able to apply to the United Kingdom the Union Customs Code and relevant indirect tax provisions.

Article developed in cooperation with "Namiary na Morze i Handel" magazine.

Phot. Briefings for Brexit