Autumn Edition - Transport and Mobility

Divergence Watch is a new quarterly publication by Ibec Global, which looks at the shifting relationship between the EU and the UK across different business sectors, helping business leaders navigate the cost and complexity of doing international business. In this issue, we focus on the impact of Brexit on mobility and transport, consider where divergence has taken place so far and its impact, and highlight the key areas business leaders should keep a close eye on in coming months.

The development of transport policy is an area of shared competence in the EU, with Member States and European Institutions each having a role. For a sector that looks for, and benefits significantly from, common rules across jurisdictions, there is an obvious interest in common policy being developed at the EU level.

In the immediate aftermath of the UK withdrawal from the EU, the agreements sought to minimise the more severe impacts of Brexit on the transport sector. In some cases, this took the form of a continued recognition of certification processes, in other areas it replaced some transport elements with new agreements to ensure continued connectivity.

For those companies operating in the transport space, Brexit has led to increased costs and administration as policies and processes were replicated. New certification requirements emerged for vehicles and equipment, new licensing requirements for staff, and duplicate systems such as the UK Emissions Trading System to sit alongside the EU Emissions Trading System. While in some industries there may be an opportunity for companies to benefit from divergence allowing for reduced costs or the ability to launch new products in a less regulated environment, we can see that in the transport industry the market influence of the European Single Market is prevalent.

The impact on transport is not limited to the area of transport policy. When the United Kingdom left the European Union on 31 January 2020, they also left the European Single Market and Customs Union. This resulted in new procedures for moving goods to, from, or through the UK, excluding Northern Ireland, in addition to new requirements and rules for people travelling between the UK and the EU. Beyond the transport sector, transport policy and new procedures are impacting businesses and their supply chains, especially in those sectors known to have high non-tariff barriers such as agriculture, food, and motor vehicles (or their supply chains).

In early 2021, a third of businesses were reporting that they had issues importing from the EU to the UK due to Brexit, with the most-cited reasons being delays at the border, additional customs and administrative costs, and regulatory checks. The impact of border delays is spread along the supply chains, complicating the logistics of deeply integrated supply chains, thus increasing the cost and complexity for international businesses.