Economic Concepts and Models: A Review of the Impact of Brexit on the Shipping Industry

Article Review - Economic
Concepts and Models

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................1

INTRODUCTION
Economic concepts and models are description of real situations in a simple manner that
are formulated to make with the hypotheses for testing of economic behaviour. The presentation
will review an article of BBC news titled as ‘trampoline prices to soar 50% on shipping costs’.
This presentation will explain the main arguments of the article with the use of concepts and
terms. Demand and supply and costs and production are the two theories that will be applied to
the issues that highlights.
MAIN BODY
There are various points that the article highlights, to begin with the transport costs
increase will make the cost of the larger toys high. This can be linked to the costs and production
theory. The increase in transportation cost increases the overall cost of the product. Increase in
price of products leads consumer to shift towards alternative that are available in the market for
such products. In this case the increase in transportation cost will increase the cost of larger toys
so the buyers will seek some other countries from where the products can be available at the
lower prices. The crowd at the port keep rising, resulting in increasing number of other issues.
After Brexit the currency of UK experienced fall in its value so even after the increase in the
transportation costs it remained easier for other countries to purchase or import the goods
produced UK’s firms (Vega, Feo-Valero and Espino-Espino, 2018). Hence as a result of this the
port were crowded and it became difficult to handle such crowd. Hauliers are experiencing
increase level of pressure as a result of increase in imports by other countries. Rates keep on
increasing because of increase in the demand.
In the history first time the ocean freight becomes more than the cost of the item that is
transported. Brexit introduce new rules regarding exports that creates work load for hauliers. As
a result of which haulage firms are able to work only at sixty-five percent of its actual capacity as
the formal documentation legalities increase the complexities in the operations. Earlier the
hauliers were not required to face such complexities in documentation as UK was part of
European Union and all the exports and imports to other member countries were regarded as
domestic trade.
Furthermore, consequences of brexit includes that the new trading relations of UK with
European Union resulting in stoppage of deliveries to UK by logistics companies. The
documentation requirements became huge for exports after Brexit which were previously not