Brexit: a risk to Britain’s rail freight sector

Brexit: a risk to Britain’s rail freight sector

It seems clear that any exit from the EU will lead to an economic recession. The only arguments appear to be around how deep and long this will be.

The last time GB Railfreight (GBRf) faced similar circumstances was back in 2008. At that time, we experienced a reduction in intermodal demand and watched from afar as aggregates traffic collapsed. Fortunately for us, we weren’t exposed to aggregates and had invested in coal. This proved to be a stroke of genius as coal became buoyant for a number of years. All of this was more luck than judgement and we consequently rode out the country’s severe economic downturn.

This time around, we won’t be as lucky.  We are surviving the coal downturn (which, incidentally, is due to much more draconian carbon emissions controls than are required by the EU) by growing in other markets, particularly passenger, aggregates and intermodal. All of these markets would be hit hard by a recession, leaving GBRf in very difficult waters.

It is also worth reflecting on a number of our commercial arrangements in the light of our EU membership. Many of our customers have strong links to the rest of Europe. Czech business, EPH, has bought Lynemouth Power; Aggregate Industries is owned by the French/German conglomerate LafargeHolcim; and EDF Energy is French-owned. The list goes on.

Most importantly, we buy our wagons in Romania and Poland. Our membership makes trade simple and quick. As we speak, I’m about to sign a letter of intent for 50 sand hoppers for Siniat, and there are no duties to pay, no taxes and no tariffs.

From a personal, more emotional standpoint, managing a business in a recession is never easy and will always have an effect on all our circumstances. I’m not an economist so I have no idea if all the above would have happened were we outside the EU. What I do know is that it HAS all happened whilst we have been members and that membership has been a huge help.

Secondly, it is clear that to leave will create a political and commercial vacuum. Businesses like EPH won’t be attracted to invest until they are clear of the rules. With all the political negotiations that will have to take place, it could take years to sort this out; years that will (in my opinion) see a long, hard recession that will negatively impact us all. One particular area of concern is our border with France and what this could mean for controls at Calais.

So overall, it’s very definitely IN from my perspective. The logic of leaping into the unknown is definitely not attractive. Whilst the EU is bureaucratic and on occasions frustrating, I see no reason to think this will change in isolation. What makes the EU work is not Brussels or Strasbourg, but businesses like our own doing deals across Europe day-in day-out, deals that are facilitated by our membership.