Brexit is the international relations equivalent of a giant bolt cutter being applied to decades-old supply chains, which many had thought unbreakable. Regardless of whether the UK and the EU reach agreement on a trade deal and irrespective of how liberal or restrictive that deal may be, the UK will fall out of the European single market and customs union on January 1st, which will mean serious disruptions to trade and historic supply chins.
As a Department of Agriculture, Food and the Marine spokeswoman points out: “The UK has left the EU. From January 1st, 2021, regardless of the outcome of the current EU-UK trade talks, new regulatory and customs requirements are going to be part of trading with or through Britain. The UK will no longer apply the rules of the single market or the customs union, except in Northern Ireland in accordance with the protocol.”
“It is estimated by Revenue that the number of customs declarations made by Irish companies will rise from 1.6 million this year to more than 20 million next year as a result of Brexit,” says Mick Curran, chief executive of the Chartered Institute of Logistics and Transport. “The customs declaration is made on what is known as the single administrative document. That’s almost laughable as the single document is accompanied by up to 20 other documents. There are about two dozen customs brokers in Ireland, and they are all flat out with work. Some hauliers are starting to do customs declarations and some freight forwarders are doing it. If you can’t make a declaration, your goods will not get on board a ship to Holyhead.”
And there is another problem. Companies need an Economic Operators’ Registration and Identification (EORI) number if they want to trade with the UK. “Last year 94,000 Irish companies traded with the UK, but only 40,000 of them have registered for an EORI,” Curran says. “That means more than 50,000 companies haven’t got one despite being contacted by Revenue. To get a number takes four or five minutes online. It’s that simple.”
Other challenges
Lorcan Sheehan, chief executive of supply chain specialist firm PerformanSC, agrees and highlights other challenges. “If there is no deal, duties will be added to many products,” he says. “There is the potential to go to WTO tariffs or the UK equivalent. The good news is you can look up what the WTO duties will be and get ready for that.”
Agrifood businesses need to pay special attention to the new rules that will apply, according to the Department of Agriculture. Any business moving animals, plants, food or other goods of animal or plant origin to, from or through Britain will be subject to new checks and controls. Irish control authorities will conduct documentary, identity and physical checks at points of entry to Ireland.
It is essential that businesses take steps to understand the impact that any new rules or processes will have on their operations. "Businesses should urgently familiarise themselves with the new regulatory and customs procedures, and the certificates and documentation required to continue trading with and through Britain. In addition, businesses are asked to ensure the operator responsible for the consignment is registered with the Department of Agriculture, Food and the Marine through the online registration portal on gov.ie/agriculture and that businesses have the necessary access to the Department's online import and export platforms and the EU Traces system. Businesses are also encouraged to talk to their suppliers, logistics agents and customers to ensure that everyone in the supply chain knows their role and responsibilities. Businesses should act now to avoid significant delays and minimise disruption to their business by going to [the above web address] to register, access supports and get all the information they need."
Food and agriculture are not the only sectors affected by these new controls. There is also a new phytosanitary standard for wood packaging used in the trade of goods of all kinds. Wood packaging material – including pallets, crates and dunnage – used to move goods will need to meet the ISPM 15 Regulation of Wood Packaging Material in International Trade standard, developed by the International Plant Protection Convention. The aim is, through the treatment of such material, to reduce the risk of introduction and spread of pests and pathogens often associated with wood packaging that could be harmful to trees, forests and ecosystems. Traders with the UK will need to ensure the wood packaging they use in their supply chain is compliant with the standard from January 1st.
‘Land bridge’
The “land bridge” route to transport good to and from mainland Europe to Ireland via the UK also presents challenges. “The expectation for companies using the UK land bridge is that there will be delays, either in the short or long term,” says Sheehan. “Businesses will learn how to deal with that. Some of them are looking at direct sailings from Ireland to France. But those direct connections can’t take the full volume of traffic. Companies will have to recognise the delays and cater for them through advanced time delivery ordering and possible bigger bulk orders.”
But nothing will prepare them for the delays that some foresee at Dover. “A two-minute delay for each truck in Dover over 24 hours will result in a 70-mile tailback,” says Mick Curran. “That would have a huge impact on supply chains. Eighty per cent of goods come into Ireland via the land bridge, and importers need some alternative. The more people look at alternative ways of getting stuff on and off the Continent the better. For years we have relied on accompanied trucks, but a lot of companies are now going for lift on-lift off (lo-lo). If you pick the right day, it’s as fast and half the price as using the land bridge. A lot of the sacred cows that were there are being slaughtered.”
Dr Trevor Cadden, senior lecturer in operations management at Ulster University, believes companies need more state assistance to cope with the impact of Brexit on their supply chains. “I led a study on Brexit for InterTradeIreland last year,” he says. “We surveyed 306 firms and 62 per cent of them didn’t have a supply chain strategy, while 54 per cent didn’t know how to measure the performance of their suppliers. Only 39 per cent had technology to link with their suppliers and just 48 per cent trusted their suppliers. Firms need support with their supply chains with or without Brexit.”
That needs a proactive response from State bodies, he contends. “If you are an SME owner you are probably working 14 hours a day running the business and don’t have time to go surfing the internet to find out about Brexit and how it’s going to affect your supply chain and what supports are there. The enterprise agencies need to knock on their doors and tell them what they can do for them.”