How will Brexit impact the European logistics industry?
As political heavyweights made their way to Brussels today for the second round of Brexit talks, British Brexit Secretary David Davis urged all sides to ‘get down to business’. The European logistics and supply chain industry will be hoping more than most that they do just that.
Justin Fox, writing for SupplyChainDigital.com on behalf of online truck marketplace Truck Locator, says that as talks progress, the earliest agreements could have profound implications later for key logistics industry players on both sides of the English channel.
In June 2016, British voters chose to leave the EU, sparking huge debate across Europe on how that exit could be achieved, and what the likely impacts would be for people and economies across the Union. Of course, within each member state, opinions are divided about whether or not Britain’s decision to leave is a wise move or a disaster, but one thing is certain: the impact of Brexit on Europe’s logistics industry will be huge.
Importing goods into Britain from the EU
Britain, along with the majority of EU member states, has a service-based economy, which means that is has to rely heavily on the import of natural resources. Many EU countries are interlinked in their dependence on imports of fuel and petroleum products, with 27% of Britain’s petroleum products, for example, passing through the EU on the way to Britain. If Brexit negotiations result in Britain not being part of the Single Market, tariffs will be
applied to goods entering the UK from other EU countries, forcing those goods to become more expensive. Rising export prices will not be good for the exporting countries, or for Britain, and those higher costs are likely to have a ripple-down effect within the logistics industry. Ultimately, it will be consumers across Europe who feel this impact most acutely, as hauliers and logistics firms will simply pass on the increased costs to their customers.
Already, some industry thought-leaders are talking about Brexit as a potential catalyst for the alternative fuel sector, and are hoping that it will inspire truck and van manufacturers to invest heavily in R&D to build commercial vehicles that are not so dependent on traditional fuels. Lobbyists and campaigners have been fighting for this kind of approach for a long time, but it seems that Brexit might provide a financial incentive that is much harder for businesses to ignore than the long-standing environmental argument.
Freedom of movement
Residents of all EU member states are currently free to live and work in any other EU country, if they wish. Britain has long benefitted from this arrangement, with EU workers making up a significant percentage of workers in a wide cross-section of industries. For example, almost 10% of commercial drivers in the UK are from other EU countries. Whilst Britain once offered an excellent opportunity for drivers from other EU countries, many of those drivers are now looking back to the continent for work, as they fear they are being used as a pawn in negotiations.
The uncertainty surrounding residency rights for EU workers in the UK is compounding a pre-existing problem in the logistics industry: Britain, like many countries, is experiencing a shortage of experienced commercial drivers. If Brexit restricts the options for EU nationals to work in the UK haulage industry, it may well force earnings for British drivers up, but it remains to be seen whether that would be enough to encourage more young people to choose driving as a career.
One alternative possibility open to Britain is to make the logistics industry a targeted sector for overseas recruitment. The British government is already exploring ways in which it could avoid a ‘talent drain’ after Brexit, and singling out specific sectors for special immigration treatment may be one option.
Customs and border controls
Under the Schengen agreement, residents of EU member states enjoy extremely relaxed border controls, and are generally free to cross borders without being stopped. The Single Market also means that goods and services can be freely traded throughout the eurozone. Inevitably, when Britain leaves the EU, this will have to change, and stricter border controls will be reinstated between Britain and its EU neighbours. Nowhere is this likely to be more pronounced than on the border between Northern Ireland and the Republic of Ireland, which, of course, remains an EU member state. Trade between Northern Ireland and the Republic is strong, and it’s thought that border controls could cost businesses billions each year, with a knock-on effect felt throughout the logistics industry.
Whilst the border between Northern Ireland and the Republic of Ireland might be the most extreme example of the border control issues raised by Brexit, there will be similar issues across the whole of the EU. Clarity on the likely outcome of Brexit talks is needed urgently, but of course, it is in no-one’s interests to rush these negotiations.
For the European logistics industry, and for the wider economies of all member states, it’s vital that the talks are held in a constructive and progressive way, without any kind of ‘them and us’ mentality. All member states need the best possible outcome from Brexit, and it is to be hoped that negotiators can find a way to make the EU’s first real exit a success for all, with as little disruption and uncertainty as possible along the way.
DHL Claim Multi-Sector Collaboration Key to Fighting COVID
Since January, global logistics leader DHL has distributed more than 200 million doses of the COVID vaccine to 120+ countries around the globe. While the US and UK recently rolled out immunisation plans to most citizens, countries with less developed infrastructure still desperately need more doses. In the United Arab Emirates (UAE), which currently has one of the highest per-capita immunisation rates, the government set up storage facilities to cover domestic and international demand. But storage, as we’ve learned, is little help if you can’t transport the goods.
This is where logistics leaders such as DHL make their impact. The company built over 50 new partnerships, bilateral and multilateral, to collaborate with pharmaceutical and private sector firms. With more than 350 DHL centres pressed into service, the group operated 9,000+ flights to ship the vaccine where it needed to go.
With new pandemic knowledge, DHL just released its “Revisiting Pandemic Resilience” white paper, which examined the role of logistics and supply chain companies in handling COVID-19. As Thomas Ellman, Head of Clinical Trials Logistics at DHL, said: “The past one year has highlighted the importance of logistics and supply chain management to manage the pandemic, ensure business continuity and protect public health. It has also shown us that together we are stronger”.
Multisector partnerships, DHL said, enabled rapid, effective vaccine distribution. While international scientists developed a vaccine in record time—five times faster than any other vaccine in history—manufacturers ramped up production and logistics teams rolled out distribution three times faster than expected. When commercial routes faced backups, logistics operators worked with military officers to transport vaccines via helicopters and boats.
In the UAE, the public-private HOPE Consortium distributed billions of COVID-19 doses to its civilians as well as other countries in need by partnering with commercial organisations such as DHL. For the first time, apropo for an unprecedented pandemic, logistics companies made strong connections with public health and government.
“While the race against the virus continues, leveraging the power of such collaborations and data analytics will be key”, said Katja Busch, Chief Commercial Officer DHL and Head of DHL Customer Solutions & Innovation. “We need to remain prepared for high patient and vaccine volumes, maintain logistics infrastructure and capacity, while planning for seasonal fluctuations by providing a stable and well-equipped platform for the years to come”.
How Do We Sustain Immunisation?
By the end of 2021, experts estimate that we need approximately 10 billion doses of vaccines—many of which will be shipped to areas of the world, such as India, South Africa, and Brazil, that lack significant infrastructure. This is perhaps the greatest divide between countries that have rolled out successful immunisation programmes and those that have not. As Busch noted, “the UAE’s significant investments in creating robust air, sea, and land infrastructure facilitated logistics and vaccine distribution, helping us keep supply chains resilient”.
Neither is the novel coronavirus a one-time affair. If predictions hold, COVID will be similar to seasonal colds or the flu: here to stay. When fall comes around each year, governments will need to vaccinate the world as quickly as possible to ensure long-term immunisation against the virus. This time, logistics companies must be better prepared.
Yet global immunisation, year after year, is no small order. To keep reinfection rates low and slow the spread of COVID, governments will likely need 7-9 billion annual doses of the vaccine to meet that mark. And if DHL’s white paper is any judge of success, multi-sector supply chain partnerships will set the gold standard.