Wednesday 25 November 2020

A rehearsal for Folkestone shows Dover what to expect

Among all the flurry of bad news on the economy and Brexit, the queues on the M20 as the French did sort of dry run in Folkestone* requesting passport and details from each driver and passenger, was a warning to the government - although I daresay they won't heed it. The checks took a maximum of 70 seconds but a five mile queue quickly developed on the M20 in Kent, so what will happen on 1 January when the full range of checks cut in?  It doesn't bear thinking about does it?

And yet the news missed perhaps the most important point. The French have had their systems in place and tested for months. We have about four weeks to finish ours which are not ready at the moment and haven't been tested and with no rehearsals at all. 

By coincidence, I was reading a blog post by John Shirley, the owner of a freight forwarding company, who has been working in international trade since 1988. He points out the fundamental reality about the issues in Dover, where he's based.  He writes:

"The understaffing of customs clerks will become significant once the UK leaves the single market on the 31 December 2020. Today, just a minority of forwarders retain customs clerks in the EU, all of whom need several years of training. The only remaining freight forwarder in Calais is Gondrand, which has just three customs clerks. This greatly contrasts the 2,000 clerks that existed there in 1992, when there were approximately 40 freight forwarders. A similar figure of clerks exists in Kent, with each clerk submitting 50 entries to customs per shift. Given that the volume of traffic in the last 28 years has risen 400% each side of the Channel, the handful of customs clerks is demonstrably insufficient."

Mr Shirley warns that delays are costly and that many drivers are paid by the kilometer and if they are delayed in Dover, they simply won't come since they would effectively be sitting in Kent for hours, even days, without pay.  If they do come there will be extra costs:

"Further issues arise when consignees fail to correctly arrange the import paperwork or permits, resulting in the truck being potentially stuck at customs for days. This can force freight forwarders to seek demurrage from the shipper, which is currently £300 a day per truck. Surprisingly, all this happens on borders or at delivery points where are a sufficient number of state-employed customs officers and customs clerks at freight forwarders. However, this will certainly not be the case for Britain or the EU on 1 January 2021. Hauliers are aware that both sides of the Channel are vastly understaffed and deterred by the risk of serious delays, requests for trucks to the UK by forwarders or factories will go unmet."

In other words, even on borders which are fully staffed with experienced customs officers and shippers familiar with the processes there are delays. As an example, on the Croatian/Serbian border, it takes around six to eight hours to leave the EU, and twice that to enter. 

His calculations for the cost of the end of the transition period paints a "bleak picture."

"Between the increased costs to British importers and exporters, the demurrage costs for goods possibly delayed for a fortnight, multiplied by the thousands of trucks crossing the Channel, importers and exporters may be looking at an annual burden of more than £33 billion. The long-term effects of customs clearance could be even more dire, similar perhaps, to self-imposed sanctions."

Self imposed sanctions/  Think about it.

The HMRC and the Border Delivery Group in the UK talk about being ready - and there is perhaps an outside chance THEY will be ready. But will the thousands and thousands of freight forwarders and privately employed customs agents be ready and in place. Mr Shirley seems to think they won't be and the costs will be about three times our annual net contribution to the EU.  Amazing.

Later today Sunak is going to deliver his autumn statement, his spending plans for 2021 with figures which promise to be eye watering.   

The trade talks continue with hints that progress is being made and I am sure by this time next week a deal in principle will be in sight. I am equally sure there will be an extension to the transition period. Yesterday's M20 experience is a pointer towards that surely?

* I corrected this after realising French customs officials did the checks at the entrance to the tunnel in Folkestone as they are allowed to do under the Le Touquet agreement.