How will British maritime trade adapt post-Brexit?

Depend­ing on the port of call, the ship­ping fore­cast for post-Brex­it trade ranges from bleak to slight­ly con­cern­ing to busi­ness as usu­al. The chal­lenge is a per­va­sive cloud of uncer­tain­ty that hangs like a pall over the Irish Sea. 

The polit­i­cal back­drop per­pet­u­at­ing this is the 2019 North­ern Ire­land Pro­to­col, which effec­tive­ly pro­posed a bor­der in the mid­dle of the UK, draw­ing a line in the sea between North­ern Ire­land and Great Britain to impose cus­toms checks on goods shipped from the EU to the UK. 

Busi­ness­es rely­ing on ship­ping – and with 95% of goods import­ed and export­ed into and out of the UK via mar­itime ports that is a sig­nif­i­cant num­ber – have had to adapt to these shift­ing tides. 

Goods that may have once gone through the Calais land bridge or through south-east­ern UK ports are now find­ing their way to the UK via north­ern ports like those in the Hum­ber or via Ire­land and North­ern Ire­land. “The real issue here is that the bor­der has cre­at­ed things in people’s minds about prob­lems,” says the UK Cham­ber of Shipping’s direc­tor of pol­i­cy Peter Aylott. This, he says, has result­ed in com­pa­nies pre­dict­ing dis­rup­tion due to Brex­it and pre-emp­tive­ly chang­ing their ship­ping pat­terns to keep trade mov­ing. 

Aylott adds that they know at the front end that the mar­ket is dis­tort­ed by com­pa­nies tak­ing pre-emp­tive deci­sions to pre­vent dis­rup­tion due to Brex­it, the pan­dem­ic and the war in Ukraine. But, he says: “We’re still see­ing issues where there have been con­sign­ments of food­stuffs in France that have been refused.” 

One of the main indus­tries affect­ed by this uncer­tain polit­i­cal and eco­nom­ic land­scape is the food and bev­er­age sec­tor. Cus­toms checks on food and bev­er­ages, which were due to begin for items arriv­ing from the EU – or from North­ern Ire­land – in July 2022 have now been post­poned again until 2023. 

Indus­try bod­ies and com­pa­nies alike have clam­oured for these checks to ensure the safe­ty of food prod­ucts. That need has to be bal­anced with the chal­lenge of where cus­toms checks will occur and the delays they may add to the process. But, with North­ern Ireland’s role in post-Brex­it trade still uncer­tain, com­pa­nies are still left at sea in terms of plan­ning. 

A spokesman for the British Meat Proces­sors Asso­ci­a­tion, which rep­re­sents the meat indus­try, said the land­scape was too uncer­tain now to deter­mine what will come. “Noth­ing has changed,” he says. “The gov­ern­ment signed the North­ern Ire­land Pro­to­col in 2019 and there’s been a lot of talk about a vari­ety of things that could hap­pen. But we have a series of hypo­thet­i­cals.”

He did add, though, that com­pa­nies have adapt­ed to the new nor­mal in post-Brex­it trad­ing, and while fric­tion­less trade would be more effec­tive, deci­sions at the com­pa­ny or indus­try lev­el will have to wait until the gov­ern­ment deter­mines its cus­toms strat­e­gy. “We’re in a wait-and-see pat­tern. Even if the UK gov­ern­ment did act, there would prob­a­bly be a long lead-in time. It’s hard to look that far for­ward.”

Address­ing the chal­lenges fac­ing the food and bev­er­age indus­try, Stu­art Machin, COO of Marks & Spencer and a cohort of co-sig­na­to­ries from across the sec­tor appealed direct­ly to the prime min­is­ter. In the let­ter, they wrote: “As we look ahead to 2022 and beyond, we need to con­tin­ue that [gov­ern­ment-food indus­try] part­ner­ship to build a sus­tain­able, resilient food sec­tor for the long term. And one of the key issues high­light­ed by the let­ter was “fric­tion­less trade for North­ern Ire­land and EU goods move­ments”.

“We need a long-term sus­tain­able solu­tion for goods move­ments into North­ern Ire­land,” it said, out­lin­ing tech­nol­o­gy that could facil­i­tate eas­i­er trans­fer of goods with­out delays or prod­uct loss due to cus­toms con­trols. This would entail “an audit scheme with requests from cer­ti­fi­ca­tion and phys­i­cal checks based on risk and spe­cif­ic intel­li­gence, and penal­ties for fail­ure”.

The Lon­don School of Eco­nom­ics Cen­tre for Eco­nom­ic Per­for­mance found in April that imports from the EU to the UK since the imple­men­ta­tion of the Trade and Coop­er­a­tion Agree­ment decreased by 25% rel­a­tive to glob­al imports to the UK. Because of the delay in the imple­men­ta­tion of cus­toms checks, the trade agree­ment and the North­ern Ire­land Pro­to­col are still caus­ing uncer­tain­ty. 

But the sys­tems are in place to deal with shifts in trade pat­terns, what­ev­er the polit­i­cal out­come.

There are sev­er­al indi­ca­tors point­ing to a shift in ship­ping pat­terns, in some cas­es see­ing goods mov­ing through Irish or North­ern Irish ports or UK ports oth­er than in the South East. The rate of goods pass­ing through Dover had steadi­ly increased from 25% of the total share of imports in 1992 to a peak of 46% in 2017, accord­ing to research by the Uni­ver­si­ty of Hull. The Brex­it ref­er­en­dum in 2016 may have caused that pre-emp­tive resilience plan­ning on the part of importers and exporters to shift goods to a more diverse range of ports. The share of goods pass­ing through Dover in 2020 was 38%. Depart­ment for Trans­port data from 2020 – due to be updat­ed for 2021 this Sep­tem­ber – notes that Lon­don processed the most ton­nage at 47.4 tonnes, fol­lowed by the Hum­ber port of Grims­by & Imming­ham with 45.6 tonnes.

Dafy­dd Williams, head of pol­i­cy, com­mu­ni­ca­tions and eco­nom­ic devel­op­ment (Hum­ber) at Asso­ci­at­ed British Ports (ABP), has not­ed a shift in cus­tomers ship­ping through Hum­ber ports instead of the South East because of the pan­dem­ic, Brex­it and the need to ensure resilience in the sup­ply chain. ABP has invest­ed in the infra­struc­ture sup­port­ing its Hum­ber ports and sees its free port sta­tus and loca­tion remain a moti­va­tor for trade with Europe. 

“For trade that flows through the cen­tral and north­ern parts of the UK, it’s quick­er and cheap­er. A lot of logis­tics oper­a­tors have start­ed to work that out, so we think the flow is part­ly a longer-term shift and part­ly a response to some of the con­cerns about con­di­tions,” Williams says.

Williams and Aylott both note that shipping’s resilience shone through the Brex­it and pan­dem­ic peri­od. Regard­ing the polit­i­cal land­scape, Aylott adds: “The facts are that dur­ing the pan­dem­ic, the UK and Ire­land and most of Europe didn’t starve. That’s the suc­cess of ship­ping.” 

With a new gov­ern­ment in place in Stor­mont and the fur­ther delay in the imple­men­ta­tion of cus­toms checks on EU imports, the seas remain stormy. But ship­ping will, as Aylott says, keep sail­ing.