Ports face Brexit catastrophe, shipping sector warns

4/17/2017

The UK is facing a logistics “catastrophe” if it does not sort out a frictionless and seamless border at Dover and other ports when the UK leaves the EU, the shipping industry has warned.

The UK Chamber of Shipping, which represents around 175 UK shipowners and associated service companies, has called on governments across Europe to urgently grasp the challenge, arguing that a problem for the UK will also be a problem for ports in the Netherlands, Belgium, France and Ireland, the Guardian reported.

“I think the UK government gets it, but I am not so sure other countries do,” said CEO Guy Platten. “It is a massive problem that we need to get solved.”

The chamber said the issue was not the prospect of tariffs being introduced if the UK quits the European customs union, as these could be processed electronically. It was, rather, the question of customs checks on either side of the borders between the UK and the EU, including with the Repiblic of Ireland.

He said Dublin would probably grind to a halt if customs checks were introduced at Dublin Port or Holyhead in north Wales, which handles 400,000 trucks every year delivering food and other goods to shops and suppliers in the UK and the continent, the Guardian reported.

The Guardian said the freight and haulage industry and Eurotunnel warned earlier this year that a port such as Dover, the busiest truck port in the UK, could face gridlock of up to 30 miles (48km) if customs checks were introduced after the UK left the European Union. The port handles 2.6m trucks a year while Eurotunnel caters for another 1.6m a year at its Le Shuttle gateway a few miles inland.

Non-EU trucks entering the UK at the moment have to go through customs checks in Dover that can take 20 minutes for paperwork to be cleared for each vehicle. If there are problems with VAT or random customs checks, the truck can be delayed for hours, days or weeks.

“It can take up to an hour for a truck now; multiply that by 8,000 a day − the number of lorries on a slow day − and you can see what happens. It is going to be an absolute disaster for the ports and for our sector as well,” said Platten.

One solution would be to handle the customs checks in Calais where space is not an issue, but this would require a political response. Platten said ports such as Calais, Zeebrugge in Belgium and Dublin, had to be part of the solution. Platten said one solution may be customs checks “at the point of dispatch or point of sale” but there was nowhere in the world with a customs model similar to Dover-Calais to draw lessons from, the Guardian reported.

A frictionless and seamless border is predicated on an electronic system that would pre-clear “trusted traders” in and out of the UK. However, 10 days ago it emerged that the UK’s customs body Her Majesty’s Revenue & Customs (HMRC) was not confident it could deliver a new electronic system in time.

Experts believe there would be a fivefold increase in customs checks at Dover and other ports from 60 million a year to 300 million after Brexit.

Platten said cargo and passenger ferry sailings to and from Dover would have to reduce unless a system was ready on time.

However, sources close to HMRC have told Lloyd’s Loading List that HMRC would adopt a pragmatic approach in the event of a cliff-edge scenario in which a new customs environment was suddenly imposed. They said that on the day after Brexit, UK and EU standards would still be so aligned that trade could be allowed to continue on the current basis until processes could be put in place to manage them without impeding trade.

As Lloyd’s Loading List reported last week, freight forwarding representatives are working closely with key UK government agencies HMRC and Border Force in preparation for Britain’s exit from the European Union and are optimistic the UK and its customs systems will cope with the challenges of Brexit – “probably”.

Peter MacSwiney, chairman of Agency Sector Management (ASM) – which deals with technology issues on behalf of UK freight forwarding association the British International Freight Association (BIFA) – outlined to delegates last week at a Brexit Briefing at Multimodal 2017 some of the ways in which BIFA and ASM are interacting with government agencies, in particular via the Joint Customs Clearance Committee (JCCC). BIFA is a member of JCCC, the overarching body for Customs legislation in the UK, with MacSwiney joint chair of the Brexit sub-committee.

He said a frictionless border was the highest priority, and so the sub-committee was looking at what the UK will need to achieve that. One of the most important elements is to prevent delays at the borders so that “we do not get a traffic jam from Paris to Stoke-on-Trent. This means we need the goods Customs cleared before they reach the ferry or Channel Tunnel,” MacSwiney said.

Some government regulatory bodies are resistant to that and MacSwiney noted that when Prime Minister Theresa May speaks about Brexit, she is very controlled until she hits the word ‘Customs’. “This is quite worrying, especially as it seems the Customs agenda will have to wait until the issues of people and who owes what to who have been sorted out,” he noted.

But he said the UK’s Border Force, which has in the past opposed pre-clearance, had begun making more positive noises about its possibility.

MacSwiney pointed out the UK has spent the last 40 years aligning its systems with those of the rest of Europe so “it would be a shame to throw that all away – to put it mildly.” For instance, he would like to keep the Single Transit Contract so that, for a consignment going from Heathrow to Paris to New York, the port of EU export would be deemed as Heathrow as it is now.

MacSwiney also explained that the new Customs Declarations Service (CDS) will gradually replace CHIEF began development several years ago and so was not designed to deal with Brexit. “But I think it probably will,” he said.

His main message was that one of pragmatic reassurance: “I think we are going to be OK,” he said. “We are engaging fully with Customs and they are listening to us. In the UK, we have a history of sorting things out.”

BIFA director general Robert Keen told delegates that nobody really knows yet what the Brexit implications are for trade. He said the complexity and level of detail that Brexit involved was “mind-boggling”, but freight forwarders and the wider logistics business could be sure that in BIFA and ASM, “you have the best people talking to Customs on your behalf”.