With the end of the Brexit transition period the UK embarked on its new journey but the beginning of this chapter has been marked by many problems. Logistics companies found themselves unable to fulfill obligations and tasks that just a few weeks ago were nothing to worry about. According to Aidan Flynn, General Manager at FTA Ireland, the main reason for the problems is that there was no real implementation or transition period that allowed companies to trial Customs IT Systems and get used to the new arrangements.
‘No matter what type of trade agreement was going to be put in place, the UK was never going to get a frictionless trade,’ Flynn begins. Despite both sides seeking an ambitious trade agreement the reality is that once outside the customs union and single market barriers such as alignment with rules of origin are now in play and companies are forced to overcome them. Flynn argues that the UK has not really understood how the increased paperwork will impact its industry and its ability to trade with the EU. According to the managing director of FTA Ireland the EU was more frank and open about it.
‘The biggest problem for all of us is the fact that we didn’t have a transition period and the requirements changed at 11pm on the 31st December,’ Flynn continuous. All the different systems are proving to be very challenging for hauliers to navigate through both at the EU and UK side. The inability to test and try the new systems meant that drivers and firms were left in the dark with no other option but to learn as they go. This inevitably has created friction and is the source of the many of the stories that circulate the media.
In addition, a real problem is the lack of customs agents who are suitably qualified and are able to understand how the new systems operate.
Volumes between Britain and Ireland are down compared to December. The UK is a substantial importer into Ireland and an important export partner. Flynn says that over the last month there has been more problems getting goods from Britain into Ireland and this will have a negative impact on a large part of the economy in both countries. Part of the slowdown is due to the stockpiling before Christmas but also because companies lack understanding how to use the new systems. Companies however are coming to the realisation that very little can be done at this stage and they will have to adopt the new procedures and get used to what is required.
FTA Ireland has written to the Irish government to ask the EU to ease some of the requirements while businesses find out what they need to do. ‘We are looking for some sort of a facilitation period that facilitates easements to movement of goods of up to six months,’ Flynn argues. ‘The supply chain is resilient but it is very difficult to adapt and change overnight.’ Ireland has increased the direct freight connections to continental Europe to try and improve the situation. A lot of these actions are also linked to the implication of the Covid-19 pandemic where drivers are forced to wait for hours and to prove they have negative tests when travelling between the UK and the EU.
Flynn is adamant that Ireland wants to continue to trade with the UK but he adds that firms need to be able to trust the systems they are working with. ‘The requirements for Covid testing are complicating this,’ he goes on.
The big question for Flynn is how many hauliers would be able to survive during the adjustment period. The logistics sector is known for its tin margins and anything that creates additional barriers can very easily become a major problem for smaller and medium size firms. ‘There is only so long that the sector can survive without goods moving,’ Flynn explains. Flynn is worried that in the short term there isn’t enough capacity to grow trade between Ireland and continental Europe to a level that could be used as a substitute to UK exports. He reckons that supply chains and trade experts must redefine how they do business. Adapting to the new training reality will take time and Ireland has already started to grow its trade with the rest of the EU but is conscious that Ireland’s trade links with Britain must be preserved.
‘Our geographic location means that we will always rely on Britain as a trading partner,’ Flynn says and adds that the challenge at the moment seems to be more at the British side rather than the Irish. ✷