Brexit - a logistical nightmare for cross-channel trade

Author
Rohan Roy
Policy Assistant | Business West
21st May 2018

Last week, three of the UK’s largest Chambers of Commerce - London Chamber of Commerce Greater Manchester Chamber of Commerce and Business West – converged on Folkestone to meet with Eurotunnel public affairs chief John Keefe to gain clarity on the logistical issues posed by Brexit.

As the main trade artery between the UK and continental Europe, Eurotunnel accounts for around 25 percent of all trade goods, and is worth around €115bn to the UK economy. The 150km of stretch of tunnel sees 8 freight trains depart each and every hour, with each crossing taking 35 minutes. Such frequency makes Eurotunnel practically the only transit route for time bound and high value goods from the UK – its scale is mindboggling.

After talking us through some of the vital statistics, John took us to see the tunnel in action. From the control centre we got an aerial view of the operation functioning like a well-oiled machine. A continuous supply of trucks came off the M20, processing their loads in fifteen seconds and proceeding to drive on to the enormous carriages that ship the trucks across the channel. The process was seamless, but as John noted, fragile. 

The system is so finely tuned that it is highly sensitive to disruption at any level. This was shown in summer 2015, when the migrant crisis and strikes in Calais led to a slowdown in processing time, creating long queues backing onto the M20.

Since then the government has invested hundreds of millions of pounds in security infrastructure to prevent a repeat of three years ago. However, it is unlikely that this will help mitigate problems that the UK’s departure from the EU might create.

Contrary to the oft-repeated assertion that the UK’s only land border with the EU is the Republic of Ireland, the UK also shares a land border with France, with each country having a border on both sides of the Eurotunnel crossing. 

Although the British government has stated in the past that it will not put up checks between Britain and the EU, it only has power to do this for imports. If the UK were to leave the Customs Union, it would be incumbent upon France to carry out customs checks on its border at the mouth of the Eurotunnel in Kent. This would extend the current processing time from fifteen seconds to a best-case-scenario of a minute and a half. Besides the fact that this would damage trade, as the events of 2015 showed, there is simply not enough physical space on the UK side to handle such volumes. 

Finishing the talk, John went through the options that he feels the Brexit negotiators face. 

According to John, both of the options being discussed by the British government, a ‘customs partnership’ and ‘maximum facilitation’ would raise the processing time of goods to intolerable levels.

In his words, a customs partnership would be ‘incredibly complicated’, particularly when considering SME’s and sub-contractors  due to the added layers of bureaucracy and complexity. As for maximum facilitation or ‘max-fac’ as it is known, this will simply not be ready in time. Max-fac will require Customs Declaration Service (CDS) technology, which is nowhere near ready. 

Needless to say, both options require huge investments in technological and physical infrastructure from the British government. So far these have not been made, significantly increasing the danger to the economy of UK withdrawal from the Customs Union. 

Joining the Chambers on their visit was Paul Brown, CEO of Mail Handling International. He commented that “there is a lack of any real clarity on what the border will look like”, and that he is “concerned that we could be forced to ‘fail to plan’ because no one knows what we’re planning for”. He added that the extra delays caused by regulatory changes might make it necessary to relocate elements of the business to continental Europe. 

For the Chamber Alliance, takeaways from the visit were twofold. First, that even slight disruptions to the processing of trucks could cause havoc to the flow of trade between the UK and the continent. Second, that both of the options currently being discussed by the government would, in their current form, cause significant disruption to the Eurotunnel operations.

It is imperative that the government responds to these urgent concerns from businesses and business groups from across the country. It is high time that exporters and companies involved in complex supply-chains receive some certainty; its lack is damaging the economy and the reputation of the UK. 

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