Post-Brexit Project Learning Curve

Breakbulk Operators Uncover EU Quirks

By Felicity Landon

The end of the Brexit transition period on Dec. 31, 2020 meant that the UK was – after nearly five years of political upheaval – no longer part of the European Union.

From the pre-Christmas truck queues on the way to the south coast’s Port of Dover – caused by the rush to stockpile, combined with France’s Covid-19-related border closure – and dramatic shifts of volumes on Irish Sea services since Jan. 1, 2021 to plummeting UK to EU export volumes, stories about truckloads of rotting pork and a ban on shipments of trees, the stories have kept on coming. But the focus is almost always on the regular flows of standard roll-on, roll-off trailers and containers.

For project cargoes, plans are made in advance and therefore any additional paperwork should have been accounted for and any new non-tariff barriers, or NTBs, will have been anticipated. Nevertheless, some Brexit fallout is inevitable for this sector.

In its recent report on risks and resilience post-Brexit, the Economist Intelligence Unit highlighted the UK aerospace industry as one that is highly integrated with the EU. “Among the biggest UK producers is Airbus, which employs around 15,000 UK workers and operates across the EU. Just-in-time supply chains could be disrupted by increased NTBs and local content requirements,” said the report.

Axel Mattern, CEO of Hamburg Port Marketing, said the port was actually seeing a positive trend in trade with the UK in terms of container shipping, with shippers routing export or import goods to and from the UK via Hamburg to avoid congestion in the English Channel ferry ports. However, he said, there has been no impact on the breakbulk segment.

Ann De Smet, Port of Antwerp business development manager, said that as Brexit impact mainly affected regular ferry services, which are not handled at Antwerp, it was difficult for her to comment on the issue.

However, a related development was Fast Line Belgium’s launch last year of a new liner service between Antwerp and Drogheda. The service runs between the Wijngaardnatie terminal, which handles all kinds of breakbulk cargoes and specializes in steel products, and Fast Terminals in Drogheda. At its launch, tagged “Prepare for Brexit,” Fast Line said it envisaged picking up cargoes that were being trucked via the UK land-bridge to Ireland. “All kinds of breakbulk and general cargoes such as steel products, bagged material, palletized goods, project cargoes, etc., are welcome,” it noted.

Hitting the Road

Brexit seems to have delivered road-related breakbulk transportation issues rather than sea-based ones, for now.

The northwest UK-based shipping and logistics group Armitt, which specializes in steel and handles a range of other cargoes, said that so far it had not experienced many issues with specific project cargoes. However, Lauren Caldwell, shipping and logistics manager, said issues around transit documentation had led to an increase in haulage companies requesting direct movements – for example, UK to Netherlands, as opposed to via Calais.

“We have seen a change in voyage requests mainly due to the transit document (T1) being required,” she explained. “If you transit another country and are not declaring the goods into a Customs control, then you need to have a transit document that accompanies the goods at all times, so that when you pass through each border point, the document can be checked, and the goods allowed to proceed until they reach final destination.”

Agents able to raise T1s are scarce, and those that can often may not provide the service, because they are not controlling the transport of the goods and therefore have no control to ensure the transit procedure is closed correctly, Caldwell said. “When raising a T1, the agent uses their guarantee to secure any duties due on the goods should they not be declared into a customs control at destination and the T1 closed.

“Due to what may be a lack of knowledge and understanding within the industry of the required process, T1s have not been closed correctly or at all. This results in penalties and the guarantee being taken from the agent raising the T1, which has deterred some agents from offering this service.”

At the end of January, a vast number of agents were offering this service with marketing emails, she said, “but over the past month we have seen this service/facility decrease due to the risks involved.”

“T1 agents now tend to want to complete the transport element, export and T1 together as one package, so their margin on transport plus the T1 cost and export declaration is making it an expensive operation to those who did not envisage the transit requirements.”

France Permit Anomaly

An unexpected Brexit-related issue that has arisen on the roadside is France-specific. The Heavy Transport Association, or HTA, is lobbying hard over what has been called “the French roaming permit system crisis.”

Before Brexit, UK abnormal load vehicle operators could apply for the EU roaming permit that allowed them to drive the relevant vehicle anywhere in the EU. These permits, in three price bands covering three categories based on size and weight, are issued by the country of origin and valid for three years, no matter how many journeys the lorry undertakes within that category.

However, post-Brexit, France made its system unavailable to UK operators – even though it remains available to EU and Swiss operators, despite Switzerland not being in the EU.

“The whole idea of the system is that you can roam in the EU – for example, delivering from the UK you could drive through France and into Italy without having to change permits, crossing borders seamlessly,” said Marcus Gough, chairman of the HTA.

“In January we started getting news that the French were withdrawing roaming permits for UK operators crossing France. That has hit the UK operator hard because most of the journeys between the UK and Europe are through France. Some go via Spain or Benelux, but the majority go across the Channel because it is the shortest crossing and offers good links.”

The HTA was informed on Feb. 8 that any permits issued up to that date – which should have lasted three years and were paid for on that basis – would expire according to the French decision.

“That is when we as an association raised our concerns with the (UK) Department for Transport,” Gough said.

“So far, there has been no change – UK abnormal load operators are having to apply for a new permit for each and every movement.”

This adds significant costs and bureaucracy to obtaining a permit for each trip through France. The EU permit still lasts for three years everywhere else, so two types of permit are now required. But the damage goes further, Gough said. The application process can take a couple of weeks, depending on how France is dealing with the system – and now, of course, France is inundated with permit applications. That puts operators at a disadvantage compared to EU-based rivals who can confirm straight away their availability for a job.

Gough relays the tale of an HTA member who drove a load through France on their existing EU permit was stopped and given an on-the-spot fine of €750.

France justifies its move by saying it involves internal domestic law, Gough said. “But under the EU-UK Trade and Cooperation Agreement, or TCA, they can’t do this because we are still meant to have seamless transport between all countries, and the agreement says there should be a level playing field for transport rights and safety. France has effectively shut its borders to the EU roaming permit for UK drivers.”

Representing Drivers

ESTA, the European association of abnormal road transport and mobile cranes, has more members who are outside the EU than within it, according to Director Ton Klijn.

“We had a discussion about Brexit at our recent board meeting. We have said that although we regret the fact that UK has left the EU, we think that in the future UK members will need ESTA even more than ever,” he said. “At ESTA we are not politicians – we want to work together.”

Klijn noted that UK drivers will not be affected by the regulations of the upcoming Mobility Package 1, part of the EU’s efforts to coordinate regulations across Europe and tighten up “bending” of the rules. He describes the regulations as “definitely a move in the right direction.”

There will be new rules around driving and rest times and cabotage, and also requiring the use of smart tachographs, to enable a system which adds up penalty points picked up in any EU country, leading to possible suspension for multiple offenses.

Within the EU-UK TCA, an annex covering road transport states that both parties can carry out international transport to and from each other’s territory with transport companies, vehicles and drivers that are duly registered, qualified and certified according to their own national law, Klijn said.

“In addition to this, a limited number of cabotage loads are permitted, provided they immediately succeed the international trip. Drivers are obliged to follow driving and rest time rules, which are stipulated in detail in the agreement; this would imply that any changes to these TCA rules (as foreseen in the Mobility Package 1) would need to be bilaterally agreed.”

As the Mobility Package 1 will culminate in a number of EU directives, its effects will have force in the EU alone, he explained.

“As such, I do not expect too much effect on UK drivers in the EU or EU drivers in the UK. This, of course, is not the case with member states’ national regulations related to abnormal transport – they can be changed at any time or can be related to use for transport companies from EU member states only, as we have seen in the abolishing of long-term permits in France that hit UK companies as a surprise.”

Klijn had not heard of any other Brexit problems related to project cargo between the EU and the UK. “However, normal transport volumes were very low in January and February, and I wouldn’t be at all surprised if the same has been the case for project cargo.”

Making Early Preparations

Speaking to Breakbulk, Des Nott, project and breakbulk specialist at Kestrel, said that before the agreement he did not know what Brexit was going to be like, but Kestrel knew they had to align their thoughts and have processes in place right from the get-go. “We already had an office in Dover, and we expanded that to have full customs compliance capability, to manage our whole UK service. When we switched, we were ready to go.”

Among current contracts, Kestrel is in the midst of a major project move to Dublin – delivering vacuum tanks and other components of an industrial air separation plant, with loads coming from various destinations, including the UK.

“With so much stuff coming from the continent and out of England and getting it into Ireland, we have done a lot of work with Customs entries and making sure everything is done before moving, including T1 bonds,” he said.
“At Christmas time we had a project running into the Czech Republic and it seemed that virtually everyone was trying to get things out of England before Brexit. For us, it is all working OK in the project sector.”

Gordon Dehne, global manager shipping and logistics at Mammoet, sees Brexit as a significant challenge to maintaining the level and quality of output within its supply chains. “In order to manage Brexit, Mammoet’s logistics team adjusted its process for transports to and from the UK, developed data management systems and partnered with customs brokers in the UK months ahead of the withdrawal date. In doing so, Mammoet managed to supply all equipment in time and without any disruptions for the projects in the UK.”

But unclear and complex customs clearance and tax legislation (specifically import value-added tax, or VAT) within Europe has been challenging, Dehne said. “As long as goods are moved within the EU, the process is extremely unbureaucratic and easy. The moment the goods come from outside the EU, individual country rules apply regarding duties (customs) and import VAT (tax). This adds time to our budgeting phase and creates uncertainty.”

Mammoet has come up with one fix to avoid the uncertainty caused by differing EU import rules: it routes international cargo through Dutch territorial waters to make sure import clearances take place in the Netherlands before going to another European country. Workarounds seem to be the name of the game for breakbulk and project cargo movers operating in the new 27-member European Union.

Felicity Landon is an award-winning freelance journalist specializing in the ports, shipping, transport and logistics sectors.

Image credit: Port of Antwerp