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The only Brexit winners will be logistics

Lengthy queues at ports will lead to greater demand for storage warehouses
Lengthy queues at ports will lead to greater demand for storage warehouses

By Paul McNeive

The best way to get a practical understanding of any issue is to speak to the people at the coalface.

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With Brexit dominating the news, I chatted with Owen Cooke, a veteran of the logistics industry and founder of Independent Express Cargo and The Pallet Network, a network of 22 freight companies.

Whilst Mr Cooke is suggesting a "partial solution" to the impact of Brexit on trade with the UK, he believes that Government and most businesses are unprepared for the effects of any Brexit, let alone a no-deal Brexit.

To put the import/export issue in context, Independent Express Cargo alone imports 800 consignments from the UK every day and exports 500 daily.

After Brexit, they estimate they will need approximately 30 experienced "customs entry clerks" to handle the increased paperwork. Mr Cooke estimates that the logistics industry in Ireland will need up to 10,000 such clerks - but they don't exist.

When the EU single market came into force in 1993, customs posts on the island were removed and 1,200 customs officers were redeployed from the Irish border.

Mr Cooke told me that the volume of trade with the UK has multiplied fivefold since then so, allowing for some technology efficiencies, he estimates that Ireland needs 4,000-5,000 customs officers, post-Brexit. We have recruited 400.

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Currently, every consignment from a non-EU country needs a full customs entry prepared and import duty and Vat paid up-front, before the goods can be taken out of an Irish port.

Mr Cooke believes that trying to do all that for the UK trade as well will be totally chaotic and cannot be coped with.

His "partial solution" is that shipping companies should prepare and present a detailed "load manifest" at the point of entry into Ireland. The goods can be taken straight out of the port, and the Revenue Commissioners then handle the Vat and duty calculations directly with the trader as part of normal business.

Revenue can spot-check consignments to ensure that the load manifest is accurate and a ledger of the load consignments can be used to cross-check with the traders' tax returns. This plan, Mr Cooke says, is feasible, and will avoid delays at ports, but there will be a huge extra burden on the freight companies in preparing itemised and valued load manifests.

Overall, he expects the cost of transporting goods in and out of the UK to double due to longer transport times arising from delays at ports and increased administration fees.

Perhaps the only good news in all this is the opportunity for developers of warehousing/logistics buildings in Ireland. The existing stock of logistics space is effectively full and new buildings are being "snapped-up".

Mr Cooke told me some major UK companies, which export to the Republic, are desperately trying to secure short-term contracts for warehousing, in order to stockpile pre-Brexit, but cannot get space.

Overall, he says Brexit will mean a significantly increased demand for warehousing.

"Importers are going to be bringing in much more stock because of the higher administration costs per load, and they will hold stock for longer because of the fear of delays," he told me.

Another factor, he believes, will be a greatly increased demand for "bonded warehouses" or "clearance depots".

These are Revenue-approved warehouses to which goods can be taken, before all paperwork has been completed and taxes paid.

If there is a problem with one part of the load, it can be removed from the port and the rest of the load distributed.

'Logistics' has been a star performer in the property market over the last two years and it certainly looks like developers should now be ramping-up their ideas and plans - particularly close to ports, airports and the Port Tunnel.

Belfast Telegraph