The Impact of Brexit on Road Transport Between the EU and the UK

Introduction: Brexit in the Context of Trade and Road Transport

The United Kingdom’s withdrawal from the European Union, commonly known as Brexit, constituted a fundamental shift in the trade and transport landscape. On 31 December 2020, the free movement of people, goods, and services between the United Kingdom and the European Union ended. Before this date, trade transactions between EU member states and the UK were treated as intra-Community movement, meaning they were not subject to customs procedures or duties. This system was based on minimal bureaucracy and maximum fluidity.

The situation changed drastically after 1 January 2021, when the UK became a third country for the European Union. This change in status necessitated the introduction of export and import customs procedures, duties, and VAT on goods in bilateral trade. Although the Trade and Cooperation Agreement (TCA) was signed in December 2020 to avoid total chaos in goods trade, it did not prevent a significant reorientation of trade flows.

This change meant a fundamental transformation of the trade paradigm. Logistics processes, which previously functioned like domestic movement, had to be transformed into operations resembling trade between the EU and third countries such as the United States or Japan. It was not merely a matter of adding a few forms or making minor procedural adjustments. This change required companies to completely rethink their operating models, especially regarding compliance, documentation, and cost structures. The lack of free movement of goods and services means that businesses can no longer rely on the previous ease of trade and must invest in long-term adaptation to new, more complex conditions. This represents a permanent increase in structural complexity and the cost of doing business, rather than temporary adjustments.

New Legal and Customs Realities: The UK as a Third Country

Post-Brexit, every trade transaction between the UK and EU countries now requires customs declarations, with potential duty obligations. This also applies to goods originating from third countries (e.g., China) that, even if cleared in the EU, are subject to customs duties upon entering the UK. Customs, excise, and VAT procedures now apply to all traded goods. Changes also affected the rules for VAT and excise payment and refunds on goods such as alcoholic beverages and tobacco products.

The introduction of these new regulations came with a range of new documentation requirements. Companies involved in moving goods between the UK and EU must obtain an EORI number (Economic Operators Registration and Identification). VAT-registered companies automatically received this number, while non-registered companies had to apply. For exports from the UK to the EU, exporters must provide their EORI number in every statement of origin, regardless of the shipment value. For exports from the EU to the UK, exporters can issue a statement of origin with an EORI number for shipments up to €6,000; above this amount, a Registered Exporter (REX) number is required. The commercial invoice has become the key document for customs declarations, and it must contain a statement of origin for the goods. It is essential that drivers have all required customs documents for their loads before attempting to cross the border.

For road transport, specific procedures were introduced. Transporting goods to the UK now requires customs transit, meaning every carrier must have access to one of two transit regimes. In a no-deal scenario (although the TCA was signed, challenges with its implementation remain), transport without special ECMT permits would be impossible, and the number of these permits is limited. Additionally, all commercial trailers over 750 kg and non-commercial ones over 3,500 kg must be registered with the Driver and Vehicle Licensing Agency (DVLA). Drivers must also carry appropriate documents, including TIR/ATA carnets, depending on the chosen transport procedure.

It is worth noting that Northern Ireland is treated differently. For goods imports and animal transport, it is treated as an EU member state. However, an EORI number may still be needed for transporting goods to or from Northern Ireland.

The introduction of these requirements has led to significant bureaucratization of processes, becoming a de facto entry and operational barrier. The multiplication of required documentation and procedures for each shipment creates a massive administrative burden. This disproportionately affects small and medium-sized enterprises (SMEs), which often lack the resources or expertise to handle complex international trade regulations. For larger companies, it creates operational bottlenecks, increasing overhead costs and lowering efficiency. This bureaucracy leads to rising costs (administrative staff, software, customs brokers) and delays, directly affecting the competitiveness and profitability of companies involved in EU-UK trade. Incorrect documentation can result in fines or cargo being held, further increasing risk.

Table: Key Changes in Documentation and Customs Procedures Post-Brexit

Impact on Supply Chains

The introduction of customs checks by both the United Kingdom and the European Union, requiring clearance before goods are allowed for transport, has inevitably affected the speed and fluidity of supply chains. Increased border controls have led to significant delays in transport and longer waiting times at borders. For example, London-based delicatessen Panzer lost as many as 37 EU suppliers due to these disruptions.

Logistics, which previously functioned similarly to domestic traffic, had to adapt to the realities of third-country trade, significantly reducing its fluidity. Companies now face new customs documentation requirements and phytosanitary checks, which lengthen transport time and increase the risk of delays, impacting the efficiency of the entire supply chain.

These changes have also forced companies to rethink their warehousing and distribution strategies. Businesses have had to review their supply chains, particularly those using central warehouses in the EU or the UK for distribution across Europe, to avoid paying customs duties twice. Many transport companies have begun investing in warehouses within the EU or the UK to minimize cross-border transport. Additionally, fearing delays and potential shortages, almost 25% of British businesses plan to stockpile goods, and 4% already do so.

The new trading conditions and border controls have had the greatest financial impact on small and medium-sized enterprises (SMEs) in the UK, as confirmed by analyses from the LSE Centre for Economic Performance. Since the beginning of 2021, the number of small business trade relationships has fallen by a third. Small importers are particularly vulnerable, as they often cannot handle the additional bureaucracy and costs.

The impact of Brexit varies across sectors. The British Food and Drink Federation (FDF) reported that exports of goods in this category to the EU market fell by over 17% in 2022 compared to 2019, despite increases in exports to other markets. Food importers fear reduced variety and freshness of products available on the UK market and rising prices.

These effects are not isolated; they create a cascading impact that influences competitiveness and market structure. The cumulative burden of delays, increased bureaucracy, and costs disproportionately affects smaller players. This could lead to market consolidation, where only larger companies with greater resources can absorb the new costs and complexities. Consequently, this may reduce market diversity, limit consumer choice, and stifle innovation from more flexible, smaller businesses. Stockpiling requirements additionally burden small companies, which often have limited capital and storage space. All this points to a long-term structural shift in trade between the EU and the UK, favoring larger, more resilient firms and potentially reducing overall trade volume and diversity, particularly for perishable goods or those with complex logistics.

Impact on Transport Companies

Brexit forced transport companies to develop new licensing rules to continue cross-border services. International transport licenses such as the „UK International Operator’s Licence” in the UK and „ECMT International Road Transport Permits” in the EU were introduced. Both require meeting specific conditions, such as having the right fleet, insurance, and ensuring safety standards. Companies now need separate licenses for transport to and from the UK, which comes with additional fees and administrative requirements.

One of the most controversial and problematic issues has been cabotage — the transport of goods within a country by a foreign carrier. Under the new agreement, UK transport companies have limited opportunities to perform cabotage within the EU, and EU companies face similar restrictions in the UK. These restrictions have significantly reduced the operational flexibility of transport companies. Previously, companies could optimize their routes by transporting goods between various EU countries in one journey. Post-Brexit, they must plan their routes more cautiously to avoid violating the new rules, leading to higher costs and longer transport times. TCA provisions concerning cabotage, multimodal transport, and triangular traffic have negatively affected EU carriers, and companies not registered in the UK may face hefty fines.

In response to these challenges, many transport companies have adjusted their logistics strategies. Some are investing in warehouses within the EU or the UK to minimize cross-border transport. Others optimize their routes and use new technologies to increase efficiency and minimize the risk of delays. Many companies are also partnering with local transport operators to handle domestic deliveries within individual countries, maintaining flexibility and operational efficiency despite regulatory changes.

Additional formalities and costs pose a serious financial and logistical burden, particularly for many SMEs. Polish carriers, for instance, report being forced to abandon transport to the UK or relocate their operations to the UK to continue fulfilling contracts. Such decisions directly impact the Polish economy.

These changes directly translate into higher operating costs per trip and reduced revenue opportunities (e.g., fewer backhauls due to cabotage restrictions). The cumulative effect of these burdens makes many routes less profitable or even entirely unviable. This presents transport companies with a strategic dilemma: absorb the costs (reducing margins), pass them on to clients (risking competitiveness), or fundamentally change their business model (relocate operations, form partnerships, or exit the market). Polish companies considering relocation clearly illustrate the seriousness of this strategic pressure. This leads to a restructuring of the transport market, potentially reducing the number of operators on EU-UK routes, increasing freight prices, and affecting the overall efficiency and capacity of cross-border road transport.

Table: Comparison of Cabotage and Licensing Restrictions Before and After Brexit

Challenges for Importers and Exporters

Importers and retailers are facing new challenges resulting from the introduction of additional border controls, which have significantly increased bureaucracy. Companies must complete a series of formalities related to transport and possible goods inspections. Additionally, the settlement of chain transactions involving entities from the United Kingdom has become significantly more complicated.

The new regulations are associated with additional costs. There is a potential obligation to pay customs duties on transported goods. The rules for payment and refunds of VAT and excise duties have also changed. It is estimated that the costs resulting from the additional bureaucracy could reach tens of millions of pounds for large corporations, while at the same time constituting a serious financial burden for small and medium-sized enterprises.

The introduction of new border controls may cause major supply disruptions. In response to these concerns, companies are stockpiling to avoid bottlenecks in deliveries. There are also fears of reduced variety and freshness of products available on the British market, as well as a general increase in prices. Some meat suppliers have already reported that delivering meat to the United Kingdom is becoming economically unviable.

The rules for settling transactions have also changed. Selling products to UK customers is now treated as an export, which means applying a 0% VAT rate for exports from the EU. Conversely, purchasing products from UK customers is treated as an import. Importers can, however, use a simplified method of settling VAT in the import declaration if they obtain Authorized Economic Operator (AEO) status. For services, providing them to a UK customer is taxed in the UK (“reverse charge”), and purchasing services from the UK is no longer treated as intra-community acquisition of services.

All these factors — increased bureaucracy, costs, delays, and supply chain disruptions — fundamentally change the risk and reward profile of trade between the EU and the United Kingdom. Importers and exporters face higher operational risks, such as goods spoiling due to delays, fines for non-compliance with regulations, or losing market share due to uncompetitive prices. This forces them to reassess the economic viability of certain trade relationships, leading some companies to reduce or completely stop trading with the UK. The “economic viability” issue for meat suppliers is a direct manifestation of this phenomenon. As a result, there is a “reorientation of trade flows,” where businesses prioritize less complex or more profitable markets, potentially reducing the overall trade volume between the EU and the UK and changing the composition of goods exchanged.

Key Challenges: Bureaucracy, Delays, and Costs

Road transport between the EU and the United Kingdom post-Brexit faces three main, interconnected challenges: bureaucracy, delays, and costs.

Bureaucracy is pervasive and affects every stage of the trading process. Companies must obtain EORI and REX numbers, submit customs declarations, statements of origin, and adapt commercial invoices. Carriers must have new transport licenses such as the „UK International Operator’s Licence” or „ECMT Permits” and comply with customs transit procedures. Additionally, new phytosanitary checks and other inspections have been introduced. The requirement for drivers to carry all necessary customs documents for each load further burdens drivers and companies.

These complex formalities are the main cause of border delays. New customs checks and documentation requirements inevitably lead to bottlenecks and longer waiting times. Delays at ports and problems for British exporters were already visible in 2021. The result is longer transport times, increased risk of delays, and negative effects on the efficiency of the entire supply chain. Industry experts fear a “potential car crash” scenario due to these bottlenecks.

All these challenges translate into significant costs. The costs resulting from additional bureaucracy are estimated at tens of millions of pounds for large corporations. Additional fees for licenses and administrative requirements represent a serious financial burden. This is in addition to potential customs duties and changes to VAT and excise rules. Although the rise in sea freight prices is not directly caused by Brexit, combined with new road procedures, it increases the overall logistics costs. Transport companies not registered in the UK may face heavy financial penalties.

Industry examples clearly illustrate these challenges. Food and drink exports from the United Kingdom to the EU have fallen by over 17%. The number of small business trade relationships has decreased by a third. Polish transport companies are considering relocating their operations to the United Kingdom or completely abandoning transport to the islands.

These challenges are not isolated problems but interrelated aspects of what can be described as “trade friction.” Each element exacerbates the others; for example, bureaucracy causes delays, which in turn increase costs (e.g., drivers’ waiting time, risk of goods spoilage). This cumulative effect significantly reduces the efficiency and profitability of road transport between the EU and the United Kingdom. It is not just a one-time adjustment but an ongoing burden for trade. The “potential car crash” scenario points to systemic risk. This friction, combined with other global supply chain shocks (such as the COVID-19 pandemic), makes it difficult for companies to adapt and plan. Ultimately, this ongoing friction leads to long-term economic separation or at least a significant recalibration of trade volumes and patterns, as companies naturally move toward paths of least resistance. This means a permanent increase in the cost of doing business across the English Channel, affecting consumer prices and economic growth in both the EU and the United Kingdom.

Table: Examples of Additional Costs and Delays in EU-UK Road Transport

Adaptive Strategies and Recommendations

In light of the new legal and operational realities, transport companies, importers, and exporters must adopt proactive adaptive strategies. Key actions include obtaining necessary numbers such as EORI and REX, as well as properly classifying products and formatting commercial invoices. It is also essential to fully understand and apply rules of origin to qualify for preferential customs rates.

Companies should thoroughly analyze their supply chains and optimize warehouse locations. Many enterprises are already investing in warehouses within the EU or the UK to minimize the need for cross-border transport. To avoid supply bottlenecks, stockpiling is also recommended. Adapting logistics strategies also includes route optimization and aligning with new cabotage and triangular transport regulations. It is crucial to collaborate with local transport partners to carry out domestic transport within individual countries and maintain operational flexibility. Before each trip, companies should ensure that all required customs documents are prepared. To simplify VAT settlement, importers may consider obtaining Authorized Economic Operator (AEO) status.

The importance of digitization and automation of customs processes is steadily growing. The requirement for electronic declarations and managing large volumes of data suggests that investments in technology can streamline customs procedures and minimize errors. Given the complexity of the new regulations, support from customs and logistics experts is key to ensuring compliance and operational efficiency.

Long-term perspectives point to a continuous need for adaptation. Assessing the impact of Brexit is complicated due to other factors such as the COVID-19 pandemic, and multiple delays in introducing UK import controls on goods from the EU suggest that the adaptation process is dynamic and may undergo further changes. Businesses must remain flexible and ready for ongoing adjustments.

In this new post-Brexit environment, investing in resilience and adaptation becomes a new business imperative. Enterprises must shift from a “just-in-time” mindset to “just-in-case”, prioritizing supply chain robustness over pure cost efficiency. This requires significant capital investment (warehouses, technology, skilled personnel) and strategic reevaluation. The ability to adapt and invest in these areas becomes a new competitive advantage. This indicates a fundamental change in business models for companies engaged in EU-UK trade, moving toward greater self-sufficiency or diversification away from direct cross-border routes, while emphasizing risk management as a core business function.

Summary: Brexit’s Impact on EU-UK Road Transport

Brexit has redefined trade and transport between the EU and the UK, transforming previously seamless intra-community trade into complex international operations. The introduction of customs procedures, additional licenses, and new documentation requirements has significantly increased bureaucracy, delays, and costs.

These changes disproportionately affect small and medium-sized enterprises, often lacking the resources to navigate the new legal and logistical landscape. For larger corporations, this means higher operational costs and the need for strategic investments in warehousing, technology, and supply chain management.

At the same time, Brexit has reshaped trade patterns, with some companies limiting or abandoning trade with the UK due to economic unviability. The cumulative effect of bureaucracy, delays, and increased costs has created structural trade friction, making EU-UK trade less competitive and less predictable.

To maintain competitiveness, businesses must invest in compliance, digital transformation, and adaptive supply chain strategies. Collaborating with logistics experts, leveraging technology, and reevaluating trade models will be crucial for success in the post-Brexit reality.