Context
When the UK leaves the transition period with the EU, a number of new processes and procedures will be required to ensure UK exports are able to make it to the EU market. This blog sets out an example of these new procedures – the replacement of community road haulage licences and the requirement for road hauliers to hold an international road haulage permit for their journey.
Under the current free movement rules, UK hauliers can travel to and from the EU without restrictions or barriers. At the end of the transition period this will change with the level of disruption dependent on the nature of any deal with the EU or on no deal being agreed. This second blog looking at the implications of the end of the transition period follows the blog on Export Health Certificates.
The importance of road haulage
According to the Road Haulage Association, some of the benefits of the road haulage industry in the UK are:
- 98% of all food and agricultural products in Great Britain are transported by road freight.
- 98% of all consumer products and machinery in Great Britain are transported by road freight.
- 2.54 million people work in the haulage and logistics industry.
- The sector is the UK’s fifth largest employer.
- 600,000 Goods Vehicle driving licence holders.
- Industry worth £124Bn GVA to UK economy.
According to the Port of Dover’s annual report for 2019, £122 billion worth of trade went through the Port in 2019, transported by 2.4 million freight vehicle journeys. This underlines the importance of road haulage to the UK in terms of both imports and exports. Each of these journeys currently requires the driver to hold a Community Licence (explained below) but with limited other restrictions. The end of Community licences for UK drivers in the EU and EU drivers in the UK is likely to change that situation.
How can road hauliers access the EU after the end of transition?
As an EU member state, UK road hauliers who held a “Community Licence” could routinely undertake work in another EU member state. The EU Community Licence is a single permit that covers trips between all EU countries and there is no limit on the number of licences available to operators in EU Member States. The Community Licence also allows for the practice of cabotage (journeys entirely within one other EU member state) for haulage operators.
After the end of the transition period UK hauliers will see their Community Licence replaced with a replacement “UK Licence for the Community” for use from 1 January 2021. However, according to the UK Government’s guidance:
“Possession of a UK Licence for the Community will not necessarily guarantee the right for UK hauliers to do business to, from and within the EU. This will depend on the outcome of UK-EU negotiations. This guidance will be updated as soon as the new rules are agreed.”
European Conference of Ministers of Transport (ECMT) permits
Another option for UK hauliers to access both the EU and also to transit through it to a number of third countries might be to apply for a European Conference of Ministers of Transport (ECMT) permits. On this the UK Government guidance is similarly clear that this requirement will depend on the outcome of the negotiations:
“UK hauliers travelling to or through the EU may require a European Conference of Ministers of Transport (ECMT) permit for some journeys from 1 January 2021. The journeys for which ECMT permits are required will depend on the outcome of UK-EU negotiations. This guidance will be updated as soon as the new rules are agreed.”
Rod McKenzie of the Road Haulage Association explained how ECMT permits might work in a recent Scottish Parliament Culture, Tourism, Europe and External Affairs Committee evidence session emphasising that as the scheme predates the UK’s EU membership, the number of permits available wold not be sufficient in a post Brexit world:
“ECMT permits were originally designed to get lorries from within the European Union to outside it. For example, if you want to get a load to Russia, you need an ECMT permit. In the UK, there are 8,348 hauliers licensed for international carriage, with roughly 83,500 trucks. In Northern Ireland, the numbers are 1,800 hauliers licensed for international carriage, covering roughly 10,500 trucks. Not all of those trucks will look to transit to Europe at the same time, so let us take a 50 per cent ratio. That would mean the potential for 47,000 truck movements to Europe. There are only 4,000 permits to allow that access, so that means that more than 40,000 trucks would not be able to trade, because each movement needs one permit. That does not make sense. It would cripple the economic operations of every haulier that deals internationally.”
The UK Government closed applications for the 2021 ECMT scheme on 20 November 2020. This was before it was clear whether road hauliers would need an ECMT permit for journeys to or through the EU from 1 January 2021. The UK Government guidance ahead of the applications closing was to apply for a permit in case it might be needed.
The potential shortage of permits has been highlighted by the UK freight industry which has warned that three quarters of hauliers could be left without permits and unable to bring in goods from the Continent if there is no Brexit trade deal.
ECMT permits cost a non-refundable £10 to apply for and £123 per permit for an annual ECMT permit (for use in 2021). Given that demand will outstrip supply of ECMT permits, the UK Government has set out criteria for deciding how the permits will be distributed. There are also strict rules for the way in which permits can be used, including a requirement to return to the UK after every third journey so limiting the number of intra-EU journeys that can be undertaken. In addition, ECMT permits cannot be used for cabotage (loading and unloading goods for hire or reward between two points in a country by a vehicle that’s not registered in that country).
Uncertainty
With less than a month to go to the end of the transition period and the imposition of new rules, road hauliers aren’t certain what arrangements will be in place to allow them to travel on business to, from and within the EU.
Logistics UK have suggested that failure to reach an agreement will put UK supply chains at risk:
“Without a deal, the cross-Channel logistics sector cannot function. With no agreement currently in place for HGV access to and from the EU, many logistics companies cannot be certain if they can operate next year and cannot plan their work. This puts the country’s entire supply chain at risk.”
At the end of November, the Chartered Institute of Logistics and Transport (CILT) published evidence showing 82% of its membership was concerned about the transition period ending. CILT added that:
“Many respondents believe their organisation understands the key requirements for what needs to be done as a third-party country exporting or importing with the EU, but did comment on feeling increasingly concerned over the lack of clarity that remains as we approach the end of the transition period. Respondents also raised concerns about how imports from Northern Ireland will work.”
Ahead of a potential no-deal exit in March 2019, the European Commission adopted a proposal for a Regulation to allow UK operators to temporarily (nine months) carry goods into the EU, provided the UK conferred equivalent rights to EU road haulage operators and subject to fair competition conditions. No such commitment has been made by the EU as yet for the possibility of a no-deal outcome at the start of 2021.
Conclusion
The uncertainty about the nature of cross-border trading arrangements including the arrangements for road haulage licences and permits is causing concern within the road haulage industry. Much will depend on whether a deal can be agreed and implemented between the UK and the EU before the end of the transition period and whether such a deal addresses the issue of licences and permits. With just 30 days until the end of the transition period the clock is ticking.
Iain McIver, SPICe Research