While the UK Government and EU continue eleventh hour talks on a trade deal, AJ Keyes asks if the UK port industry will be ready for Brexit?
While the UK and rest of the world’s port are dealing with the COVID-19 pandemic, Brexit looms large in the UK. Although the UK has technically already left the EU, the transition period will soon end, so what better time to take stock of the current position for ports?
The exact outcome of the Brexit process from the politicians is unknown (at the time of writing in early October 2020), but there has been some positive news for the port industry over the past few months.
BREXIT BORDER FUND
In July 2020 the UK Government announced a £705 (US$888) million fund to support infrastructure, systems and staffing related to Brexit border issues.
The announcement was received positively, as Richard Ballantyne, CEO, British Ports Association confirms: “We are particularly grateful that the Government has listened and agreed to our requests to pay for new infrastructure both at ports and at inland sites,”
Yet the provision of funding is only part of the process, clearly, as the UK port industry looks to navigate the unknown but potentially stormy waters from the start of 2021. It is a fact fully appreciated by Ballantyne, among others, who rightly state that new border infrastructure will inevitably impact on freight and cargo flows.
The key factor here is the concern to keep freight moving. Or to put it more practically, that any enforcement of border processes will not result in trucking and cargo being held-up while seeking to transit the port of entry/exit.
“There is a huge amount to prepare for and operators across the freight and logistics sectors will need to understand what will be required and what this will mean for their businesses,” Ballantyne underlined at the time of the UK Government announcement.
AVAILABILITY OF FUNDS
Confirmation of availability of funds for the investment is clearly a positive sign to begin with. At the start of October 2020, the UK Government unveiled a package of £200 (US$259) million in one-off grants to support development of new order processing facilities for ports from the start of 2021. These funds form part of the July 2020 investment package.
The UK Government Cabinet Office has stated that this Port Infrastructure Fund will be “targeted at ports that have the space to build new border infrastructure on current sites, so they are ready to handle new customs requirements under the new Border Operating Model”.
The remaining £270 million is being allocated to inland customs facilities in order to support ports who lack sufficient space. “The funding can be used for a range of vital port infrastructure, from warehouses and control posts to traffic management systems,” the Cabinet Office announcement confirmed.
The news from the UK Government has been, generally well-received, based on responses from relevant parties. Tim Morris, Chief Executive of the UK Major Ports Group acknowledges it as a “welcome step” in the significant amount of UK port capacity being maximised. Ballantyne is also positive. “We welcome this scheme which, importantly, will be open to all port operators across Great Britain,” he said.
Yet both of these highly-respected individuals make additional incisive observations. Ballantyne underlines that: “Without support, there would not be the capacity to deal with the new customs and border requirements,” in relation to the UK’s main ro-ro gateways. In a similar vein, Morris also states: “Time is short, and it is vital that UK businesses prepare for new border arrangements.”
PRACTICALITIES – “OPERATION STACK”
There are already compelling signs of what could occur come January 1, 2021. BPA warns: “How new controls are placed on the 10,000 lorry and trailer movements a day between the UK and Europe is critical to avoid traffic disruption.”
This is a crucial point, as signposted by the impact of a 24- hour closure in Calais, France due to industrial action. There are strong similarities between a work stoppage in a key connecting port to the UK and delays in ensuring that trucks and cargo are efficiently processed to/from the UK. Both situations have the ability to slow the movement of freight, even bring it to a complete standstill, and thereby generate congestion.
The implementation of “Operation Stack” is already well-known in the southern-eastern part of the UK involving access to the Port of Dover but could again be activated come January 2021.
When Operation Stack is in place, trucks with freight are separated into two queues on either side of the connecting M20 highway, with one lane used for traffic heading to the Eurotunnel terminal and one lane kept aside for (Dover) port traffic. The middle lanes are not used and have to be kept clear for emergency vehicle access. All non-freight traffic is diverted off of this major road artery and onto secondary routes.
It has been used regularly in the past, but this use is the exception, not the rule – and certainly not a regular option.
The biggest challenge now facing the UK ports industry regarding Brexit is not efficiency of operations or, currently, funding from central UK Government coffers. It is time!
There are (at the time of writing) less than three months until the Brexit transition year is finished and while the UK Government is providing funding, it has also stated that the deadline for applications for the Port Infrastructure Fund is 12-noon on October 30, 2020.
Successful bids are to be announced “shortly after” this deadline. It is, therefore, imperative that the release of funds occurs promptly after the deadline.
However, for ports and terminals in the UK, there is a need for site selection, preparation and gearing-up to commence handing goods, all before the end of the year.
The challenge and risks still exist though because the funds for these processes will only be forthcoming once the port facility knows it has been approved.
The clock is ticking…and clearly there are some doubts about what can achieved in such a short time window.
Three-Steps to Heaven?
The UK government has confirmed that it expects new border controls to be implemented in three different phases with these taking effect in phases from January 2021.
STEP ONE will see companies importing standard goods, (noted as being “everything from clothes to electronics”), having to prepare for basic customs requirements, such as keeping sufficient records of imported goods. Then, a period of up to six months will be allowed to complete customs declarations.
STEP TWO commences from April 2021, with from this point all animal and plant products requiring pre-notification and all relevant health documentation completed.
STEP THREE is scheduled to go live from July 2021 with importers required at this point to make declarations at the point of import and pay all relevant tariffs. The number of inland border control posts (BCPs) to handle overflow of cargo is under consideration. Facilities at Thames Gateway, Birmingham, Holyhead, Fishguard/ Pembroke and Dover will increase the number of BCPs to 10 and are planned to be operational in July 2021.
These new locations will complement proposed and nominated sites that are set to go live in January 2021. These include: Ebbsfleet; North Weald Airfield, two sites in Ashford and another in Warrington still awaiting planning permission.
However, with such a short period of time remaining, until January 2021, ensuring these initial locations are ready for operations to commence could be very challenging.