There has been no more frustrating a place than "T11" at Dublin Port for lorry drivers, customs agents and businesses since Brexit kicked in just over a fortnight ago.
The terminal at the State’s busiest port, manned by a strengthened team of customs officials from Revenue, is where “red-routed” lorries are sent if their paperwork is not in order and checks are required. Since Brexit, a lot of paperwork has not been in order.
The problem, for now, is mostly on trade from Britain to Ireland, as the UK has a six-month phase-in period following the Brexit trade deal. That will bring more issues when it ends.
Ray Cole, transport director of Virginia International Logistics, had three lorries stuck at T11 for three days and another truck sitting at the port terminal for four days trying to get a regular load of car parts – "everything from windscreen wipers to headlights" – in from England.
“They wouldn’t let us leave the trailer there on its own, so we had to keep swapping drivers for it. There were eight drivers involved over the four days. There are no toilets, nothing,” he said.
Cole said the customer awaiting the car parts was unable to reach a Revenue official at T11, so the driver had to pass his mobile phone to a customs official so the customer could find out why the load was delayed.
“Communication is zilch,” said Cole, who has 130 trucks, half of them on Ireland-UK routes.
They believe that this is an Ireland-only problem, but they are going to see the same problems with the rest of the EU next week
Customs declarations are expected to surge from about one million to 20 million this year, as goods crossing the Irish Sea are subject to checks for the first time since the EU single market opened in 1992. Businesses selling goods to the EU from the UK, and vice versa, must confirm the products’ origins. Thus companies must make import and security declarations. In addition, hauliers have to provide shipping companies with completed pre-boarding notifications, which avoid checks and delays at the destination. And then there is another layer of regulatory checks for food of plant or animal origin for which Department of Agriculture veterinary inspectors require 24-hour advance notice.
Applying this across a highly-integrated supply chain is akin to unscrambling an egg, applying a Kafkaesque level of paperwork to the massive volumes of business developed between Ireland and Britain during a quarter century of frictionless trade.
Revenue’s IT system was designed with the intention of pre-clearing goods so they could, in theory, flow smoothly through customs, safety and transport declarations to be able to board ferries. In practice, it has been snarled up by the complexity of the consignments.
“You could be talking about thousands of items in each trailer. Each item requires a different code and customs entry. It is very slow and cumbersome trying to get that through,” said Cole.
“Our biggest problem is that we are caught in the middle of everything, between the customer not having the paperwork and the Revenue being extraordinary stringent straight away.”
Simon McKeever, chief executive of the Irish Exporters’ Association says that after an initial quiet period “last Wednesday the lights went on”. Members began contacting the association reporting difficulties on both sides of the Irish Sea.
Corporate UK’s failure to prepare for Brexit is a big part of the problem, according to McKeever. “They have no idea what’s required of them,” he says. “They believe that this is an Ireland-only problem, but they are going to see the same problems with the rest of the EU next week.
“They are not sure what level of information they should provide in the first place. There is very little coming in, most of the stoppage is that it’s stuck in warehouses in the UK, that’s because the UK entity does not know what it is supposed to be doing.”
Owen Cooke has never seen anything as bad as the bureaucratic logjams on Irish Sea trade since he started working in customs in 1967.
The chairman of transport group Independent Express and the Pallet Network said "rules of origin" issues have also posed major problems, particularly for food imports. This is a factor behind the empty supermarket shelves in the Irish outlets of big UK retailers.
The UK has long been a distribution centre between Ireland and mainland Europe, particularly for food, and under the Christmas Eve EU-UK trade agreement when goods are unpacked and repacked in the UK – and not subject to further manufacturing – then customs taxes, or tariffs, are applied when the goods are reimported back in the EU.
“Goods that are of EU origin have come from the EU are no longer of EU origin if they move through the UK. They are no longer allowed EU or UK status. It is just crazy stuff,” said Cooke. He is fearful of what will happen when businesses increase freight volumes, currently at a fraction of previous levels; in pre-Brexit times, trade between Ireland and Britain was worth €1 billion a week.
“If nothing changes, the economy is going to be brought to its knees, Ireland will be totally closed,” he says.
According to McKeever, the work is overwhelming customs brokers. At the same time, he maintains that the lack of preparedness in the UK is hitting hauliers, whose trailers are left waiting in Britain. Fears are already growing that there will not be enough trailers to carry exports from here to the UK and in some cases on to Europe.
“The whole thing is snowballing,” McKeever warns. “When Irish exports really begin to pick up next week, there may be a shortage of trailers on the island as a whole.” At the same time, he says hauliers are telling him that they may be forced to bring back empty trailers. As those companies will not be able to afford the cost of bringing back empty trucks, they could be forced to pass on the extra expense.
He concedes that the problem is not entirely one-sided. Not all Irish businesses are as prepared as they might be, some of the Irish Exporters’ Association’s members contacted the organisation only in December asking what steps they should be taking. Nevertheless, Irish enterprises, North and South, were, on the whole, better prepared than their British counterparts, McKeever notes.
Aidan Flynn, general manager of Freight Trade Association Ireland argues that Britain had to be ready, too, for Ireland to manage the changes Brexit inevitably brings.
“They often say: if the UK gets a cold, Ireland gets pneumonia. The distribution hub for Ireland was the UK. We could have been as prepared as we wanted, but if our British partners weren’t ready, it was always going to add complexity here. That is really what is manifesting itself,” he said.
Customs
Florance Carey, Revenue assistant secretary and head of its customs division, disputes some of this analysis. "To be honest, we were surprised at the lack of preparedness of businesses in general," she observes. "We have spent two years giving them information and advice, telling them what they need to look at in terms of their own business and supply chain. Both in Ireland and the UK, they either did not do sufficient preparation or underestimated the preparation needed."
There are, Carey says, free training courses and a €9,000 Government grant to aid businesses in building up the expertise they need to cope with customs’ requirements. At this stage, she says, 70 per cent of trucks going through Dublin Port are on the green route, which means they are not facing delays. Customs is also noticing improvements every day as companies adapt.
She stresses that as the UK has left the EU, this is now the reality for any Irish organisation doing business with Britain. Customs declarations are now a normal part of that process, she explains. “This is an overhead that’s not going to go away in a few weeks.”
North Ireland
Northern Ireland is bearing the brunt of Brexit. It is part of the UK but remains aligned with the EU single market, so an Irish Sea customs border separates it from Britain. Supermarkets are not stocking some goods imported from the UK, while there is evidence that many small companies face the prospect of British suppliers ceasing to do business with them, or paying extra shipping and documentation costs in order to keep receiving goods.
In December, British companies told one builders’ merchant close to the Border that they had decided to cease supplying Northern Ireland from January 1st. Others told their customers in the region that they would have to cover the cost of customs declarations, or preferably to arrange and pay for shipping themselves.
Last week, the owner of one affected business, who asked not to be named, received a letter from a British-based supplier saying it would now impose a £70 (€79) administration fee to cover customs declarations, made up of £35 at the exit port and £35 at entry. For the Republic, the same British company said it would seek £140, that is, £70 at both exit and entry. The firm added that the best solution was for customers in Ireland to organise shipping themselves.
This appears to be mainly hitting smaller organisations. The Confederation of British Industry in Belfast, which represents most of the North's bigger employers, said it had not encountered the problem. Roger Pollen, head of external affairs Northern Ireland at the Federation of Small Businesses, confirmed that members were reporting this, among other issues, but cautioned it was hard to know how widespread it might be.
Big, high-profile businesses too have found themselves mired in Brexit complexity. Percy Pig became an unlikely poster boy for the "rules of origin" controversy when Steve Rowe, Marks & Spencer's chief executive singled out the sweets to illustrate a problem the retail chain and its rivals face. Percy Pig is made in Germany, so the popular jellies attract no tariffs when Britain imports them. However, they could be subject to tariffs when the British retailer distributes them to its Irish stores. This has obvious implications for Marks & Spencer and Tesco, two British chains with sizeable Irish operations. Marks & Spencer believes it can ultimately work around the problem, with solutions possibly including a move to buy more Irish-made products. Tesco has taken the issue up with the Irish and British governments and has said it may also raise the problem in Brussels.
Whether or not it gets a resolution remains to be seen. As Carey notes, Brexit has happened, so borders and customs checks are the new reality: “The UK has left the EU, that was not our decision, but businesses have to accept that they are now dealing with a third country.”
