UK port association says industry is not prepared for 'no deal' Brexit

Dive Brief:

Maritime UK last week called for the U.K. and European Union to extend Brexit negotiations, as "there is not enough time to prepare for crashing out of the EU."
In a survey of 507 business leaders, the association found just 50% of them had made preparations for a "no deal" scenario, in which the two parties cannot negotiate trade terms by October.
Members of Maritime UK include the ports and shipping service industries, which facilitate 95% of trade within the country.

Dive Insight:

When the U.K. voted to leave the EU in 2016, it was clear supply chains would shift. From pharmaceuticals to food supply, companies with suppliers in the U.K. were promised a new set of trade rules to follow by 2019.

But with politics at play, business leaders are preparing for the worst-case scenario, in which no deal is reached and any free trade agreements established between the parties in the past are scrapped.

As a member of the EU, the U.K. has free trade agreements with 27 countries. A no deal scenario would raise the cost of servicing the £602.1 billion ($775.1 billion) in imports and exports between the U.K. and the EU.

Ports, as the intermediaries of trade, would be visibly affected both in terms of volumes and congestion.

"Failing to secure a deal will mean delays and disruption at ports like Dover, Holyhead and Portsmouth, but equally at EU ports including Zeebrugge, Calais and Dublin," said David Dingle, Chairman of Maritime UK, in a press release.

It's not just ports in the U.K. that are preparing for a no deal scenario. The Port of Rotterdam is preparing a "post-Brexit pilot" program to test its custom processes 90 days ahead of Brexit, in 2019. The port is one of the largest in the EU, and while not all of its products come from the U.K., a shift in customs rules could translate to congestion and slower container turnover while products are inspected.

"If we fail to agree [to] a deal by October, it is in the interest of both the UK and EU to extend the Article 50 process," Dingle said, reiterating the importance of "frictionless trade" in the press release. "We cannot accept that no deal is better than any deal."