Brexit’s impact on EU-UK air trade compounded by COVID resurgence

The outbreak of new COVID-19 strains in the United Kingdom and related trade disruptions are masking the impact of Britain’s departure from the European Union as part of its 2016 Brexit referendum. Since the Brexit referendum in the United Kingdom in 2016 set up the U.K.’s departure from the European Union, businesses involved in international trade in and via Europe have sought clarification of what the eventual Brexit would mean in terms of trade policy and customs requirements. The new policies went into effect in January, but the precise fallout has been difficult to isolate from the evolving COVID-19 pandemic and its impact on U.K. trade. [caption id="attachment_68658" align="alignright" width="450"] Photo/British Airways[/caption] New trade and customs policies have had some impact already, but the precise effect is difficult to quantify due to other negative factors influencing trade. “The timing of Brexit is very unfortunate with what’s happening in the ocean markets and restrictions with COVID,” said Christos Chamberlain, general manager for the U.K. of Flexport, during a January webinar. Labor issues have also caused interruptions in U.K. airfreight operations, as the U.K.’s largest cargo carrier , IAG Cargo’s British Airways, has recently dealt with handler strikes at London Heathrow Airport (LHR) over pay cuts. The U.K. has “had this reemergence [of COVID-19] and this new strain that's really put the country back on lockdown,” said Matt Castle, vice president of global air product and services at C.H. Robinson, in a recent interview with Air Cargo World . “You've got IAG Cargo who is working through some of their labor challenges right now. Between IAG and some of the labor issues, and COVID, those are really dominating the storyline. It's been a little tough to get beneath [those issues] and understand how much of the disruption there is really a result of Brexit.” See also: Post-Brexit EU-UK airfreight increase unlikely to persist Despite not having clear guidance on a trade policy until the Christmas Eve deal finalized just over one week before policies would go into effect, logistics companies began preparing in earnest for post-Brexit trade around mid-year, said Nanoh Park, director of global customs at Expeditors, during a recent podcast from the Seattle-based freight forwarder . “What we knew going into 2020 was by the end of 2020, a declaration would be required,” Park said on the podcast. “And that really became solidified in the June, July timeframe. As entities were preparing for both the separation, as well as the trade, how the two would now trade, lots of changes were made, including forming new entities in the U.K., shifting the way that distribution and warehouse functions happened throughout Europe.” “They may have had a specific Europe channel that sourced everything or distributed everything from London or the U.K.,” Park added. “Now they had to move that and have a parallel channel of sourcing or distributing Europe/EU versus the U.K., as an example.” How much air cargo supply chain networks will adjust to favor continental Europe remains to be seen, but there are several likely hubs that could see an influx of airfreight post-Brexit. Among these are Amsterdam Airport Schiphol (AMS) in the Netherlands, where another large European airline for cargo, KLM, is based, and Lufthansa Cargo’s Frankfurt (FRA) hub. For its part, Lufthansa Cargo recently announced a modernization project at its airfreight center in Frankfurt, which began in January and is expected to be completed in 2028. The project isn’t aimed specifically at capturing U.K. volumes, but a spokesperson did not rule out the potential. “Overall, we are of course closely monitoring the developments in the air cargo market,” the Lufthansa Cargo spokesperson told Air Cargo World. “Whether Brexit will lead to major shifts in airfreight flows in the long run remains to be seen. We have already been able to handle very high throughput volumes in recent years with our existing ground capacity.”

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