Effects Of Brexit Will Be Felt Sharply By European Supply Chains
The vote by the UK to leave the European Union will affect the global economy in many ways, but one place where it will be felt particularly strong is in regional supply chains.
Shipping and logistics operators say that the vote’s effects could be felt sooner rather than later, affecting the movement of goods and feeding demand for services that can help manufacturers and retailers understand and accommodate changes in trade rules and regulations.
On Friday, logistics and transportation companies’ stocks took some big hits, with XPO Logistics stock shares dropping nearly 15 percent. The firm gets 12 percent of its revenue from the UK. Meanwhile, FedEx and UPS noted declines of 3.9 percent and 2.2 percent respectively.
The vote could also provide UK retailers with a short-term boost in sales. The weaker pound is currently making goods from the UK a lot cheaper for foreign buyers.
Too Early To Say What Will Happen
It could be several years before the UK manages to negotiate a new trading relationship with Europe, and until the exact repercussions of the move become clear, it’s hard to say what actions will be taken and how big of an effect it will actually have. Nevertheless, in the wake of the vote, mergers and acquisitions that involve British and EU firms are likely to be put on hold.
America’s biggest 3PL operator, C.H. Robinson, says that it could end up reviewing its global growth plans. While the vote doesn’t change their strategy of European growth and expansion, it will affect how they go about accomplishing that.
No matter what agreements end up being ironed out when it comes to trade, it’s highly unlikely that the UK would ever stop trading with the EU or the US, so there will almost certainly be an adjustment period while everyone gets used to new ways of doing business.