Bel­gian ports bat­ten down the hatches for Brexit trade shock

The Observer - - BUSINESS - By Jennifer Rankin Zee­brugge

Grid­lock at the bor­der, vast mo­tor­way car parks and jobs lost: Bri­tish ports have been vo­cal about the risks of a hard Brexit. In case Con­ser­va­tive MPs missed the mes­sage, the Port of Dover ad­ver­tised at the party con­fer­ence, warn­ing that an ex­tra two min­utes on lorry in­spec­tions could lead to queues of 17 miles at Dover and sim­i­lar “chaos in Calais and Dunkerque”.

Across the North Sea, ports are wor­ried about the great un­knowns of Brexit. One of the most ex­posed is the Bel­gian port of Zee­brugge, which does 45% of its trade with the UK. “We are vul­ner­a­ble if some­thing hap­pens to the trade from the UK to the con­ti­nent,” said port chief ex­ec­u­tive Joachim Coens. “So what I mainly hope is that we could con­tinue hav­ing a good trade re­la­tion­ship with the UK… as we have been do­ing for cen­turies.”

The port’s UK traf­fic dropped 1% in the month fol­low­ing the Brexit ref­er­en­dum. More than one year on, it has ral­lied but not quite re­turned to the June 2016 peak.

Zee­brugge, (lit­er­ally “Bruges on Sea”), de­scribes it­self as a bridge­head for the Bri­tish econ­omy. Ev­ery week, 64 con­tainer ships and fer­ries leave Zee­brugge bound for Til­bury, Tyne, Sheer­ness, Southamp­ton and other UK ports, laden with goods for Bri­tish shops and ware­houses. A daily ferry still crosses from Zee­brugge to Hull, with 800,000 pas­sen­gers disem­bark­ing at the Bel­gian port each year (in­clud­ing those ar­riv­ing on North Sea cruises).

This sprawl­ing port com­plex on Bel­gium’s coast is a hid­den link in Bri­tain’s every­thing-on- de­mand econ­omy. More than 1 mil­lion cars go to and from the UK through Zee­brugge. If a Bri­tish su­per­mar­ket in Glas­gow or­ders a pal­let of wash­ing-up liq­uid from Zee­brugge’s dis­tri­bu­tion hub be­fore lunchtime, it will be at the shop door the next day. Ev­ery bot­tle of Evian and Volvic wa­ter on Bri­tish shop shelves trav­els from France, via Zee­brugge. Tens of mil­lions of litres of Trop­i­cana or­ange juice are bot­tled for Bri­tish break­fast ta­bles at the port, af­ter the juice has been shipped in from Brazil.

In the worst-case sce­nario – of no deal – the port would be hit by the re­sump­tion of WTO tar­iffs – 10% on cars to 25-30% on or­ange juice. This kind of “fight­ing di­vorce” would be “bad news for the port, but mainly for our pro­duc­ers and ex­porters”, says

Coens. Around 5,000 jobs at the port are linked to trade with the UK.

The sharp de­val­u­a­tion of ster­ling is al­ready rip­pling through to Bri­tish consumers: con­sumer goods com­pa­nies based at the port are sell­ing slightly smaller prod­ucts for the same money – known as “shrink­fla­tion” – in­clud­ing or­ange juice and choco­late bars.

For the in­dus­try, the out­look can ap­pear as murky as an over­cast day on the North Sea. “No­body knows what Brexit will be, what will come af­ter it,” says Is­abelle Ry­ck­bost, the sec­re­tary gen­eral of the Euro­pean Sea Ports Or­gan­i­sa­tion. “What we know it that you will have to re­or­gan­ise your port to do the bor­der checks. It is not very clear how im­por­tant these ad­di­tional checks will be. Will there be an agree­ment be­tween a UK port and an EU port to fa­cil­i­tate these checks? Then you have phy­tosan­i­tary checks (on plants and plant prod­ucts) – will the leg­is­la­tion be dif­fer­ent?”

If the Bri­tish re­mained aligned to Euro­pean stan­dards, “then the checks are “not so bur­den­some”, she said, but for now this re­mains “very un­clear”.

There is also anx­i­ety about the for­tunes of Flan­ders, Bel­gium’s largest re­gion. Bel­gium and the Nether­lands are among the coun­tries that will be hard­est hit by Brexit, with only a few oth­ers, in­clud­ing Ire­land, ex­pected to do worse. A study from the Univer­sity of Leu­ven found that Bel­gium could lose 2.35% of GDP un­der a hard Brexit. The re­searchers warned that the im­pact on the EU27 had been un­der­es­ti­mated, al­though the UK re­mained the big­gest loser. “Higher tar­iffs on the UK are the last thing we want,” the min­is­ter-pres­i­dent of Flan­ders, Geert Bour­geois, has said, cit­ing Zee­brugge’s port and the re­gion’s ex­port-dom­i­nated econ­omy.

How­ever, Zee­brugge is less con­cerned about the re­sump­tion of cus­toms checks – “I think we can han­dle that,” says Coens. The Bel­gian port could even take busi­ness from Calais, he sug­gests, be­cause it spe­cialises in peo­ple-free freight – “roll on, roll off ” in in­dus­try jar­gon – re­mov­ing prob­lems about driv­ers hav­ing to clear UK bor­der con­trols.

Mean­while, Zee­brugge is fast­track­ing the de­vel­op­ment of apps and scan­ners to fur­ther re­duce pa­per­work. It is de­vel­op­ing a UK-spe­cific pro­gramme for ev­ery stage of the lo­gis­tics chain, which would al­low goods to clear cus­toms, even when lor­ries are miles from the port.

He hopes Brexit will push the UK gov­ern­ment to do more to help man­age mi­grants try­ing to reach Bri­tain. From an open port 10 years ago, Zee­brugge is now locked down, with advance po­lice checks re­quired to access cer­tain ar­eas.

Coens is op­ti­mistic, cit­ing Zee­brugge’s in­creas­ing traf­fic with Ire­land and other coun­tries, in­clud­ing Turkey and Iran. In July, the first cargo train from China – loaded with Daqing­made Volvo cars – chugged into Zee­brugge, mak­ing this windswept cor­ner of Bel­gium a fi­nal stop on the silk road.

Alamy

Zee­brugge, which does 45% of its trade with the UK, is pre­par­ing for the re­sump­tion of tar­iffs if Bri­tain leaves the EU with­out a deal.

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