Time for Galway businesses to assess how Brexit impacts them

Minister of State Naughton pictured recently at Galway Harbour with Conor O'Dowd and Maurice O'Gorman.

Minister of State Naughton pictured recently at Galway Harbour with Conor O'Dowd and Maurice O'Gorman.

Minister of State in the Department of Transport with responsibility for International and Road Transport and Logistics

EVERY day, trucks carrying products produced by Galway’s manufacturing companies including those in the medtech sector leave the city and begin making their way to international markets in the UK, Continental Europe and further afield.

At the same time, in ports across the country, heavy goods vehicles pour out of ferries carrying food, consumer goods, medicines, construction materials and other essentials, goods which will be delivered to shops and warehouses in a matter of just a few hours.

Sea-borne freight accounts for some 90pc of our merchandise trade and the economic well-being of many Galway businesses relies on well-functioning ports and a highly-efficient supply chain. Manufacturers and exporters, as well as firms who need to import products to serve their business, rely on the system working well. And it does. Our experience of Covid-19 is testament to that, as we did not run out of necessities. Our shops remained stocked. We did not run out of medicines. Once possible, the construction sector resumed building. Exporters moved their products.

But Brexit poses a fundamental threat to our ability to move goods on and off this island. Unless everyone involved in the sector takes action now, businesses across Galway and in many of our cities, towns and villages run the risk of experiencing major problems importing and exporting the products and materials needed to keep them afloat and maintain employment.

As Minister with responsibility for International and Road Transport and Logistics in the Department of Transport, I have visited our ports and spoken to operators and stakeholders across the supply chain, including hauliers. I have spoken to the Galway Harbour Company, chambers of commerce across the region and other groups to learn, understand and assess the challenges which Brexit presents.

Across Government, we are constantly monitoring and assessing potential economic threats arising from Brexit. The Government understands the challenges we face. Among these is the impact that Brexit will have on the UK Landbridge. The Landbridge is used as a route to access wider EU markets primarily because it offers significantly faster transit times than alternative routes.

Used by some 150,000 vehicles travelling to and from Ireland each year, the Irish Maritime Development Office (IMDO ) suggests that the value of trade to Continental Europe via the Landbridge is some €21bn.It is in the UK’s interest that the Landbridge works and that any disruptions are short-lived. But we recognise that regardless of whether a deal is agreed between the EU and UK, the new arrangements from the end of the transition period will inevitably create delays for Irish RoRo (roll on roll off ) traffic.

This is because those using the Landbridge will be required to engage with customs, health and agriculture authorities in Ireland, the UK and across the EU for all goods transiting through Britain. As part of our planning to avoid disruption, my department has been examining alternatives to the Landbridge.

This has culminated with the publication of an IMDO study which re-assesses Ireland’s maritime connectivity, updating a previous study from 2018.The IMDO found there was “significant spare capacity” on existing services to handle diverted Landbridge traffic. “Shipping companies may be required to adjust current schedules and routings, but there is good reason, based on previous experience and industry consultation, to be confident that RoRo operators will adjust their service offerings to meet changing demands,” it said.

Ferry companies are commercial operators and meeting demand is in their interest. Since May, new RoRo services have been introduced from Ireland to Zebruggee, Santander and Portugal. A direct daily service from Ireland to Cherbourg will be introduced in January, which increases capacity on that route by some 15%. New LoLo (lift on lift off ) services have also been added. There has been criticism of the IMDO report from some quarters. To be clear: the IMDO was tasked with examining connectivity and to ascertain if ferry companies were capable of providing additional RoRo capacity if required. The report suggests they are.

With the end of the Brexit transition period fast approaching there have been calls for the State to directly intervene and provide a daily sailing from Ireland to France. But there is as yet no case for State intervention. There is no evidence of market failure. While acknowledging that spare capacity may not be in exactly the right place at present, the shipping companies have assured me it will follow demand once proposals are put to them.I understand that many in the sector are worried about possible impacts on their business.

The Government is working hard to ensure jobs and livelihoods are protected. But there will be profound changes in how we conduct business and each sector of the supply chain must mitigate the risks within their own control. Importers, exporters, hauliers and logistics companies will have to examine and adopt new ways of doing business.

That means traders should re-assess how they get goods to and from EU markets. What is the risk – in time and money - from delays on the UK Landbridge? Could these risks be avoided if goods are instead shipped directly to Continental European ports? Exporters and importers must work with haulage and logistics companies to ensure there is no interruption to the supply chain. Ferries must be scheduled at appropriate times. All involved must act now.

The IMDO ACT campaign encourages stakeholders to Assess their options, Communicate their demands to shipping companies and trial alternative services. There is little value in waiting until the New Year. All firms which rely on international trade must take action now. It serves no-one well to predict that the worst will happen and to portray the Government as being ill-prepared. Not until after January 1 next will we know if Ireland, the UK and our EU partners are ready to weather the storm. Until then, the Government will continue to diligently plan for the profound shock that is Brexit, and it’s vital that business does the same.

 

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