Friday 20 October 2017

International transport faces Brexit ‘cliff-edge’

In order to assure the continued smooth running of international transport operations, the UK has until March 2019 to either create the infrastructure that will allow it to continue to trade with the European Union after Brexit, or negotiate an agreement with the EU that will allow present arrangements or similar to continue for a transitional period, likely ending in 2022.

With continued membership of the European single market and/or customs union post-Brexit apparently ruled out by the government, the first option would mean either creating some form of electronic virtual border control which allows cargoes to clear customs at the point of loading, or building sufficient physical infrastructure.

This would need to be present not just at the cross-Channel ports, but those serving the North Sea and southern Irish Sea crossings, to accommodate the thousands of trucks which will need to wait for customs clearance before continuing their journeys, and the recruitment and training of thousands of extra customs staff and clearing agents.

History indicates that attempts to create customised IT systems to control the UK borders have been problematic to say the least. In 2007, the UK Border Agency started work on its e-Borders project that was intended to provide information about passengers entering and leaving the country. After a series of delays and cost over-runs of millions of pounds, it was quietly cancelled in 2014.

The alternative creation of a physical ‘hard border’ with the necessary infrastructure between the UK and the EU seems equally problematic.

Kent

Starting at the Kent coast, current facilities are already stretched to breaking point by traffic volumes passing through the open border. As many as 200 trucks a week are being turned away from Ashford Truck Stop which is now busier than ever. In June and July, it was operating at 97 per cent capacity: a 10 per cent increase on 2015. Current plans are to double the number of parking spaces to 600.

Independent economic consultancy Oxera has also warned that, with trucks having to queue to pass through Customs checks, each taking 45 minutes, Operation Stack – whereby Kent’s motorways are converted into temporary lorry parks when the short-Channel crossing is disrupted – may become a semi-permanent state of affairs.

A proposed permanent facility, capable of parking a maximum of 3,600 trucks just off the M20 at Stanford, is now mired in the planning process. The development has been called in for judicial review, and the hearing is not due to start until December of this year, meaning that even if the project goes ahead, the earliest the facility can open will be 2018.

France

There are also fears that, post-Brexit, the French may insist that the UK’s import border controls, which are currently carried out on French soil prior to embarkation, be physically moved back to England.

This would require the creation of a massive parking space on the ‘international’ side of the UK frontier on land that would presumably need to be reclaimed from the sea. With no English security in France, the removal of any illegal immigrants found stowed away on import vehicles would be practically impossible.

Oxera estimates the cost to the UK economy of increased checks on port traffic as being in the region of £1 billion. The bulk of this would be borne by the freight sector.

Ireland

The UK land border with the EU in the island of Ireland will present slightly different, but just as difficult, issues.

Implementing passport controls between the United Kingdom and the Republic of Ireland would be unacceptable and impossible, as there has always been free movement of people between the two nations and large numbers of people cross the border multiple times a day as part of their work.

Even at the height of the Troubles, with the British army constantly active, the border remained porous.

Currently, the economies of Northern Ireland and the Republic are closely integrated. Guinness, for example, is brewed in Dublin, tanked up to east Belfast for canning, then trunked back to Dublin for export to Great Britain and mainland Europe.

About one-third of the liquid milk produced by farmers in Northern Ireland is transported south for processing into butter, cheese and infant formula. Many of those farmers could be forced out of business if customs formalities and health inspections had to be completed for every milk tanker-load.

In total, some 38 per cent of Northern Ireland’s exports are destined for the Irish Republic.

The majority of road freight from the island of Ireland to mainland Europe currently crosses Great Britain with traffic to the ‘landbridge’, as Irish hauliers call it, taking two main routes.

Unaccompanied trailers and less urgent consignments tend to use mostly dedicated freight-only services operating in the Northern Irish Sea. These connect Belfast, Warrenpoint and Dublin with Liverpool and Heysham.

While much of the traffic on these sailings consists of unaccompanied trailers that are collected at the docks for onward transport to mainland Europe, the length of crossing does allow drivers to take a rest period while at sea.

More urgent traffic tends to use the mixed freight and passenger services operating between Ireland and Wales. It is also popular with hauliers who are heading for the North Sea ports.

Dr Andrew Potter, a member of the Logistics & Operations Management Section at Cardiff Business School, warns that a ‘soft’ land border between the Irish Republic and Northern Ireland might see more freight loads being sent north before making the crossing to Great Britain, rather than being held up by customs checks in Welsh ports, which currently do not have anything like the facilities needed to process the volume of freight that they carry through Customs formalities.

At Holyhead alone, which offers the fastest combination of crossing times and road travel for most journeys, 400 trucks an hour can be landed in the port.

Traffic diverting to use the northern route, rather than Wales, would lead to greater congestion at key points on the M6 motorway as more trucks headed south for the Dover Straits crossing.

The Road Haulage Association (RHA) called last month for an urgent clarification of plans for the Irish border after Brexit.

RHA director of policy, Rod McKenzie, said: “The EU has already indicated that in the final deal it would like to see a codified version of the 1920s common travel agreement – which means passport-free travel for Irish and British citizens between the two islands…

“Automating customs controls so that goods can move without delay at the land border is essential – achieving this will be difficult. The RHA is urging the governments to reach an agreement for customs formalities to be done away from the border itself.

“This will be possible, but will need a significant investment in time and money for companies moving goods over the border. We need an implementation period to give time to customs and businesses the time to put in place the systems to manage any new system.

“Any agreement must ensure that Ireland does not become a back door for unauthorised migrants, desperate to reach the UK.”

Westminster

With the considerable difficulties in achieving new customs infrastructure before the deadline widely acknowledged, the need for a transitional arrangement with the EU is looking increasingly likely – but this is also being hampered by the UK’s desire to negotiate new international trade deals from 2019.

According to the EU’s current rules, it would be legally and practically impossible for the UK to implement its own trade deals with the rest of the world on ‘Brexit Day’, while still retaining current border practices with the EU.

Even if the United Kingdom elected to forego checks and formalities on its side of the borders, France, the Irish Republic and other nations do not have the authority to reciprocate independently. Their treaty obligations mean that the decision would have to be made by the EU as a whole, which could take years.

In an attempt to quell doubts about Brexit, the chancellor (and former Remain campaigner) Phillip Hammond and international trade secretary (and leading Brexiteer) Liam Fox put their joint names to an article in the Sunday Telegraph in August which appeared to attempt to set out the Cabinet’s position on the matter.

It was confirmed that the UK would leave the single market and the customs union on Brexit in March 2019, but would seek a time-limited “interim period” during which “borders must continue to operate smoothly”, to avoid what was admitted would be a fall off a “cliff-edge” for the UK if the relationship between it and EU reverted to World Trade Organisation rules, including 20 per cent tariffs.

James Hookham, deputy chief executive at the Freight Transport Association (FTA), said that the government had recognised it could not: “drive the British economy off the cliff-edge of Brexit”.

But he continued: “The government’s ambitions for customs arrangements post-Brexit are, at present, just that, and it will take time and care to ensure that all the subtleties of current operations can be incorporated into future plans.

“The logistics industry has clearly identified its needs if trade is to continue in a frictionless manner with the EU and the rest of the world, and the government owes it to British trade and industry to work with us to ensure that these arrangements can be introduced as part of the final Brexit deal.”

At the end of August, the Labour Party differentiated itself from the government’s position in the clearest terms yet, when shadow Brexit secretary Keir Starmer confirmed Labour would seek for the UK to remain in the single market and customs union, during a transitional period that would be “as short as possible, but as long as is necessary”.

He wrote in the Observer that: “By remaining inside a customs union and the single market in a transitional phase we would be certain that goods and services could continue to flow between the EU and the UK without tariffs, customs checks or additional red tape. There would be no need to set up complex alternative customs or trading relations.

“Given that UK-EU combined import/export trade totalled £553bn last year, this certainty would be hugely advantageous for British businesses and consumers.”

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