What does the refugee crisis mean for European logistics?

Pictures of refugees trying to cross European borders have become commonplace over the summer. Whether at Calais trying to jump trains or trucks bound for the UK, or on a much larger scale crossing en masse into Hungary, Austria or Croatia, the migrant crisis has dominated the political agenda. Whereas the media has rightly highlighted the humanitarian consequences of the movement of thousands of people across the continent, little attention has been paid to the impact of the political response on European trade and transport.

One of the most successful results of greater European integration has been the free movement of goods and people throughout the Single European Market. For many countries in the region a separate treaty – the Schengen agreement – has meant the total abolition of border controls. This means that trucks can travel anywhere in mainland Europe without being required to stop by authorities. The pressure which the mass movement of migrants has placed on European governments, especially those in eastern and southern Europe, means that this agreement is under threat as never before.

In total 26 countries have signed the agreement – 22 EU members and four non-EU. Only six of the 28 EU member states are outside the Schengen zone – Bulgaria, Croatia, Cyprus, Ireland, Romania and the UK.

However the agreement includes a clause which allows countries to temporarily re-impose border controls in certain situations. This is exactly what Germany has done due to the influx of migrants across the border from Austria. Austria itself imposed controls on its border with Hungary and has carried out spot checks on trucks since the deaths of 71 migrants in a refrigerated vehicle in August. On occasion these have resulted in queues up to 30km in length.

The costs for Europe’s economy are twofold. Firstly, re-applying border restrictions would undermine the supply chain strategies of manufacturers and retailers. The Single European Market was a critical element in the efficient distribution of goods around the region and the unrestricted movement of trucks was a fundamental part of this. Inventory costs would rise making Europe even less competitive compared with markets in Asia, for example. With delays at borders sometimes running into days and an inability to effectively schedule just-in-time deliveries, the whole foundation of European retail and manufacturing strategy would have to be re-assessed.

Secondly, transport costs would also rise. Dutch-based logistics provider Jan de Rijk has been one European road freight operator to comment on the disruption the crisis is causing the industry. Its Managing Director, Sebastiaan Scholte stated that it was faced with increased waiting times at border crossings due to checks by authorities: ‘In an industry with very thin margins these additional cost are not sustainable in the long run.’ In order to offset these costs his company would be charging waiting costs due to border checks or channel tunnel disruptions. Of course ultimately these will be passed on to European consumers.

It is clear that, to date, European governments have been influenced by political factors relating to fears over uncontrolled, mass migration. Economic considerations are much lower down the agenda and the supply chain and logistics industry must lobby hard to make sure that governments understand the full consequences of their decisions on border controls.