Keeping trade flowing post-Brexit: prosperity is co-dependent
25 September 2020: The International Air Transport Association (IATA) is quite clear that the movement of cargo by air relies on open economies. However, it is also facing up to Brexit and conjuring with some huge questions.
“Over 30% of UK exports travel by air,” says Glyn Hughes, IATA’s Global Head of Cargo. “A significant percentage of the cargo that flies by air, will also have a land-based logistics element because the truck network has grown to connect airports.”
It is not just the export of UK manufactured goods that are uppermost in his mind. There are certain import issues that are yet to be resolved, he says. Some of them are niche but they will have massive implications for individuals.
“The UK is considered a very important import location for certain commodities,” says Hughes. “For example, the UK has one of the most advanced certification processes for personalised healthcare. So, if you are in Europe, and you have a particular medical condition, your samples can be flown to Silicon Valley, a personalised treatment programme can be prescribed, this will fly back through the UK because its personalised treatment certification process is one of the most effective and efficient that exists, and it will arrive with the European patient through the UK within 48-72 hours.”
He points out: “Once the UK leaves the EU, that kind of programme can no longer fly through the UK.” This is just one very small but hugely consequential issue that is yet to be resolved.
“What will be the role of the UK as a gateway to Europe?” he asks. “There are about 10,000 trucks that cross between the EU and the UK every day and, in an integrated borderless environment, they flow seamlessly. Even if you have inland borders and the ability to process the documentation of cargo several months after the cargo has arrived, it still makes that process more difficult,” he says.
“It may be that some cargo will not fly into the UK anymore. You may find that some UK factories that rely on European sourced parts will not only have the border complication but also have to bear financial implications. Companies may look to relocate factories which will have a consequential impact.”
IATA has been vocal in its lobbying for the continuation of a single customs union so that, at least, parties to the movement of goods will benefit from an electronic document submissions process that will make post-Brexit information flow manageable.
“There will, no doubt, be an impact on the flow of goods from the economics point of view,” says Hughes. “As the UK becomes more independent and negotiates its own trade agreements, there may be a broader network of trade partners around the world in which case you would need greater ocean and air freight movement activity.” The shape of freight flows will, no doubt, shift hugely if the EU is no longer the UK’s main trading partner.
And let’s not forget that the movement of cargo worldwide is very much an integrated process. It only works if air, sea, road and rail come together in one long funnel, with technology providing the tracking and tracing as well as accountability in terms of security and duties to be paid. “Integrated logistics with all modes of transport working together seamlessly to build the global economic picture, along with open and free borders to the extent that that is possible, is how the global economy is built,” he says.
All this comes at a time, he points out, that SMEs, through technology, can access global markets. Export is a real possibility thanks to ecommerce and web shops as well as both the UK’s and European government’s enthusiasm for entrepreneurship. However, bureaucracy adds cost. Cost diminishes competitiveness, and so a downward spiral can begin. What next?
“We need to keep the conversations going,” says Hughes. “We have to assume that everyone involved has the same objective which is business prosperity, social prosperity and integrated global economic prosperity. It is inconceivable that any one state can prosper alone.”