Trade and Logistics Update March 2025
Trade and Logistics Meeting
Background
We hold a regular meeting for the Community to hoirizon scan issues in global logistics and future trade issues. This call focused on shipping, including the likelihood of a return to the Red Sea route and the reset of the UK/EU trade deal. Key points are below
1. Global Logistics Issues
James Hookham, from the Global Shippers Forum, who we are working with in the Community updated us on current and future issues.
Red Sea Resumption
Although the peace deal in the Middle East appears to be holding, including the Houthi rebels who have targeted ships in the Red Sea it was too early to expect a resumption in the Red Sea route. The main factors are the fragile nature of the peace deal, the cost of insurance and the available shipping capacity. All this points to an unlikely resumption of the Red Sea route until late 2025 at the earliest.
Impact of US Tariffs
The unpredictable and rapidly changing approach to tariffs by the USA meant it was difficult to predict future changes to trade flows and the impact on shipping.
Shipping Contracts
Members were alerted to potential changes to shipping contracts later this year. Major shippers are considering key clauses such as force majeure which could have an impact on when importers are able to claim for disruption. We will be following developments and aim to give more information as changes are agreed.
Greenhouse Gas Reduction
The commitment by the major shipping lines to reduction in carbon through new fuels will have a significant impact on shipping costs. Although these wont be fully implemented until 2027 they could double the cost of fuel impacting on the overall cost of shipping. Again we will follow developments on this.
2. UK/EU Reset Trade Deal
We were joined by Sally Jones, Deputy Director at DBT for an update on future negotiations with the EU.
UK Government Objective
The Government will have a greater focus on the importance of the EU trade deal and is determined to reduce friction at the border. It sees the reset of the deal as a key part of the growth agenda. It is currently preparing its position ahead of discussions with the EU. Those discussions will begin on 19th May with a major EU/UK summit.
Government Proposals
The Government is considering how closer alignment with EU regulations would reduce border checks. It is currently consulting industry to assess the impact greater alignment would have (BRC has met both Defra and DBT to stress the importance of alignment on regulation, not just SPS but also environment and product safety).
The Government also wants to improve the border process, both unilaterally by improving UK systems and also in negotiations with the EU. These would include greater data sharing and digitilisation. We are likely to see more details of the unilateral approach in the trade strategy later this year.
DBT did not give us a timetable for when they expect to see a reset, improved EU trade deal but did agree to continue to work with retailers to incorporate our views.
3. Next Steps
Our next call will be in June when we will update on both the shipping issues and review the latest from the UK/EU trade negotiations. In between we will share any news through the Trade and Logistics Community
