Brexit Update (Part 3) - What does the falling pound mean for freight ferry travel?
The pound has been falling pretty dramatically since the Brexit vote at the end of June. We recently wrote about how about Brexit would affect hauliers and couriers (Part 1, Part 2). There has been talk of some overreaction from investors, however it is difficult to deny that there are some changes on the way for hauliers & couriers. In particular, when travelling by freight ferry.
From an export point of view, a weaker pound can potentially make UK exporters more competitive. A weaker pound means UK exporters can sell their goods cheaper. Whether the increase in ferry travel costs to Europe (see below) will offset this however is yet to be seen.
There's nothing new about fluctuating fuel prices at the pumps but as fuel is largely traded in dollars, the cost of fuel in pounds will increase for HGV drivers. The Petrol Retailers' Association is expecting a litre of fuel to cost 5 pence more by the end of October.
“The double impact of the pound weakening against US$ and global oil prices strengthening will cause pump prices to move sharply upwards “
Brian Madderson, Chairman of the Petrol Retailers Association (PRA).
This increase is frustrating as most fuel companies will have already purchased the fuel at lower rates but as soon as the exchange rate goes up, this will be passed on to the drivers at the pumps!
European Ferry Companies
European ferry companies such as Stena Line for example, report their accounts in Swedish Krona. Currently, 1 pound currently gets you around 10.81 Swedish Krona (xe.com). This number is slowly decreasing therefore it is likely at some point that the ferry companies will want more sterling per crossing. We can anticipate that ferry costs will increase for companies accounting outside of the UK.
Travelling to the EU
So, what are your options for avoiding the effects of the falling pound when regularly travelling to Europe? It's difficult, but there are a few options
- Purchase a pre-paid currency card. This way, you can fix the exchange rate on the card and avoid some of the coming fluctuations. It's safer than having cash hanging around in your HGV cab too.
- DO NOT exchange currency at the port exchange. You are a captive customer at a ferry terminal and pay for the convenience of exchanging cash there. You could lose up to 20%! If you really have to use the port exchange booth, 'haggle'. You have nothing to lose and a lot to gain.
- Shop around for your currency. High street banks can be expensive. Currency specialists such as the Post Office will probably do you a better deal.
- Look for a credit card with 'zero foreign usage' charges.
The Post Office is already seeing a 46% YoY increase in foreign currency exchanges so it is worth looking into your options for future trips.
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