European business will be forced to cut back on trade with the UK following a vote by Britain to leave the European Union (EU), warns international parcel broker ParcelHero.
ParcelHero has revealed its UK SME business customers prefer to steer clear of trading with European countries outside the EU, such as Switzerland and Norway, because of the complexities and expense involved. And British businesses will be equally shunned by EU companies, because they will be too difficult to trade with, if we vote to leave the EU, says ParcelHero.
The company has released a new report – Delivering Brexit – which reveals 66% of ParcelHero’s customers who regularly ship items to European non-EU countries, such as Switzerland and Norway, say they would prefer them to be inside the Union. ‘It’s a message UK SMEs can’t ignore,’ warns the international parcel courier.
ParcelHero’s Head of Consumer Research, David Jinks MILT says: ‘The same difficulties with tariffs, border delays, red tape and transport costs that now discourage UK SMEs from trading with Switzerland and Norway, are exactly the hindrances that will hit business between the UK and the EU post-Brexit.’
Explains David: ‘The Swiss economy is held up by Leave campaigners as the trading model for the UK post-Brexit: but it’s a model riddled with more holes than Swiss cheese. For example, both Holland and Switzerland have a population of around 8million and so might be expected to be sent the same approximate number of parcels. Yet ParcelHero’s small business customers shipped over three times more items to Holland in 2015 than they did Switzerland. Clearly Switzerland is a less attractive market for SMEs.’
Though Switzerland is the UK’s tenth largest export market, this trade is largely led by large international companies specialising in chemicals, medical equipment and vehicles. Switzerland does not feature in the top ten import or export markets list for UK SMEs compiled by ParcelHero partners FedEx recently. ‘The reason is not hard to fathom,’ says David: ‘The costs of red tape, tariffs and border delays might be swallowed by large companies, but to smaller businesses they can be overwhelming.’
For example, ParcelHero will ship a 10kg parcel to Italy for £16.14 (before VAT and any surcharges) on its Economy Service through one of its major delivery company partners; but the cheapest cost to Switzerland – broadly the same distance and also in Europe but, crucially, outside the EU – is £36.90.
David asks: ‘Why a difference of over £20? The simple answer is that many shipping companies don’t want to serve non-EU countries because of the complexities of border controls. This means that there is little competition between couriers, and those operators who do chose to deliver into Switzerland build the cost of delays and bureaucracy into their prices.’
David adds: ‘Transport costs are one of the reasons why consumer prices in Switzerland are 58% higher than in the UK. For example, a typical pair of Nike shoes costs £59.36 in the UK but £88.35 in Switzerland. Obviously some of this extra price is because Switzerland chooses to tax items heavily to pay for public services, but a good portion is because of duties and transport costs. It gives some idea how much prices could rise in the UK post-Brexit.’
‘The lesson behind these figures mustn’t be lost on us,’ concludes David: ‘There’s little doubt EU-based SMEs will be swift to retreat to doing business inside the EU, if Britain votes Leave, and UK companies will find themselves side-lined.’
For more information for shippers on the pros and cons of leaving the EU click here.