International trade meets Brexit in UK

International trade represents an issue as the UK moves to leave the EU as part of Brexit. (Photo: Shutterstock)

International trade represents an issue as the UK moves to leave the EU as part of Brexit. (Photo: Shutterstock)

Ever since the United Kingdom pressed for divorce with the European Union, the far-reaching implications - both politically and economically - have been studied with great interest. The UK’s immediate priority would be to smoothen the transition process and align trade possibilities post-Brexit, without a fallout in its economy.

One of the major woes the country faces is because of the impact created by closed borders on international freight transport. A bulk of its incoming freight is handled by mechanisms set up outside the UK and within the EU sphere. Though the transition period of two years does sound realistic for the UK to build on its infrastructure, aspersions still exist after looking at its excessive dependence on mainland European ports and Eurotunnel for trade.  

The port of Rotterdam is the largest port in Europe, handling over 460 million tons of cargo in the year of 2016. It also is the main point of entry for goods headed to Germany, Russia, and the UK. Though being an island nation, the UK does not have the facilities to manage large ocean liners and thus a sizeable chunk of the UK’s cargo is received in the Netherlands, from where it is sent to the country in batches.

Apart from the infrastructural problems, the UK also needs to contend with logistics slowdown after Brexit. This is because the UK would not fall under EU customs laws and thus would have additional checks levied on its containers while on entry and exit in EU transport hubs.

For example, consumable products coming in containers would be checked by sanitary inspectors if the cargo is entering from or leaving for a foreign market. To date, this was not an issue, but with Brexit, the UK would no longer fall under the EU jurisdiction, making it a foreign market. Customs clearances place an additional burden on freight movement, with it being a hassle for both the EU and the UK.

The UK has also benefited from the Eurotunnel Le Shuttle Freight that exists between continental Europe and England, making it one of the most cost-effective ways to transport freight by sub-sea links. Ireland, for instance, depends heavily on the Eurotunnel, with two-thirds of its exports moving through the UK and the sea link, to venture into the mainland European market.

With Brexit, supply chains that move through the Eurotunnel could be delayed, since the sub-sea link transports over 54,000 tons of freight every day and they would have to pass through customs at either end of the tunnel. The Dover port in the UK, which is situated a few miles from the Folkestone exit of Eurotunnel, oversees 40% of all import and export activities in the UK, and handles 10,000 trucks that are transported on roll-on and roll-off ships every day.

The UK is working on upgrading its existing customs checking technology, since with outdated systems, the situation could quickly turn nightmarish. Concerns have been raised by MPs in the UK Parliament about the possibilities of an endless gridlock of trucks due to slower or faulty customs processing systems.

Meg Hillier, the Labour chairman of the all-party public accounts select committee, believes it could be catastrophic if there is a delay in processing, with queues that could stretch to over 112 miles, all the way beyond London. Add to the mix, perishable commodities that are not hauled in reefers, and the country could be facing a logistics horror story.

There also is the trucker variable in the freight industry equation. Almost 10% of commercial truck drivers in the UK are from mainland EU countries, mostly hailing from East Europe. Brexit would lead to their exodus which is worrying on many levels, since the local logistics workforce is aging, with only about 9 percent below the age of 25.

All said and done, the UK was the third largest economy in EU, and its leaving would create an economic void in continental Europe that would be hard to fill - thus injuring trade growth and possibilities within the 27-member EU state. The shipping ports and sea links in the Netherlands, Belgium, and France have handled a lot of the UK’s cargo and thus, would lose a valuable partner post-Brexit.

London and Brussels should work hand in glove to cough up a deal that could make Brexit as painless as possible, and chalk out negotiations that could expedite the process of businesses adapting to the scenes post-Brexit.

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