Sunday 22 September 2019

Paul McNeive: 'Brexit bad news creates opportunity for logistics'

The right moves

Paul McNeive
Paul McNeive

Paul McNeive

THE best way to get a practical understanding of any issue is to speak to the people at the coalface. 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 Government and most businesses are unprepared for the effects of any Brexit, let alone a no-deal. The only good news in the debacle appears to be a big opportunity for developers of logistics buildings in Ireland.

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

After Brexit, they estimate they will need approximately 30 experienced "customs entry clerks" to handle the paperwork. Mr Cooke estimates the logistics industry 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 redeployed from the Border.

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

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 port.

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

His "partial solution" is that shipping companies should prepare and present a detailed "load manifest" at the point of entry. 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 the load manifest is accurate and a ledger of the consignments can be used to cross-check with 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 could double due to longer transport times arising from delays at ports and increased administration costs.

Perhaps the only good news in all this is the opportunity for developers of warehousing/logistics buildings. 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 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 it distributed.

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

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