How will British maritime trade adapt post-Brexit?

The political landscape resulting from the Brexit referendum is yet to provide long-term certainty for British businesses relying on shipping
Freight ships at port, 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.” 

Even if there was action by the UK government, there would probably be a long lead-in time before anything happened. It’s hard to look that far forward

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.