Uncertainty remains the main concern for the freight, distribution and logistics sector as Brexit Day, on March 29, gets ever closer, writes Aidan Flynn.
The complexity of the issues faced by traders, in the post-Brexit world, in getting goods to market, cannot be underestimated. Understanding the Customs Union issues and the Single Market issues is critical in developing effective contingency plans. Time is also vitally important for businesses to prepare and adopt to the future trading environment.
To trade without friction with third countries requires a comprehensive ‘free trade agreement’. Future arrangements must deal not just with customs issues, but with regulatory requirements, such as mutual recognition of licensing for the movement of goods by road, driving licences, qualifications, and insurance.
Brexit will reduce the number of jobs and the profitability of businesses, and increase costs, which will impact the consumer. Ireland stands to be the most affected, due to our geographic location and reliance on the UK, not just as a trading partner, but as a link to continental Europe.
In 1973, almost 55% of the total value of exports from Ireland went to the UK. By 2017, according to the CSO, this reliance had reduced to 13% of total exports, worth approximately €13bn. The EU accounted for €63bn of Ireland’s exports in the same period.
Some 150,000 trucks use the landbridge each year, moving over three million tonnes of product. This route to the EU market is vital for the just-in-time model of logistics, utilised particularly by the agri-food sector for the likes of beef, poultry, lamb, pork and fish. It is also important for the pharmaceutical sector, where security and the management of temperature controls is vitally important for maintaining the integrity of the product.
The landbridge is the quickest route to market, and three times quicker than container shipments. After Brexit, the landbridge will be compromised, because of multi-agency checks at ports and new administrative red tape, which ultimately increases costs.
To use the landbridge, hauliers will have to operate under the Common Transit Convention (CTC). This requires a guarantee to cover Vat and excise duties and will ensure that import and export declarations do not have to be completed whilst entering and exiting a third country — which the UK will be — en route to continental Europe.
It is fiction to think there will be no checks by the UK authorities; rather, they will be less intense in the early months, as resourcing and infrastructure is built. However, this will cause problems for Irish hauliers moving under the CTC. Under the CTC, hauliers will need to be scanned at entry and exit locations in third countries, such as the UK.
If there are no offices of transit, how will French authorities know that the Irish products have travelled under the CTC? Essentially, the trust in the chain is broken.
Therefore, the likelihood of the Irish operators arriving into France from the UK and being treated as if they are coming direct from the UK is increased. This adds to the uncertainty and will cause confusion and long delays.
A possible redesign of the supply chain may be necessary. The importance of having contingency plans cannot be denied, but this — in itself — will not result in 100% compliance at ports. The reality is that planning, training, upskilling, better procurement practices, consignor liability, shared responsibility, and increased awareness of your supply chain is a start in determining the best way to get goods into and out of the country as efficiently as possible.
Currently, there is limited capacity on direct routes, so it is not beyond imagination to assume that when industry requires the increased capacity, it will not be available, thereby creating log jams that will take months — if not longer — to find reasonable solutions.
No-deal is no good for business.
The only certainty, at the moment, is that we are all moving in convoy towards the cliff edge.
- Aidan Flynn is general manager of the Freight Transport Association Ireland