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Brexit – whither (or wither?) now?

The UK Parliament’s emphatic rejection of PM Theresa May’s leave deal opens the question of whether another Brexit deal can be negotiated in time for the deadline day of 29 March, or the UK leaves the EU with no deal, or Brexit is postponed or simply doesn’t happen at all

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Brexit – whither (or wither?) now?

At the moment the official government line is that the UK will not seek a postponement of the Article 50 deadline day of 29 March.

 

Therefore, however unlikely it appears to be in the light of the way political and business forces are aligned against it, a "no deal" exit remains possible, although even then an imposition of tariffs and border controls does not necessarily follow.

 

However, the supply chain has to prepare for the worst. “A No Deal Brexit would be highly damaging for trade, for business and for Britain,” says James Hookham, Deputy CEO at the UK Freight Transport Association (FTA). “With no clear solution for what happens next, the risk of a No Deal has risen significantly – and the problems which this would cause for businesses, which now have virtually no time to prepare, would be catastrophic for the UK’s supply chain, on which we all rely."

 

According to the FTA, companies directly involved in or highly dependent on logistics, like retail and manufacturing, make up 22% of all UK companies and employ a third of the UK’s workforce. And, as Hookham continues, time is now running out for logistics to make the necessary preparations for a No Deal Brexit.

Eurotunnel carried a record 1.7M trucks in 2018
Eurotunnel carried a record 1.7M trucks in 2018

"Logistics must not and will not be held up as the “whipping boy” for politicians who have failed to take into account the complexity of the supply chain over the past two years. Operators of all sizes are always prepared to go the extra mile to deliver for customers, but without knowing the parameters of the market in which they are and will be working, planning has been almost impossible.

 

“A no deal Brexit would leave logistics operators facing increased red tape, restrictions to access and to skilled staff, increased delays and rising costs and puts the livelihoods of the hardworking Britons involved in the movement of freight at risk. No one voted for that, and FTA is urging the government once again to reach an agreement with the EU which can keep goods and services flowing with minimal or no hindrance – that is what was promised two years ago, and that is what the industry expects.”

 

Mark Watts, Secretary of UK Transport in Europe (UKTiE), has also warned that the prospects of a no deal Brexit have increased. "At UKTiE we have always sought to present a constructive view in the Brexit negotiations," he says.

 

"However, as the risk of No Deal continues to increase, UKTiE seeks the ’best possible Brexit deal’ should become UKTiE seeks ’to ensure the right arrangements are urgently put in place to provide certainty for transport.’ What we cannot accept, and what is currently a great fear for industry, is that last night’s vote has set us beyond the point of no return for leaving the EU without a deal."

The Port of Dover has again emphasised its importance for UK trade
The Port of Dover has again emphasised its importance for UK trade

The Port of Dover, the UK port directly in the firing line, has stated: The UK’s planned departure from the EU has changed the way people think about the logistics industry and supply chains. Never has there been more public scrutiny on trade and the efficient movement of goods.

 

"What has not changed is the ability of one port, two ferry operators and a fleet of 12 dedicated ferries to be capable of handling up to 10,000 lorries a day – a 180 km trade expressway. Neither will geography change and Dover will remain the only place from which such a fleet can achieve up to 120 ferry movements a day, where each ferry is berthed, unloaded, reloaded and heading back to France in as little as 45-50 minutes on the shortest sea crossing. With the French coast often in full view, this finely tuned engine simply cannot be matched in terms of capacity or speed.

 

"Of course, external factors such as border controls may slow things down, but they will do that at every EU-facing gateway across the country. What makes Dover different is that it has the experience of how to deal with major disruption and find a way through – nowhere else has this experience.

 

"That is why within a few days of the last significant incident of Operation Stack in the infamous summer of 2015, Dover was once again handling record volumes. During the course of any year, the Port of Dover manages smaller disruptions through our continuing professional approach. Dover has stood the test of time."

 

Dover and Calais ports’ competitor in the Dover Straits, Eurotunnel - which transported a record 1.7M trucks in 2018 - stated: "Eurotunnel calls on political leaders to clarify the nature of the border relationship and controls that will exist between the United Kingdom and the EU as soon as possible.

 

"Only the establishment of clear rules will allow businesses to continue to invest, to create jobs and to preserve the vital human, social and cultural exchanges that benefit both the UK and the EU. 26% of trade between the UK and the EU passes through the Channel Tunnel, supporting hundreds of thousands of jobs.

 

"Over the past two years, Eurotunnel has been preparing for all outcomes, with the full support of its 2,500 employees. We have adapted our infrastructure so that, with or without a deal, traffic flow through the Tunnel will be maintained.

 

"Eurotunnel is currently working to ensure that new post-Brexit border controls will have no significant impact on Tunnel traffic. As our history shows, when the Tunnel was opened in 1994, lorries passed through only three types of check, compared to eight separate controls today. This increase in the level of controls over time has not prevented truck traffic from increasing fourfold over the same period between 1994 and 2018."

 

Richard Ballantyne, CEO of the British Ports Association, stated: " We have now been discussing the implications of a ‘no deal’ Brexit with Ministers and officials for more than two years and we know they fully appreciate the disruption that this would entail at certain key port gateways.

 

"Whilst plans are in place to mitigate some of the worst aspects of this, the fundamental dangers to free flowing trade remain and must be avoided if at all possible. Ports also have a vested interest in a stable and healthy economy. We are obviously now very close to exit day and many in the ports sector will be seeking guarantees that time will found for further negotiation to avoid the UK leaving the EU on unfavourable terms."

ABP has invested more than £50M to boost container handling capacity at Hull and Immingham
ABP has invested more than £50M to boost container handling capacity at Hull and Immingham
Flags blow in opposite directions!
Flags blow in opposite directions!

However, just before the vote in Parliament, Associated British Ports (ABP), the UK’s leading ports operator, stated that it is actively working to support businesses anxious about the event of a No-Deal Brexit and the potential severe disruption this may cause at the Port of Dover.

 

"ABP’s container and ferry facilities on the Humber are capable of helping businesses bypass such disruption, providing regular and reliable links to Europe. Over 70 sailings every week connect the Humber to a number of destinations including Belgium, the Netherlands, Denmark and Poland.

 

"Investment highlights include: £50M to boost capacity at its container terminals at ABP’s ports of Hull and Immingham; £65M to help ensure the future of the steel industry on the river Humber; £55M to enhance the automotive and cruise offering in the Port of Southampton; and a range of other investments throughout its network of 21 ports across England, Scotland and Wales.

 

"ABP has continued to invest in the very best facilities and services available for its valued customers, supporting their growth, as well as continuing to help safeguard jobs and contribute to the UK economy.

 

Henrik Pedersen, Chief Executive Officer of ABP, said: “For ABP, ‘keeping Britain trading’ is a responsibility that we are passionately committed to. We are continuing to invest in our people, equipment and capability, so that we have the flexibility and resilience we need to help UK trade to flow and grow. We have already seen volumes begin to rise at our ports on the Humber as customers look for alternatives to Dover.

 

"Our ports have been operating to world-class standards for many years, we have proved that we are ready to handle new customers’ requirements.

 

“We want to send a strong message that ABP stands ready to keep Britain trading through Brexit, and we will continue to invest to drive trade and create jobs over the longer term.”

 

ABP is an important component in the UK’s trading infrastructure, handling almost £150B of UK trade across its port network, contributing around £7.5B to the UK economy and supporting almost 120,000 UK jobs across its supply chains. In addition, it has a vast landbank surrounding its ports, which provides ample room to grow and enhance operations."

 

From Geneva, the IRU has pitched in. "IRU is deeply concerned about the effects of a no-deal Brexit on cross-Channel commercial road freight, passenger transport as well as about the huge impact it will have on the UK and EU economies and their citizens. The contingency plans from the European Commission and the UK Government will be unable to meet today’s operational needs of commercial road transport companies and their customers."

 

Matthias Maedge, leading IRU’s EU-related work, said: “A no-deal Brexit should not have been an option, but it is now close to being a fact. With only two months to go, the lack of clarity is still our biggest challenge. Extremely serious economic consequences to society and businesses are to be expected as clarity on customs and market access for millions of commercial road transport operations going from and to the UK annually is still missing. Trade and the supply of goods will suffer, costs will increase by at least 10%.

 

"On a normal day, up to 10,000 trucks pass through the Port of Dover alone. IRU remains unconvinced, despite all contingency planning, that the commercial road transport operators, their customers and governments can be ready for a no-deal scenario by 30 March 2019.”

 

No-deal means that road transport companies will see their market operating rights seriously diminished and this will result in a negative impact on the supply of goods. An increasing number of companies in the EU are considering the suspension of operations in the days following the Brexit deadline.

 

Richard Burnett, CEO of the UK Road Haulage Association, said: “It is imperative that any withdrawal deal includes a transition period to establish new and efficient border technology, and systems across industry needed to be put in place to avoid disastrous queues at ports and also a hard border between Northern Ireland and the Irish Republic.

“In addition, a deal would avoid reliance on an acute shortage of permits and measures for customs that are unworkable and impractical.”

  • Eurotunnel made a bizarre intervention when the British government announced it was allocating a total of 103M to emergency "no deal" ferry services. It complained that the government had ignored its truck shuttles, which "are the most efficient way to supply vital goods into the UK. That would remain the case even if new border procedures were introduced by countries after Brexit." The point is that the emergency funds were aimed at bypasses to the Dover Straits, the most exposed supply line to a No Deal Brexit and which of course Eurotunnel is an integral part.
  • When reporting the above emergency funding and focusing on the plan to restart a Ramsgate-Ostend freight ferry link as the obvious alternative to Dover-Calais, worldcargonews online tried to elicit comments from the Port of Ostend, but they did not return our calls. However, in an interview with the BBC, the town’s Mayor, Bart Tommelein, stated that the port would not be ready in time and was seeking "guarantees." According to Private Eye, the Mayor wants €1M to secure the ferry terminal against ingress by migrants, who the town fears would move to Ostend from Calais in an effort to reach the UK.

 

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