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25 May 2016

How Brexit Could Affect the Irish Transport Industry

Posted By: AIB Business

With a few weeks to go until the UK referendum, many polls point towards the exit and non-exit camps having roughly equal support, so the undecided block is all to play for in what is one of the most important referendums ever for the Irish transport industry, writes Donal Dempsey from Dempsey & Associates.

Each week €1.2 billion worth of trade is carried out between Ireland and the UK, over 80% of road freight to Europe travels through the UK, and we are the only EU country that shares a land border with the UK. 

If the UK exits the EU, there would be profound implications for the sector in Ireland:

  • It is expected that Sterling will depreciate in value by 15%-25%. We have already seen an 8% reduction since the beginning of the year, which will dramatically affect the volume of exports from Ireland to the UK, our largest export partner. This will create an imbalance in load volume, further reducing the viability of UK work, which is already marginal due to competition from UK hauliers.

  • Customs procedures will become more onerous. Since we are the only EU country with a land border to the UK, Irish hauliers transiting through Northern Ireland to the North East will be severely hampered.

    Over 80% of our road freight to mainland Europe transits through the UK mainland and, if customs restrictions are put in place that increase cost or time, this will result in added costs that have to be passed on to customers. Some freight will become economically unviable to transport by road to, or from, mainland Europe, resulting in lost revenue to Irish hauliers and a reduction in trade as import/export volume decreases and transfers to containers.

  • The UK’s current cabotage regulations may alter, with a knock-on effect on the current work practices of Irish hauliers in the UK. The current derogation on car transporter firms using Irish registered units in the UK during peak periods may also be lost.

  • Less than 15% of current commercial vehicle volume in right-hand drive form will remain under EU legislation, meaning a massive increase in cost to service a limited market. This will result in less brands and higher cost. Currently, we have differences in weight and height legislation between Ireland and the UK, which will become more pronounced if the UK leaves the EU.

Written by: Donal Dempsey, Managing Director, Dempsey & Associates – specialist consultancy to the transportation sector

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