News / Uncertainty over Brexit hits logistics margins amid growing fears of 'no deal'

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Declining profit margins and continuing uncertainty has the left the UK’s logistics industry short of cash to cover the costs of preparing for Brexit.

Amid heightened concern since Theresa May triggered a leadership contest, the UK’s biggest independent forwarder now believes “no deal” is the only option.

European network development manager at Uniserve Lauren Liddell said that “as of today”, there was little chance of an alternative.

“Despite the Brexit deadline being pushed back until 31 October, we believe there is little real time left to put any alternative or negotiated deals in place,” said Ms Liddell.

“During this time, we have to appoint a new PM, reorganise government and forward a new proposal to Brussels to improve on the withdrawal ggreement and the Irish back stop.

“All of this is meant to be achieved while politicians go on holiday for a month – and if there is a new agreement, it must also be approved by parliament and legally ratified by all parties.”

But according to the FTA, the picture is far bleaker. Its 2019 Logistics Report claims profit margins of just 2% in 2018 made the “significant” financial investment required to prepare for Brexit difficult.

Director of UK policy Elizabeth de Jong said that, with the low margins, any investment would be difficult to justify, especially when the post-Brexit landscape remains unclear.

“FTA represents the interests of 17,000 logistics businesses – they simply do not know what they should be planning for,” she said.

“It is of no surprise, then, that at the time of the survey [January 2019], 37% of respondents had not taken any action to prepare for Brexit and only 17% had created a plan for a no-deal Brexit.”

The survey indicated that Brexit uncertainties were taking their toll on the industry, with 61% of respondents citing the uncertainty as a barrier to their business’s international growth.

Furthermore, the report claimed the country’s global competitiveness had dropped “significantly”, with logistics investment “urgently required” to boost attractiveness to international investors.

“Logistics businesses are also concerned about how the UK’s departure from the EU will impact their workforce,” added Ms de Jong. “80% of respondents say the employment status of EU workers is their most pressing Brexit challenge, with 13% of HGV drivers currently working in the UK being EU nationals.

“Residency of workers is not guaranteed, and we’re campaigning for amendments to the Future Immigration White Paper to help address the worsening skills shortage.”