Market Overview

FTA Lays Bare Brexit's Challenges for Freight

FTA Lays Bare Brexit's Challenges for Freight

In a fast moving environment truck operators are finding it difficult to keep pace with Brexit policy updates.

Serious challenges to market access and a skills shortage are facing hauliers and rail freight operators in particular from a no deal (hard) Brexit, according to speakers at Wednesday's Freight Transport Association conference in central London.

Those close to negotiators in the European Union believe that the chances of a hard Brexit have increased substantially following the British Government's decision to postpone the meaningful vote in parliament last week. Pauline Bastidon, the head of European policy and Brexit at the association, outlined four possible outcomes of Britain's withdrawal negotiations, but it was hard Brexit that she considered the most likely.

Bastidon's four Brexit possibilities are cancellation of Britain's departure from the European Union; Brexit minimal, that is a soft Brexit that will see Britain maintain a close relationship with the European Union even after the transition period has ended; and Brexit tough was considered little different to a hard Brexit which would see the full border formalities and tariffs imposed after 11pm on 29 March.

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A no deal withdrawal would have a severe industry impact, but even a soft Brexit could have serious implications for the freight industry with the UK yesterday signalling a significantly tougher immigration policy post-European Union membership. Some United Kingdom cabinet ministers want to maintain a £30,000 ($38,000) minimum pay limit for workers wishing to be employed in Britain and education at Regulated Qualifications Framework 6, degree level. Other ministers believe that a £21,000 ($26,600) minimum salary and educated to level of Regulated Qualifications Framework 3 would be more realistic.

British political shifts are happening at a frenetic pace in what is a febrile atmosphere in parliament, with cabinet ministers supporting the lower educational level winning the day, while those favouring the higher minimum wage levels for foreign workers in the UK refusing to change their position, and for the moment that remains the government's position. These decisions were taken and announced during the period of the Freight Transport Association's conference.

Sally Gilson, the Freight Transport Association's head of skills, told the conference that some 88% of logistics workers fall below the £30,000 limit. Heavy goods vehicle drivers, who are rated at Regulated Qualifications Framework level 2, compose 90% of those working in the logistics sector. With a shortage of 52,000 drivers within the United Kingdom this would pose a serious challenge for the industry.

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Government has yet to address the driver shortages, which will exist whatever type of Brexit. That is about to change, said Gilson, who said ministers had called for evidence and that haulage companies and forwarders should respond to that call, in an effort to persuade the authorities to place truck drivers on the government's Shortage List of occupations. That would allow a further shift in policy and allow drivers from abroad to work in Britain.

Although, it seems that some ministers have yet to be persuaded of the need, with the Freight Transport Association's deputy chief executive James Hookham telling FreightWaves that the secretary of state for transport, Chris Grayling, had told the association's chief executive that automation was one answer to the driver shortage while the minister also argued that high levels of immigration [and not low levels of investment] was causing the UK's productivity levels to remain stubbornly low, below many of the country's major competitors.

Driver shortages could be further exacerbated with the difficulties of market access should a hard Brexit be realised, with European Union issued licences to British drivers no longer valid for use in the European Union. In a no deal scenario, the European Conference of Ministers of Transport permits will be the only available instrument for operators to continue working on the continent. The permits are issued to countries and distributed by governments, the UK's quota for 2019 is 984 permits with many already having been issued. However, the deadline for applying for these permits expires today.

British hauliers without licences to operate will rely on a deal on offer from the European Union  to recognise British licences for nine months after Britain leaves the European Union, up to the end of 2019, but only if the UK Government reciprocates. This deal has yet to be agreed to, but a decision is eagerly awaited.

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Posted-In: Brexit European Union Freight Freight Transport Association FreightwavesNews Global Markets


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