Transport and logistics could be one of the sectors hit hardest by the vote to leave the EU, from both a practical and economic point of view. The impact may be immediate for some businesses.
In terms of operational costs, fuel is one of the more significant items in the profit and loss accounts of transport companies. Oil is sold around the world in US dollars, so a weakened sterling could have a profound impact on fuel prices, which would have immediate consequences for transport companies’ profits, whether they are airlines, shipping, haulage or distributors.
In due course, duties may also rise for landed goods arriving in the UK from the EU, which could put further cost pressure on transporters or their customers. Customs controls and security of cargo is also likely to be impacted. UK businesses could find that they face longer security checks at foreign borders, depending on Brexit negotiations regarding trade agreements, freedom of movement and potential restricted access to European markets.
Driver shortages have been impacting the haulage industry for some time. The Brexit decision could exacerbate this in the longer term as there may be fewer drivers from the EU available to meet the needs of UK haulage firms.
On a more positive note, the government may now have the freedom to change the rules around the use of UK roads by EU hauliers. This could help tackle congestion levels in traffic hotspots, which would have a positive effect on transportation times and costs. A new government could also seek to raise more funds by increasing the fixed levies paid by European firms to access our roads or improve enforcement of existing rules to ensure foreign hauliers pay for use of UK roads. However, it is also worth noting that this may apply in reverse for UK hauliers operating overseas.
On the investment side, the recent announcement of a likely cut to corporation tax rates are welcome, but it will be important to maintain capital allowance rates to promote investment in replacement aircraft, rolling stock, vessels and haulage fleets.
For further information, please get in touch with Steven Law or your usual RSM contact.