Summary
The announcement by the UK government of new inland Border Control Posts is seen as ‘extremely last minute’, with serious road freight disruptions along the main EU/UK Ro-Ro routes through Kent now seen as almost inevitable. The UK is seen as ‘dangerously ill-prepared’ for leaving the EU customs union and single market on 1st January 2020. As a consequence, significantly large increases in costs of moving goods through EU/UK border controls are likely. However, there are expanding freight options for delivery to UK East Coast and ‘inland’ ports which will side-step traffic congestion in Kent. ACP exporters using triangular supply chains need to adequately prepare for these changes and actively seek to “Brexit-Proof” their supply chains. ACP exporters directly serving the UK market will also need to take similar “Brexit-Proofing” initiatives, with successful companies potentially being able to capitalise on the rising food prices projected for the UK market in 2021.
The UK government has highlighted how preparations for a no-deal outcome to the EU/UK trade negotiations were ‘now intensifying’ (1). Indeed, on the 21st October it was announced the government was ‘exploring plans to expand the number of inland border control posts (BCPs) to handle any overflow customs checks in the post-Brexit environment.’ According to reports in The Loadstar ‘a further five inland sites are being studied as potential BCPs’, with the establishment of BCP facilities being explored at ‘Thames Gateway, Birmingham, Holyhead, Fishguard/Pembroke and Dover’. This would be in addition to the five new sites already planned, two of which are in Ashford, with one in Ebbsfleet, North Weald Airfield, and Warrington. These sites would be responsible for customs controls, sanitary and phytosanitary controls, controls of goods in transit and market surveillance operations, with these sites planned to be operation by July 2021 (2).
The Executive Director of Scala, a supply chain consultancy firm, told The Loadstar the plans were ‘extremely last minute’ and as a consequence he expected fears of ‘severe border disruptions’ to be realised. Executive Director David Howorth maintained ‘the impact of this level of disruption could be “enormous”, particularly for short shelf-life items.’ He argued ‘the ramifications of perishables being delayed by even a day – which, given drivers’ hours, may be caused by a delay of just hours – could be hugely significant’. This is likely to be particularly the case where goods have to pass through inland border control posts. The use of inland border control post facilities is seen as likely to disrupt travel, delivery, and collection schedules, with these disruptions needing to be factored into contractual arrangements. It was estimated that should the feared delays be realised, the cost to the concerned businesses could be £3.5 million per day (2).
However, in the face of likely delays and disruptions along the current main EU/UK RoRo road transport corridor in Kent, the options for using UK East Coast and ‘inland ports’ are being expanded. Companies such as CLdN, are expanding by 25% their freight ferry services along the Rotterdam-London and Rotterdam–Humberside routes, as well as the Zeebrugge–London route in response to growing demand. These services are being expanded specifically as a ‘Brexit proofed’ means of getting cargoes from the EU to the UK (3).
In addition, ‘inland’ ports with existing Border Control Post infrastructure such as Tilbury are developing their ‘daily rail services to major retail distribution centres and customers in the Midlands, the South West, Wales and Scotland.’ Press reports indicate ‘the Port of Tilbury has invested around £23 million in new rail-related infrastructure over the last couple of years’, with the aim of increasing rail cargo movements by ‘900,000 tonnes per annum within the next five years.’ This is seen as part of a low carbon post-Covid recovery strategy (4).
These concerns need to be seen against the background of warnings from the former head of the UK government’s Brexit department, Philip Rycroft, that ‘the country remains dangerously ill prepared’ for its departure from the EU customs union and single market. Even the most likely best option a ‘thin’ UK/EU trade deal will still pose serious challenges serious.
It is highlighted how while a deal would ‘remove tariffs on trade, significant “non-tariff barriers” will be imposed, adding serious costs on manufacturers and practical difficulties for hauliers.’ He highlighted how even if a deal were concluded, a ‘thin deal’ would still require ‘customs declarations, security declarations, regulatory checks, rules of origin compliance’ and a host of other standard border control checks to be applied. It was pointed out these changes will ‘happens at the end of this year, either way’, with this posing ‘a massive logistical challenge and a very expensive one’ (5).
Furthermore, it was highlighted how on top of the short-term impacts there would be a ‘dead weight on trade forever because that’s the nature of being out of the single market’. Put simply, friction will be introduced into the process of moving goods across an EU/UK border, with increased friction equally increased costs (5).
Ben Fletcher, of Make UK meanwhile, has highlighted how ‘even the best deal now on offer was “a long way from the kind of deal that was being discussed as a starting point during Theresa May’s discussions – which itself was a very long way away from the status quo.’ It was maintained ‘too many firms think that the potential deal is actually largely the status quo’, but this is far from the case. Consequently, these companies will be in for a very rude shock come 2021 (5).
This situation has seen more than 70 trade associations and professional bodies appealing to the UK and EU to ensure a deal is concluded (5).
| Comment and Analysis The implications of the fact that even with the most likely UK-EU trade deal, the situation faced in moving goods across an EU/UK border in 2021 will be ‘a very long way from the status quo’, will mean ACP exporters using triangular supply chains who have not adequately prepared for these changes will be in for a very rude shock.ACP exporters serving the UK market along triangular supply chains will undoubtedly be caught up in the transport and haulage disruptions which now seem inevitable along the main EU/UK trade routes. A portion of the huge additional costs generated by traffic congestion and delays in clearing goods through newly created UK border control facilities (particularly inland border control posts) will be borne by ACP short shelf fresh product exporters, unless specific arrangements can be set in place which will help the concerned exporters side step many of the sources of additional cost. Products requiring phytosanitary inspections are likely to face particular challenges in terms of ensuring the new controls do not result in commercially significant delays in getting fresh produce to clients in the UK. However, there is scope for establishing special arrangements for the border clearance of these cargoes, given the phytosanitary risk of products which have just been inspected upon entry to the EU will be minimal. However, the window of opportunity for establishing such special arrangements is closing, as the risk of a no-deal outcome comes closer. Making use of such arrangements, were they to be set in place, would also require those responsible for forwarding ACP goods to the UK to get to grips with the “Groupage” issues, which arise under current logistical models for onward freight operations from the EU to the UK. Against this background ACP exporters using triangular supply chains will need to fully explore the scope for transporting products to the UK through East Coast or inland ports (Tilbury or London Gateway) which have established Border Control Post facilities, with good onward distribution infrastructure already in place. While there are geographical and transport infrastructure advantages to ‘inland ports’ like Tilbury2, these facilities focus on containerised traffic, with this not being practical for certain ACP short shelf life product cargoes. In this context, reorientating onward shipping operations to utilise UK East Coast Ports could prove of some value. The use of such onward shipment options would potentially enable ACP exporters using triangular supply chains to side step the serious road haulage delays which are likely to emerge along the main Roll-on/Roll-off EU-UK freight corridor which passes through Kent, under what the UK government has described as a ‘reasonable worst-case scenario’. While the most serious challenges will be faced by ACP exporters using triangular supply chains, unless effective preparations are undertaken to “Brexit Proof” their supply chains even ACP companies exporting directly to the UK could be caught up in the systemic strains across the whole of the UK’s border control infrastructure, arising from the process of the UK’s withdrawal from the EU customs union and single market. Taking early action to effectively “Brexit Proof” supply chains serving the UK market or building such actions into post-Covid-19 freight recovery strategies, could enable those ACP exporters who effectively get to grips with these challenges to capitalise on the rising food prices which are likely to be a feature of the UK market in 2021. |
Sources:
(1) Guardian, ‘UK refuses to restart Brexit talks despite EU accepting its demands’, 19 October 2020
https://www.theguardian.com/politics/2020/oct/19/brexit-gove-praises-constructive-move-as-eu-agrees-to-intensify-talks
(2) the Loadstar, ‘UK government unveils plans for more post-Brexit border control posts’, 21 October 2020
https://www.fpcfreshtalkdaily.co.uk/single-post/uk-government-unveils-plans-for-more-post-brexit-border-control-posts
(3) Hellenic Shipping News, ‘CLdN increasing capacity on UK Routes’, 6 October 2020
https://www.fpcfreshtalkdaily.co.uk/single-post/cldn-increasing-capacity-on-uk-routes
(4) Rail Technology, ‘HS2 will enhance rail freight usage at UK ports’, 23 October 2020
https://www.fpcfreshtalkdaily.co.uk/single-post/hs2-will-enhance-rail-freight-usage-at-uk-ports
(5) Guardian, ‘Experts claim Boris Johnson’s thin EU deal will cause major economy upset’, 18 October 2020
https://www.theguardian.com/politics/2020/oct/18/experts-claim-boris-johnsons-thin-eu-deal-will-cause-major-economic-upset