Beyond Brexit: trade in goods Contents

Chapter 8: Transporting goods

Transport disruption

177.The extent of disruption to cross-border transport since the end of the transition period is difficult to quantify, but is less than we anticipated in late 2020.253 We heard that “the numbers have been relatively low and isolated to specific sectors and routes”.254 Paymaster General Penny Mordaunt claimed that the flow of cross-border transport “is similar to, if not exceeding, where we were for example a year ago”. The Government’s fear that “30% to 50% of HGVs might not be ready, particularly at the short straits” has “not proved to be the case”, both because “business has done a tremendous job in preparing”, and because “officials have done a very good job in communicating what needs to be done”.255

178.The relative lack of serious disruption may partly be a product of reduced traffic due to the COVID-19 pandemic, stockpiling and some traders choosing not to trade because of new requirements introduced on 1 January. The Institute for Government said traffic flows between Great Britain and the EU “were just 40% of normal” in the first week of January, rising to an estimated “70–80% of normal in the last week of January”. It continued: “There is still scope for traffic flows to increase further as stockpiles are reduced, with an associated risk of disruption.”256 Liam Smyth from the British Chambers of Commerce also warned that we are not yet seeing the full impact of disruption.257

Empty lorries

179.The flow of traffic means little, however, if it consists of lorries carrying no goods. The proportion of lorries crossing from the UK to the EU empty appears to have increased since 1 January, “suggesting suppressed levels of exports”, as the Institute for Government told us, though there are no “agreed figures”.258 Alex Veitch said the “best available data” indicate that, whereas “about 30% of trucks ran empty from GB to the EU pre-Brexit”, the Government has told the logistics industry that “empty running is currently about 50%”.259

180.There are several possible reasons. Alex Veitch said “the cost of trade has gone up”, potentially creating “a systemic issue for SMEs or larger businesses in doing fewer exports to the EU”.260 The Institute for Government noted reports of firms reliant on parts or products imported from the EU “paying for lorries to return to the EU empty (and thereby avoiding the need to comply with most border formalities), in order to reduce the risk of them being delayed in returning to the EU to collect future deliveries”.261

181.One impact of the increase in empty lorries, the LEP Network told us, is that drivers from Eastern Europe are “not coming in the same numbers”, because they are “unwilling to return to Europe from the UK with an empty truck”.262 We would add that the movement of empty lorries creates entirely unnecessary carbon emissions.

Short-term problems

182.Much of the disruption since 1 January appears to be the result of short-term problems that, while unwelcome, are being or are likely to be resolved as the new requirements bed in. Fergus McReynolds from Make UK noted that shipping costs “have increased significantly since the beginning of the year”, but argued that “the time and cost implications should become more predictable in the future”.263

183.Des Hiscock of ACITA and Customs Support said this rise in transport costs was “definitely driven in part by the unpreparedness of some sectors of the transport industry”, as well as by “frustration on the part of those who have prepared and who are struggling with the differing procedures and regulations” in each EU Member State.264 Liam Smyth told us that many transport companies, fearful of disruption caused by incorrect documents, “are now carrying goods only if they are also responsible for the paperwork”. This is causing “big price inflation”, with transport costs rising “threefold in some examples”.265

184.The LEP Network said “initial teething issues” were “resolving themselves”, with the Port of Dover, for example, reporting that “specific and detailed problems” had reduced from 200 per day at the start of the year to some 10 or 15 per day. It added that hauliers were “getting used to what is required and being better prepared”, resulting in “a marked difference on preparedness from the start to the end of January”.266 As an example of improvements since the end of the transition period, the Minister highlighted the Kent access permits, where “in early January we were looking at 60% of hauliers having the correct paperwork … That has now increased to 85%.”267

Structural problems

185.Other problems seem unlikely to be resolved without significant changes. Fergus McReynolds said that in some sectors and for some businesses, the disruption “is structural and it will change their supply chains”, adding that it may “mean that it is not necessarily economically viable to continue to operate in the way they have done historically”. Whereas the role of the Specialised Committees is to “make sure that we address system issues very quickly”, some structural issues simply “cannot be addressed because of the nature of the agreement that was concluded”.268

186.The TCA creates a Specialised Committee on Road Transport, but softening the impacts of the new requirements does not appear to be its primary focus. It is a forum in which the UK and the EU can discuss the impact of new regulatory measures relating to road transport proposed by either Party, potentially leading to “appropriate remedial measures, including the suspension of obligations under this Agreement”.269 David Thorneloe said there is “less cause for optimism” about this Specialised Committee than its air transport counterpart, and that it “seems to be set up around enforcement and ensuring that there is no rowing back from cooperation”, because “the EU fears that the UK would seek to undercut the EU market with lower regulatory measures”.270

187.Some of the issues disrupting transport flows are likely to be short-term, but swift Government action is required to minimise their consequences and lower transport costs. At the same time, we ask the Government to identify and consult with the industries likely to struggle most to move goods in the long term, to consider what mitigations might help to preserve trade flows.


188.Problems with groupage—the consolidation of various consignments, often from multiple companies, on a single lorry—have the potential to be a long-term brake on trade in goods. Each element of the load must have the required paperwork before the vehicle can travel. If one consignment of goods on the lorry does not, the entire load is delayed and may be returned. Luke Hindlaugh from the Food and Drink Federation described such problems as a permanent new feature:

“You can get it right as many times as you want, but if someone else gets it wrong, the lorry is held up. One of our members has had orders for about 50 different consignments. Most of them were on groupage and only about two made it over the EU border; the rest of the 48 were held up. The lorries cannot move; none of the orders in those groupage loads can move. It is very tough to overcome some of those things, and they are very much here to stay.”271

189.The LEP Network told us: “Some hauliers are suspending groupage operations into Europe as each delivery requires significant amounts of paperwork to accompany it, there are significant time and labour costs and one small error can delay the whole load.”272 Similarly, the Institute for Government noted reports in “the weeks following the end of the transition period” of logistics firms withdrawing groupage services, “in order to reduce the amount of paperwork each lorry had to carry and minimise the risk of trucks being stopped at the border”.273 It is unclear how far this situation has improved.

190.Smaller businesses appear to have borne the brunt of groupage-related disruption. Jo Lappin of the LEP Network said groupage problems are “having a very disproportionate effect on small businesses”, as “a lot of hauliers do not want to take your goods because they are less confident that you have complied with the requirements”.274 Fergus McReynolds said such “weakest-link-in-the-chain issues” are affecting SMEs “much more” than larger companies.275 The Institute for Government noted that small firms affected in this way “often have few economically viable alternatives to ship their goods”.276

191.Cheesemakers Alvis Brothers Ltd welcomed the Government’s Groupage Export Facilitation Scheme (GEFS), which allows exporters of SPS products—provided they have received an attestation from an official veterinarian or food competent certifying officer within the last 30 days—to supply an export health certificate for a consignment rather than each product within it. The company said GEFS “makes trade smoother, faster and cheaper” than using individual EHCs, “but will require investment in veterinary resource, processes and then the ability to update the EU Common Health Entry Documents (CHED) on arrival in the EU so that product can be distributed to more than one destination”. It also called on the Government to extend the 30-day attestation period, noting that no hauliers are offering groupage services outside GEFS.277

Groupage of SPS products for Northern Ireland

192.Alex Veitch highlighted problems with groupage of SPS products moving from Great Britain to Northern Ireland, but said Logistics UK had worked with the Department for Environment, Food and Rural Affairs (Defra) and Northern Ireland’s Department of Agriculture, Environment and Rural Affairs (DAERA) to “come up with a pilot process” and “develop specific guidance for doing SPS loads by groupage from GB to NI”.278

193.Acknowledging that groupage “has been one of the hardest things to get right under the new requirements”, Emma Churchill, Director General of the Border and Protocol Delivery Group at the Cabinet Office, described the process developed by Defra, DAERA and Logistics UK. It “sets out two different models that can be used”. The first is “a consolidation hub, whereby the mixed products arrive in one specific premises and are consolidated and certified as a single unit. That means that a single certification officer can place a seal on the final load and can send it with the confidence that it will get across.” The second is “a linear model, whereby hauliers can pick up several consignments from multiple locations but the guidance allows for the individual certification along the way”.279

194.We are concerned that groupage problems appear to be having a disproportionate effect on smaller exporters. We welcome the steps taken to mitigate such problems for the movement of food and animal products, including the Groupage Export Facilitation Scheme (GEFS). We recommend that the Government urgently extend the 30-day attestation period for GEFS and implement a similar scheme for other goods.

UK haulage within the EU

195.The TCA allows unlimited point-to-point haulage access between the UK and the EU without permit requirements. It also allows UK hauliers to continue to travel through the EU en route to European Conference of Ministers of Transport (ECMT) member countries without an ECMT permit, which the Chartered Institute of Logistics and Transport described as a “key” provision.280

196.However, traders must comply with new transit requirements. Des Hiscock said many UK exporters “do not realise that if they want to deliver something into Austria, for example, they cannot just pass an export document”, but must also have “a transit document so that the goods can transit those European Union countries to facilitate the VAT requirements so the customs clearance would ultimately take place only in Austria”.281 Similarly, Liam Smyth pointed to “major issues with the use of transit documents” and “unanticipated demand for transit movements”, since there is “insufficient capacity for transit guarantees in the UK” and “the drivers of the trucks are unfamiliar with the system”.282 The absence of new requirements of this type when moving goods within Great Britain could feasibly give EU hauliers an advantage over UK hauliers.

Cross-trade and cabotage

197.The TCA states that UK lorries “may undertake up to two laden journeys from one Member State to another Member State, without returning to the territory of the United Kingdom”. This is known as cross-trade. They may also make “one laden journey within the territory of a Member State”—known as cabotage. Lorries from Northern Ireland may carry out two cabotage operations in the Republic of Ireland, and EU lorries may carry out two in the UK.283 Before the end of the transition period, UK hauliers were subject to EU rules allowing unlimited cross-trade and up to three cabotage journeys in the territory of another Member State.

198.The Road Haulage Association commented that the arrangements agreed “work reasonably well for UK and EU haulage operators”, and therefore “most goods transportation is adequately catered for”. In some markets, however, they “cause serious problems”.284 Other witnesses concurred, with Logistics UK describing the provisions as “incompatible with certain business models, i.e. when the same load needs to be moved to different successive locations across Europe and returning to the UK between these deliveries is unnecessary and inefficient”. As service providers—for example, travelling musicians—are more heavily affected by these limitations than those trading in goods, these provisions are examined in more detail in the report by the EU Services Sub-Committee.285

199.In the absence of greater bilateral cross-trade and cabotage rights for UK and EU hauliers, we encourage the Government to seek opportunities to negotiate exemptions for the categories of goods most affected by the restrictions in the TCA.


200.The TCA allows unlimited point-to-point traffic between UK and EU airports. The ADS Group welcomed the “inclusion of a comprehensive air services agreement that allows flights to continue between the UK and EU without quantitative restrictions on passengers or cargo”.286

201.The TCA commits the UK and the EU to “cooperate in removing obstacles to doing business for air carriers of both Parties where such obstacles may hamper commercial operations, create distortions to competition or affect equal opportunities to compete”. It establishes a Specialised Committee on Air Transport to “monitor progress in effectively addressing matters relating to obstacles to doing business for air carriers”.287 David Thorneloe told us there was “scope for optimism” about this Specialised Committee, whose “purpose is to remove obstacles to trade”.288

The fifth freedom of the air

202.The fifth freedom of the air refers to an aeroplane flying between two foreign countries on a journey originating or ending in its own country. Under the TCA, there are no fifth freedom rights for passenger transport, but the UK and individual EU Member States are free bilaterally and reciprocally to agree fifth freedom rights for cargo. For example, there is no provision for a UK airline to fly from the UK to France, deposit and collect passengers then continue on to Germany. Such an itinerary could take place if the aeroplane were transporting goods rather than passengers, but only if the UK had come to bilateral, reciprocal agreements with both France and Germany.

203.Alex Veitch said Logistics UK “would like to see a deepening of the arrangements on air transport for the so-called fifth freedom to add liberalisation to air travel, which would benefit both passengers and freight”. He expressed hope that such a liberalisation “could be negotiated through an addition to the air services agreement with the EU”.289 In written evidence, Logistics UK noted that bilateral agreements with Member States were only temporary arrangements and called for long-term reassurance.290 The Chartered Institute of Logistics and Transport commented on the importance of fifth freedom rights for London Heathrow’s status as an international hub.291

204.The Government should seek to negotiate full fifth freedom rights in the EU for cargo and passengers at the earliest opportunity. As an interim measure, it should seek liberal bilateral arrangements for cargo with as many individual Member States as possible.

253 See letter from Baroness Verma, Chair of EU Goods Sub-Committee, to Rt Hon Michael Gove MP, Chancellor of the Duchy of Lancaster, 10 December 2020:

254 Q 38 (Alex Veitch)

255 Q 50 (Penny Mordaunt MP)

256 Written evidence from the Institute for Government (FUU0019)

257 Q 32 (Liam Smyth)

258 Written evidence from the Institute for Government (FUU0019)

259 Q 43 (Alex Veitch)

260 Ibid.

261 Written evidence from the Institute for Government (FUU0019)

262 Supplementary written evidence from the Local Enterprise Partnership Network (FUU0021)

263 Q 19 (Fergus McReynolds)

264 Q 38 (Des Hiscock)

265 Q 32 (Liam Smyth)

266 Supplementary written evidence from the Local Enterprise Partnership Network (FUU0021)

267 Q 50 (Penny Mordaunt MP)

268 Q 19 (Fergus McReynolds)

270 Q 10 (David Thorneloe)

271 Q 22 (Luke Hindlaugh)

272 Supplementary written evidence from the Local Enterprise Partnership Network (FUU0021)

273 Written evidence from the Institute for Government (FUU0019)

274 Q 34 (Jo Lappin)

275 Q 19 (Fergus McReynolds)

276 Written evidence from the Institute for Government (FUU0019)

277 Written evidence from Alvis Brothers Ltd (FUU0005)

278 Q 43 (Alex Veitch)

279 62 (Emma Churchill)

280 Written evidence from the Chartered Institute of Logistics and Transport (FUU0003)

281 Q 43 (Des Hiscock)

282 Q 32 (Liam Smyth)

284 Written evidence from the Road Haulage Association (FUU0014)

285 European Union Committee, Beyond Brexit: trade in services (23rd Report, Session 2019–21, HL Paper 248)

286 Written evidence from ADS Group (FUU0015)

288 Q 10 (David Thorneloe)

289 Q 45 (Alex Veitch)

290 Written evidence from Logistics UK (FUU0011)

291 Written evidence from the Chartered Institute of Logistics and Transport (FUU0003)

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