Weathering the Brexit storm - what next for trade on the Irish Sea

Stephen Carr, Group Commercial Director, Peel Ports Group

We are two months post-Brexit and its impacts on the Irish Sea has become one of the most hotly debated topics.

Whether it’s the significant increase in direct shipping between Ireland and the continent, the growth in trade through Northern Ireland (NI), or the switch to unaccompanied freight, the ‘status-quo’ is clearly being challenged.

While the industry had more than four years to prepare for Brexit, it also faced a hard-hitting third wave of Covid-19 coming into 2021, adding another challenging dimension to our transition into 2021.

The effect of this ‘perfect storm’ of challenges has been seen already in England, with delays and bottle necks in supply chains felt by traders using southern ports pre-Christmas, all in addition to the challenges traders are now experiencing when grappling with new paperwork, rules and checks.

As a result, we are now seeing some distinct shifts in supply chain and logistics strategies here. Are these shifts merely short-term solutions to challenging times? What effect will they have longer term for trade on the Irish Sea?

Between the Port of Liverpool and Heysham, Peel Ports handles half of the freight in the Irish Sea. We see containerised and RoRo traffic to both Northern Ireland and the Republic of Ireland, as well as both accompanied and unaccompanied freight.

Before Christmas we saw a spike in container volumes, due to Covid-related issues, as well as a spike in trailer volumes, due to stockpiling. Moving into January, volumes were lower, but this is a drop we expected due to the normal fall in demand post-Christmas, and impacts of stockpiling.

However, there was much speculation about what, if any, impact Brexit would have. So what have we seen so far?

The first of these is the changes in profile of Irish sea volumes – we’re seeing larger than normal volumes on the Northern Ireland route and lower volumes on the Dublin route.

Whilst a swing was expected (people argued it could have gone both ways), what we have seen is greater than expected shift towards Northern Ireland. Is this simply a Brexit-related issue, where traders have identified the route as a path of less resistance?

Certainly easements into Northern Ireland will have an effect, but their longevity is a matter of much public debate. 

A second trend we are seeing is an increase in traffic on direct routes from Ireland to continental Europe as hauliers choose the long sea option, coupled with more direct services into Northern Britain from the continent.

There were previously around three direct services running a week and this has risen to 15 (from December to January), as well as increasing container volumes. Equally, Liverpool has seen new services launched in recent months including ferry services from Spain and Portugal, and container services from Dunkirk. This is in addition to volume growth with established clients on continental European routes, operated by the likes of Containerships and Borchard Lines.

The extent to which this has been caused by Covid-19 remains unestablished, but what we do know is that the uncertainty caused by the pandemic, coupled with the need for new Brexit paperwork, has led to hauliers choosing the routes that best help avoid these challenges and potential delays.

We are now seeing a new trend emerge where its beneficial for companies to choose long sea routes, with shorter land time than vice versa, which was previously the norm, showing an evolution of the market which places resilience at the core of supply chain decisions. Many will know I have argued for a long time that this is the most sustainable, resilient and economic model for international supply chains.

We are yet to establish whether the changes we are seeing in Irish Sea RoRo/container services are short term mitigation strategies, or more fundamental long-term shifts.

Regardless of whether these are caused by Brexit or Covid challenges, or a combination of both, some will stay for the long-term. Ports will therefore need to respond to these market changes and adapt to the changing demands of cargo owners, hauliers and shipping lines alike.

Now that we are nearly at the end of February, we are starting to see much of the stock built pre-Christmas eroded and these longer-term trends should start to emerge.

We do have further Brexit hurdles ahead, including the introduction of checks at UK borders from 1st July.

So, in the medium term at least, we expect the benefits of using longer-distance sea route and the unaccompanied model will continue to be exploited, as they reduce the cost exposure to businesses of delays and complex paperwork.

Will the shift in trade between Norther Ireland and the Republic of Ireland continue? That’s one for the politicians!