Delayed departure: The FTA on preparing for Brexit in March 2019
17 / 12 / 2018
James Hookham, deputy chief executive of the UK’s Freight Transport Association (FTA), provides an exclusive insight for Air Cargo News into the supply chain challenges of Brexit.
Bing-Bong: “The UK Government regrets to announce that boarding for Brexit flight 30-03-19 has been delayed”
For logistics and supply chain managers waiting in the Brexit departure lounge, the postponement of the vote in the House of Commons on the European Union (EU) Withdrawal Agreement is deeply frustrating.
Partly because it holds up the other ratification procedures in the European Parliament but mainly because, with less than 100 days to go, they still do not know what sort of trading and transport conditions they should be planning for in the second quarter of next year.
For businesses trading across Europe, the number one concern is preserving the smooth flow of goods across the UK-EU border.
Much of the media attention has been focused on the potential impact of a no-deal on the roll-on roll-off ferries and the Channel Tunnel shuttle services between Britain and France.
This is inevitable, as nearly one fifth of the value of Britain’s international trade enters or leaves the country across or under the Straits of Dover, including nearly all movements shipped as airfreight.
Contingency planning to prioritise, divert or re-time this traffic is at an advanced stage in Britain and ports in France, Belgium and the Netherlands, both by affected businesses and the responsible government agencies.
Enough details of these no-deal arrangements has now been released by both parties to allow serious operational planning to start. Given the delayed boarding announcement for the Brexit flight, FTA is recommending you heed this advice.
These plans are necessary because of the UK’s decision to leave the EU Customs Union and the Single Market.
Without the Transition Period that ratification of the Withdrawal Agreement would provide, this action will end the numerous co-operation and mutual recognition agreements in place for the aviation sector that allow frictionless crossing of borders and use of air space.
The EU has said that this will mean that British registered aircraft, airworthiness certificates and airfield security certifications would not be automatically recognised if the UK leaves without a deal and flying permissions would be denied.
There is scepticism that such a disruptive and unnecessary action would be hard to implement and to enforce and difficult to explain to the EU27 member states using British certified aircraft and parts but this is not a basis for operational planning and businesses using and operating airline services need and deserve more clarity than political brinkmanship.
If the Withdrawal Agreement is not ratified and no Transitional Period takes effect, it will require a series of urgent and comprehensive mini-deals to recognise flying rights, air worthiness certification and air crew qualifications necessary to keep planes in the air in EU airspace.
Some of these have already been negotiated but many more are needed to ensure that schedules can be confidently delivered.
As the political processes become more mired in controversy and the possibilities of a no-deal increase, the pressure for so-called Mini-deals to be agreed, separate to the main Withdrawal Agreement will grow.
These are interim emergency agreements that will roll-over current arrangements until something more permanent is sorted out.
But while it may be good to know that the ground crew are trying to fix up some alternative arrangements, the hope in the Brexit departure lounge is that they won’t be needed because the Withdrawal Agreement flight will leave as scheduled and a Transitional Period during which all current EU trading and transport arrangements continue as now will give a breathing space of at least 21 months while a new frictionless trade deal can be negotiated.
Business class passengers are still holding the UK government accountable for delivering a frictionless Free Trade Agreement with the EU, despite leaving the Customs Union and the Single Market, just as was promised on the ticket.
But not everyone in the departure lounge is waiting for a flight out of Europe.
One of the most frequently quoted reasons in favour of Brexit is that the UK would be able to reach its own free trade agreements with other economies around the world, once it is out of the EU Customs Union.
Leaving aside the length of time these negotiations usually take to complete, the prospect of a substantial increase in global trade to and from the UK will ask questions of the nation’s infrastructure capacity and the planning and management capability of logistics businesses based in the UK.
Keeping Britain connected to new and existing markets around the world is one of the main arguments advanced by FTA in support of the proposed expansion of London Heathrow airport.
Failure to progress that development, and improve the freight capacity at this key global gateway in the meantime, could limit the number of direct connections between Britain and its target global markets in the future.
A global Britain needs a global hub airport.
The capacity of Britain’s gateway ports will also come under pressure should trade in goods with the rest of the world grow in relation to EU trade.
The switch is not seamless though. Most rest of the world trade is carried in container boxes through ports and supply chains equipped to serve this kind of equipment.
Whereas UK-EU Trade is carried mainly by trucks and trailers aboard roll-on roll-off (ro-ro) ferries and shuttle trains – even airfreight.
The rest of the World trade enters and leaves the UK through different international gateways. With the container shipping industry currently undergoing deep structural change, ports like Southampton, Felixstowe and London Gateway will need to work hard to remain attractive points of call for the two or three shipping alliances now serving the world’s major container trades.
These trades are served by so-called mega-ships that are two or three times the capacity of vessels in service only a few years ago.
A pivot in UK trade towards North American trade could also benefit westward-facing UK ports like Liverpool and Avonmouth.
Were Customs controls and border inspections to be re-introduced between the UK and the EU, the capacity and reliability of the existing ro-ro ferry services would inevitably reduce unless and until new separate facilities were constructed to conduct these checks away form the main traffic flow.
There have been several proposals for the introduction of other types of service between Britain and the Continent. Unaccompanied trailer movements, for example, have been increasing steadily over recent years and have the great advantage, in a no-deal Brexit situation, of not requiring a haulage permit to accompany them.
Likewise, new or expanded short sea container shipping services could offer relief to congested ferry routes, although the type of inland transport equipment and handling facilities at origin and destination would need to be adapted for this type of service.
Smaller ports, like Ramsgate and Sheerness in Kent, that last saw a commercial service many years ago, are now actively promoting their ability to provide alternatives.
If the South East of England is to remain the principal gateway to and from mainland Europe, the government needs to decide soon on the location of the Lower Thames Crossing and to commence construction in order to provide much needed relief to the crossings and approach roads at Dartford.
Meanwhile, back in departures, the airfreight community is still waiting anxiously for an update on whether the planes will be flying, or the trucks rolling, on March 30 next year. Few politicians believe that a no-deal Brexit would be acceptable to the British business community or a majority of consumers, once its consequences start to take effect.
Some EU politicians are becoming more alert to these risks to their own constituencies too. So the political talk now is of a possible delay of the time of departure or a cancellation of the Brexit flight altogether.
But this remains highly speculative at this stage and is of little value for practical logistics planning purposes.
Presenting a 2019 business plan that relies on political realism in order to avoid the need for making any contingencies against a no-deal Brexit plans to keep supply chains flowing is unlikely to impress any board of directors or shareholders.
•The FTA is one of the biggest business groups in the UK, "supporting, shaping and standing up for efficient logistics". It is the only organisation in the UK that represents all of logistics, with members from the road, rail, sea and air industries, as well as the buyers of freight services such as retailers and manufacturers whose businesses depend on the efficient movement of goods.