Brexit: Crisis? What crisis?
Ignore the doomsayers. Britain’s ports are up to the challenge of coping with Brexit, even the no-deal version, argues the chief executive of the UK Major Ports Group
Among all the preparations for UK’s departure for Europe, it is important not to lose sight of the fact that Brexit may offer opportunities for the UK’s ports, its coastal communities and the environment
CRISIS sells. Headlines proclaiming likely chaos lure us into tapping a screen, clicking a mouse or picking up a newspaper from a stand, and such has been the case with Brexit and UK ports.
Allegedly, ports will be paralysed, our roads gridlocked, and given ports handle 95% of the UK’s trade in goods with the world, our economy will be crippled, with shop shelves empty.
But actually, behind the scenes, the UK’s ports have been working incredibly hard to prepare for a range of different Brexit scenarios.
It would be a bold person who claims there is nothing to worry about.
But the UK’s ports are approaching Brexit in the same way they have approached major challenges throughout their long history; through working closely with their customers.
There is even an optimistic case that Brexit can bring benefits to the UK’s ports.
First, let’s start with some context.
The UK’s ports differ hugely in the types, volumes and sources of trade they handle. This means that the risk profile of ports in terms of exposure to Brexit disruption varies hugely.
Ports such as Dover, with 98% of its throughput by volume travelling to and from EU jurisdictions via self-driven ro-ro traffic, clearly have a different risk profile from a major multi-cargo port such as Bristol, with a 35% exposure to Europe.
Major container ports such as London Gateway, where 95% of its volume comes from outside the EU, are different again. This ‘rest of the world’ trade is handled today highly successfully and without drama.
It’s also important to remember that trade and ports change all the time. For instance, containerisation completely transformed global trade, shipping and thus UK ports.
More recently, the UK’s low-carbon energy transition has had big implications on the waterfront.
Thermal coal, once a key high-volume cargo for many ports, has virtually disappeared in the relatively short period of just five years. Ports have weathered this regulation-induced storm in a way few other sectors would have.
And many ports — such as Lowestoft, Great Yarmouth and Blyth — are changing their business models to serve the new renewable energy industries that this policy sea change has driven.
The speed and complexity of Brexit, particularly a no-deal scenario, produces special pressures. But the experience of the UK’s ports over the long term is of successful adaptation to change.
In terms of Brexit, ports have already been preparing hard in a number of ways.
First, by maintaining significant investment in port facilities. Last year saw nearly £600m of investment from the UK’s top 15 port operators, handling 87% of port volumes.
The investments speak directly to the need to maintain the UK’s resilience ahead of Brexit.
They include £50m ($65.8m) to boost capacity at ABP’s container terminals in Hull and Immingham, which serve European routes; Hutchison Ports and DFDS’s investment to boost ro-ro capacity at Felixstowe by 40%; and the acquisition of additional land by the Bristol Port Company for customer storage requirements.
Second, by working closely with customers, helping them develop the Brexit options they are asking for, such as new sailings and new storage facilities.
They have been migrating customers to the systems that successfully handle global trade today. They have been sharing their expertise in terms of border processes and handling ‘third country’ cargoes.
Third, by working closely with the government and agencies. If you’ve been wondering why that port employee you know seems to have been busier than usual over the past two years, the chances are it’s because they’ve probably been in a seemingly endless series of meetings, workshops and conference calls with government and its agencies on Brexit preparation.
It has not been a seamless process, so it has been a huge commitment of people’s time on all sides.
Among all the preparations for the UK’s departure for Europe, it is important not to lose sight that Brexit may offer opportunities for the UK’s ports, its coastal communities, and the environment. Many UK ports have already experienced an upsurge in enquiries from potential new customers.
The UK’s major ports sector is unique in Europe because it has considerable amounts of private — rather than government — ownership, a model than has served the UK well. Inevitably, EU rules are set for 27 rather than the UK special case.
A stand-out example would be the EU’s highly bureaucratic attempts to enforce competition from Brussels via the Port Services Regulation, which comes into force in the UK a matter of days before Brexit.
Brexit gives the opportunity to set the right regulatory framework for the UK’s port sector. It also gives the opportunity to boost environmental ‘next gain’ through a more streamlined regulatory system and more flexibility in mitigation.
Finally, it could allow step-change opportunities for boosting investment and jobs in coastal communities through the introduction of free ports.
None of this should be taken as complacency. Brexit, particularly a no-deal Brexit, means challenges for the UK, including many of its ports. Major system change inevitably brings risk.
There are two sides to a border, with the UK only in charge on one side. But regardless of the sensationalist headlines, ports and their customers are working intensively to ensure the UK stays open for trade, whatever Brexit brings.
Tim Morris is chief executive of UK Major Ports Group