Port issues predictable and could create more opportunities for UK firms

German freight company DB Schenker has become the latest firm to suspend delivers to the UK due to increased paperwork since Brexit.

Nigel Driffield, Professor of International Business at Warwick Business School, said:

“Problems with imports and exports after Brexit have long been predicted, but were previously dismissed as project fear.

“It illustrates how even a tiny amount of friction in an otherwise frictionless system causes complications and delays. It’s like a few grains of sand in some complex gears. They might not cause the system to grind to a complete halt, but they will significantly reduce performance.

“The fact that EU hauliers are finding it uneconomic to come to the UK may create further opportunities for UK firms, but at higher cost and with higher delays. We already have a potential shortage of skills in this sector, so this is likely to raise costs for importers and prices for consumers

“The bigger question relates to future investment decisions, and whether these frictions, plus hitherto unspecified rules of origin changes, lead firms to reconsider future investments.

“Firms will not necessarily leave, as sunk costs and fixed capital having been incurred, but as this needs replacing, firms are likely to find it more economic to cut UK firms out of supply chains and simply export the final goods to the UK.

“Of course some may take the opposite decision, and UK policy makers should be making every effort to maximise opportunities from this, encouraging reshoring and fostering UK based supply chains.”

For more information please visit the Warwick Business School website