The UK’s exit from the European Union in February 2020 is considered a significant event in the continent after the fall of the Berlin Wall in 1989. This event not only changed the economic dynamics in the European heartland but also highlighted the UK’s tumultuous historic relations with the union. While this separation took place on mutually agreed terms, the UK’s economy as well as its polity went through a tragic turmoil in the post-Brexit era.
While the trade between the UK and the EU continues with increased restrictions, the cost of freight forwarding has seen a major surge with increased import and export taxes and duties. Not only that but the migration of the no. of European citizens from the UK mainland to the European Union also resulted in the shortage of skilled workforce, further aggravating the labour shortage and resulting in the imbalance of demand-supply dynamics.
The UK under the leadership of Rishi Sunak may be slowly recovering from the hardships of the post-Brexit era by locking up a new trade deal with the European Union, but Brexit has entirely impacted the global freight forwarding companies in many ways, bringing in new challenges for the stakeholders.
Through this blog, let’s dig deeper into the various aspects and factors which by and large affected freight forwarding and their long-term implications for global trade.
Post-Brexit World And Its Implication For The Freight Forwarding
The post-Brexit world presents major implications for the freight forwarding industry, particularly in the realm of international trade and logistics. With the United Kingdom’s departure from the European Union, new customs procedures, tariffs, and regulations have been introduced, leading to increased complexity and potential delays in cross-border shipments.
Freight forwarders now face the challenge of navigating these changes, ensuring compliance with new trade requirements, and managing the associated administrative burdens. Additionally, the uncertainty surrounding future trade agreements and the potential for trade disruptions further complicates the landscape for freight forwarders. Adaptability, agility, and robust supply chain solutions will be key for freight forwarders to mitigate risks and capitalise on emerging opportunities in this evolving post-Brexit environment.
Some of the biggest challenges encircling the industry are:
Reduced Commercial Activities
The commercial transactions between the UK and the European Union came to a major slowdown because various companies had to deal with the changed customs documentation and checks. After the border restrictions increased, goods and commodities had to go through extra physical inspections.
Increased Cost For The UK Exporters
The freight expenditure for the UK exporters has significantly surged since January 2022. Expert in UK retail logistics John Waldock highlighted that several UK merchants have chosen not to engage in cross-border fulfilment at all until the overall uncertainty surrounding these operations and their degrees of complexity have subsided.
Scarcity of Skilled Workforce
Following the events of Brexit, about 200,000 European citizens left the UK in 2020, which culminated in the shortage of skilful workforce and staff engaged in the transportation and freight industry. This caused a loss of productivity within the leading multinationals like DHL, Amazon, etc., and they had to offer special incentives for recruiting and training more workforce.
Increased Transit Times
Given the drastic changes in the cross-border trade policies and agreements between the EU and the United Kingdom post-Brexit, friction at the borders has increased, and due to more paperwork & document verification, shipments are subjected to long delays. Freight forwarding companies even attempted to bypass the traditional supply chain routes from the UK mainland to the EU, to avoid customs. As per the reports, freight volumes from Rosslare Port (Ireland) to the EU increased by 500% in the last few years.
The Road Ahead For Global Trade And The Future Of The UK Freight Industry
Ever since Rishi Sunak took over as the Prime Minister of the UK in 2022, several initiatives have been taken by his government to restore the multiple disputes which emerged in the post-Brexit times. One such is securing the deal with the European Union over the Northern Ireland protocol, which has been called a “decisive breakthrough” by Ursula von der Leyen, the president of the European Commission. This era of new constructive partnership between the UK and the EU will further open doors for the restoration of cross-border trade, further easing the way for the global shipping and freight industry.
Although the United Kingdom has gone through a major economic slowdown post-Brexit, it is rapidly moving ahead on the recovery track with the eCommerce segment booming rapidly. With that, many startups and small-scale brands are making their way into the business landscape of the country.
If you are an eCommerce business owner just starting in the industry, NimbusPost is a reliable and trustworthy shipping partner you can count on. Their economical shipping rates, extensive network coverage network across the UK mainland and offshore postcodes, integration with 15+ top carriers, tech-enabled shipping solutions, and so on make them the most preferred shipping aggregator in the UK.