Europe’s ports may have spent millions on Brexit for nothing

Ports on the coast next to Britain must enforce the EU’s single-market rules from the moment the UK exits

Jean-Marc Puissesseau, chief executive of the Port of Calais in France. The port has spent 6 million euros on facilities for customs officers, updated signage around freshly painted roads and huge extra parking lots for lorries. BloombergShow less

The port of Calais on France’s northern coast has spent €6 million (Dh24.41m) on facilities for customs officers, updated signage around freshly painted roads and huge extra parking lots for trucks. It may all end up being pointless.

What looks like the expansion of a transit hub in the world’s busiest shipping area is more an insurance policy against upheaval from Britain’s tortuous journey out of the European Union. UK Prime Minister Boris Johnson is trying to get a deal over the line this week to make good on his promise to leave by the end of the month.

It’s a similar story along the continental coastline of Northern Europe, from Roscoff in France to Esbjerg in Denmark, as well as across the Irish Sea in Dublin. Ports have spent millions of euros to prepare, add staff and run drills for the new checks in an effort to limit backlogs of traffic, all the while knowing it might be a waste of time and money. The current October 31 deadline is already seven months later than the original.

“The uncertainty is very difficult to manage for your nerves,” Jean-Marc Puissesseau, the chief executive of the company that runs the Calais seaport, said last week. “We have been in constant meetings with the French state, regional authorities, business partners, the customs office and the police. We are fed up.”

A new 'orange zone' sign for UK livestock, food cargo and passenger customs checks with a 'green zone' traffic sign sits on display in a parking lot at the Port of Calais. Bloomberg

The effort has echoes of the millennium bug, when companies braced for possible chaos as computers entered the year 2000. But this time it’s also physical infrastructure as well as back room technology, and so long as the clock is ticking down with no agreement or extension, the Brexit equivalent of software meltdown still looms.

Ports up and down the coast next to Britain must enforce the EU’s single-market rules from day one while the British would effectively be free to do what they like. While the government in London has staged mock bottlenecks of trucks headed for the continent via Dover, the French, Dutch, Danish and Irish have had to install infrastructure just in case.

“What we’re hearing is that customs checks will be brought in gradually and not on day one of Brexit,” said Jean-Marc Roué, the chairman of shipping operator Brittany Ferries, which is based on the port of Roscoff on France’s western tip. “That isn’t the case on French soil because the customs code is European, not French. It’s a European code that France is obliged to apply.”

The odds on the UK and the EU securing a deal to keep trade unhindered are changing every day. Last week started with stalemate and ended with hope. While Johnson has vowed to make Brexit happen regardless, British legislation states that he must seek a delay rather than crash the country out of the EU.

Whatever the outcome, how Europe’s ports deal with the fallout will be crucial. A slowdown in the global economy is already hitting trade flows, and Brexit would just compound that decline. The Organisation for Economic Cooperation and Development calculates that exports from other EU countries to the UK would fall by 16 per cent because of higher trade costs should Britain leave without a deal.

France has hired 600 customs officers and plans to recruit another 100 to deal with the task of reinstating borders on trade routes that until now have flourished from over a quarter of a century of free trade.

Simply reverting to written declarations of goods being transported would be unmanageable with modern-day volumes of trade, according to French customs officials. Instead, they have created an “intelligent border” that integrates its computer systems with those of ferry companies.

“The direction of history is towards integration and customs unions, and now we are presented with a disunion,” Laurence Coredo, a chief customs officer for the Normandy region, said last week as her team searched a lorry on the docks of Le Havre during a Brexit drill. “It’s completely unprecedented.”

War gaming what might happen is tough because of so many unknowns, not least the kind of divorce the UK and EU are headed for. Roué at Brittany Ferries said ports like Le Havre may benefit because longer crossings compared with Calais give more time for the intelligent borders to function smoothly.

The burning question for ports up and down the coast, though, is whether delays in the UK could jam up facilities there and then spill over to Europe.

Port managers in Britain expect some disruption, though say apocalyptic predictions are overdone. The Port of Dover, which handled a sixth of the UK’s trade in goods, is “100 per cent ready,” chief executive Doug Bannister said last month. But some of his counterparts on the continent reckon any snarl-ups will be British.

“We don’t expect any problems at our end and I think that it will mainly be the English ports that will face delays and bottlenecks after a hard Brexit,” said Dennis Jul Pedersen, harbour director at Port Esbjerg in Denmark. He said ships eventually could directly dock from Scotland as exporters avoid travelling on congested roads to Dover in southeast England.

On the North Sea at Rotterdam, Europe’s largest port, chief executive Allard Castelein has confidence in the contingency planning — at least his own. “We are as well prepared as we could be,” he said. “If they haven’t, we still are in dire straits.”

A sign for the city of Calais stands near a barbwire security fence on a road leading to the Port of Calais. Bloomberg

The biggest fears are in Calais, though. It’s the closest French city to England, just 34 kilometres from the coastline near Dover, and has been a bustling centre of trade and shipping since the Middle Ages.

According to the French government, 60 per cent of the people and goods crossing between the UKL and EU goes through the port of Calais and Channel Tunnel rail link, which is also accessed in the city. Crucially, as much as 80 per cent of the produce requiring new sanitary inspections will pass through after Brexit.

Mr Puissesseau says the Port of Calais has been 'in constant meetings with the French state, regional authorities, business partners, the customs office and the police'. Bloomberg

Already this year, lorry traffic is down 5 per cent to 6 per cent and passenger traffic has tumbled 10 per cent, said Mr Puissesseau, the port chief. There was a spike in activity in March as businesses built stocks before the initial Brexit deadline, but that’s since faded and — to his surprise — there’s been no rebound ahead of the October deadline. He’s hoping the recent start of a new rail freight terminal will cushion the blow.

The plan is for goods declarations to be processed electronically during the crossing from the UK. Lorry drivers will receive a colour code before disembarking in France — green to exit the port, orange to proceed to inspections at the newly expanded facilities. Mr Puissesseau pointed at horse boxes disembarking from a ferry as an example of what would become a routine inspection after Brexit.

Still, if somehow the UK remained in the EU, Mr Puissesseau said he wouldn’t worry about the lost investment. “The party in Calais would go on for two weeks — there would be Beaujolais flowing through the streets,” he said. “It’d be the first time so much money had been invested for so much fun.”