Could Hard Borders Be Coming Back?

Thanks to the changing global political landscape, some experts and observers are concerned that trade barriers are about to change the face of business – and not for the better. With Brexit and the Trump administration both showing protectionist leanings, logistics companies are worrying about the return of hard borders and how it could impact their business.

Express delivery firms in particular have noted a boom in business in recent years as cross-border e-commerce continues to increase in popularity. Big firms like UPS noted record-breaking revenues in the last quarter of last year, and customers buying items online from other countries are responsible for half of the rise in express delivery volumes since 2008. This has been largely achievable thanks to falling trade barriers.

Progress Being Threatened

Just a few decades ago, sending packages to other countries was a painstaking endeavor, with packages disappearing into customs for weeks on end and heavy taxes being levied. However, expanding free trade areas and falling tariffs have turned things around in recent years. Now, it looks like some of that progress could be undone as UK Prime Minister Theresa May says they will leave the EU customs union and US President Donald Trump threatens to raise the tariffs on goods hailing from Mexico and China.

These higher tariffs would undoubtedly impact the demand for cross-border deliveries, with local goods ultimately having an edge. Complex customs codes could hold things up at Britain’s border. Sending goods from the UK to Switzerland, which is not part of the EU, already costs 150 percent more than it does to send them to places inside the EU like Italy.

The potential for a huge shake-up is so great that FedEx CEO and Founder Fred Smith has stopped running his firm’s daily operations in order to devote more time to campaigning for free trade.

This blog post was based off of an article from The Economist. View the original here.