France has just closed its border to lorries arriving from British ports in response to the new, more infectious strain of Covid19 now sweeping the UK. Currently around 10,000 lorries a day make the main Dover to Calais crossing. In supply chain terms this 27 nautical mile link is among the most critical in the world. The term ‘logistical nightmare’ has been so often used it has lost much of its impact, but it aptly describes the situation in which many thousands of businesses dependent on UK-France road freight connections now find themselves.
This suspension of services may be dismissed as a short-term over-reaction by the French government, but it is also a timely reminder that serious, longer term disruption of UK-EU supply chains is only two weeks away.
What government would deliberately risk plunging the country into a logistical crisis during the worst medical emergency in a hundred years? The answer is a government that prioritises an ideological principle over the state of the economy and well-being of the people. Adherence to Brexit demands severing the UK’s remaining ties with the EU on the 31 December 2020 come what may, ‘no ifs no buts’. No matter how strong the warnings from industry, Parliamentary Committees and independent public bodies that the country is not prepared for this impending rupture with the EU economy, the government insists that it must happen. Although it concedes that the new Covid strain is ‘out of control’ and requiring radical lockdown measures, there is no suggestion that the end of the Brexit transition period, due in 10 days, might be extended. A call today for this to happen will no doubt be cursorily dismissed. This is surely the true measure of the UK government’s utter devotion to the Brexit cause, a cause which according to opinion polls now commands the support of a diminishing minority of British citizens.
Brexit news is currently dominated by the prospects of a last-minute trade deal being agreed. For many months these prospects have been oscillating between bright and dismal but none of the deals on offer, no matter how much they are hyped, will avert the logistical disruption we are facing. Most of this disruption will be caused by Britain’s decision to leave the EU Customs Union, effectively ending friction-free trade between the UK and its main market which accounted for 43% of its exports in 2019. Only an eleventh-hour reversal of this decision or an extension to the Brexit transitional period can now spare us the impending dislocation of EU-UK supply chains. Both options would, of course, be anathema to a government hell-bent on delivering Brexit at any cost.
Over the past week, before the new suspension of services was announced, we had a foretaste of what is likely to happen from January onwards. Companies desperate to build up and reposition inventory ahead of the December 31 deadline have caused a pre-Brexit surge in lorry traffic on the cross-Channel routes, which account for 90% of truck-borne trade between the EU and UK. This has resulted in 25-30 km tailbacks on port access roads on both sides of the Channel. According to the Sixfold real-time mapping, on the morning of Friday 18 December, when there were no truck delays at almost every other international frontier in Europe, the average delay was 5-6 hours on the Dover-Calais route and 13 hours between Dunkerque-Dover. And this is before any customs checks are introduced. Once they are, problems arising from untested computer systems, vehicles arriving without the right paperwork, acute staff shortages in customs brokerages etc are likely to cause even longer delays.
The potential extent of these post-Brexit delays to freight moving on the cross-Channel routes is indicated by the 1700 vehicle capacity of the new lorry holding area that the government is building in Kent. 1700 16.5 metre long articulated lorries would form a nose-to-tail traffic jam 28 kilometres long. The government’s own ‘reasonable worst-case’ scenario envisages as many as 7000 lorries queuing, a tailback extending from Dover to the outskirts of London. These tailbacks are typically portrayed in the media as a traffic problem, but this under-estimates their wider implications for the road haulage industry, the management of supply chains and the economy as a whole.
EU-based hauliers are responsible for four-fifths of the cross-Channel road freight market. As flows are predominantly inbound to the UK these foreign hauliers usually struggle to find backloads. So the economics of delivering to the UK are relatively unfavourable even before Brexit depresses the level of exports to EU countries and shrinks the available pool of return loads. The economics will become even less attractive once the new operational and administrative stresses of serving the UK market are factored into the equation. One or two day delays are likely then to become routine, new customs paperwork will be mandatory and it will get harder to find truck drivers willing to make the UK round trip. In a European haulage market already suffering from a chronic driver shortage, how many drivers will want to regularly spend many hours, if not days, waiting in their cabs on both sides of the Channel, often with limited access to toilet and catering facilities? A high-friction UK border means gross under-utilisation of vehicle assets and labour which will translate into much higher operating costs and freight rates. A few days ago a German haulier I know was able to charge almost five times as much as normal for a delivery from Hamburg to London because of the current delays. How high will road freight rates to and from the UK rise once post-Brexit trucking delays on cross-Channel routes become endemic?
The wider impact on EU-UK supply chains and production systems, finely-tuned to just-in-time replenishment over three decades of friction-less movement, will be even more severe. These international supply chains are not only being subjected to a substantial lengthening of transit times on the main roll-on roll-off ferry routes: acute congestion at the UK’s main container ports, which is partly Brexit-related, is compounding the problem. In recent weeks Honda has had to suspend production at its UK plant because delays in its inbound component supply chain, while IKEA has warned its UK customers of a decline in product availability. These high-profile examples of the vulnerability of UK-bound supply chains are just the tip of a very large iceberg spanning many industrial and retail sectors.
The government’s decision to phase-in UK customs controls over a 6 month period from January may seem a welcome concession, but it is debatable how much logistical relief it will bring. Tying up vast numbers of lorries in outbound traffic queues awaiting French customs clearance, will also limit transport capacity in the inbound direction with or without customs checks on the UK side. Nor will the phase-in of UK customs checks help those managing the distribution of Britain’s exports to EU customers. In addition to facing outbound delivery delays, many still lack the information they will need to trade with EU businesses just two weeks from now. For several months they have been instructed by a patronising government PR campaign to ‘check, change and go’ but the British Chamber of Commerce’s Brexit Guidance Dashboard for December shows that ‘businesses still have insufficient official information available in 24 critical areas (out of 35), undermining their ability to prepare for change on 1st January’.
I have long argued that ultimately it would be the reality of disrupted supply chains that would make people and politicians realise what a bad idea it was to leave the EU. No amount of political debate and media discussion on this issue can compare with traffic jams, empty shelves, factory closures, higher prices, medical shortages etc in shaping the public mood. The next few months will reveal if this is correct.
Thanks for your article. It seems that it is written as if you have cut and pasted most of it from 2016, pre-vote.
This was more than four years ago, and whilst it is reasonable to have thought it might never happen, due to our disconnected Parliament defying that vote up to December last year, a WTO Brexit was always a possibility and hence, prudent companies I would argue, should have factored that in when preparing their periodic strategic reviews.
WTO is the ‘worst case’ and there are established procedures in place to effect international trade therein. Is it too simplistic to believe that if all EU and UK companies had prepared for that scenario, the effect of this change would have been significantly mitigated? Any improvement on those terms is of course a bonus.
You talk about the government insisting on delivering Brexit by 31 Dec as if they should renege on or further delay it. Would there ever be a good time to do it in the view of those who don’t want to leave? I doubt it.
I agree there will be some disruption as a consequence of this change and had both sides shown more willing, the situation would have been handled better, especially when it comes to communication of certainty.
But we all cannot go on in a transition period forever.
Nothing has changed since 2016. It’s still a ridiculous notion not helped by this incompetent administration.
Yes it is too simplistic to expect businesses to plan for WTO terms as that would result in inefficient and uncompetitive businesses.
Thank you, Alan, for a breath of common sense in the face of the inexcusable negligence of the UK government to take logical steps to ensure the safety and economy of its own people. To pursue Brexit blindly on doctrinaire ground in the face of current horrific circumstances seems to me to be bordering on insanity.
The point you raise at the end of your piece poses a strange paradox. Do we have to welcome and embrace food shortages, delays and loss of business as the bluntest of blunt instruments to bludgeon the government into realising that its approach to Brexit will benefit almost nobody at all? Is that what it will take?
I write as a private individual, but I was a transport journalist for over forty years. Never in that time have I seen a country shoot itself so comprehensively in the foot as ours is doing now.
Looking forward to the next article!