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Monday, May 20, 2019
City of Sunderland

Anyone trying to fathom the possible effects on the economy, and therefore the health of the shipping industry, on the UK pulling out of the EU, has to say the least of it is a nightmarish task as little is at all clear or straightforward.

There are most certainly negotiations ongoing in secret involving the government and different industries and interests. Even the EU Commission themselves, while wanting not necessarily to ease the UK’s passage out of the EU, do not want to damage those industries so integrated with the UK that European workers and manufacturers will themselves suffer, unless careful consideration is given to a myriad of interrelated markets and industrial issues.

Take the car industry for example: over decades an extremely efficient delivery system has developed between the UK and various ports on the continent and at export destinations where vessels will carry a mix of UK and continental manufactured built vehicles. The packed car carriers queuing up to dock at Portbury, Southampton, Sheerness, Grimsby and the Tyne often load and unload in a few hours without hindrance by customs or import-export duties and tariffs. The system has all the appearance of a well oiled goods handling machine and has boosted several ports’ volumes and value of goods to record levels. So to interfere with this process will trigger all manner of extra costs on the shippers and manufacturers and so the consumer. Ultimately it may bring a downturn in traffic and a loss of sales and therefore jobs in the car manufacturing plants and amongst the shipping companies.

Nissan has apparently negotiated a deal that allows it to invest in its Sunderland factory, which is said to be amongst the most productive in the world, where they will now build two new models. Nissan is said to have assurance from the UK government they will compensate for any extra EU exit costs. But it could still lead to complicated shipping arrangements, especially should the EU counter this agreement with extra bureaucracy of its own. The currently thriving ports of Tyne and Sunderland have a huge stake in the smooth operation of car import and export and in handling the materials and parts required for the Nissan plant. The supply chain of the parts required by UK car plants largely involves carriage by container feeder and ro-ro currently requiring a minimum of paperwork. The uncertainty must indeed be clouding the business horizon of several UK ports.

Other UK car plants are playing their cards closer to their chest, but there is a report that General Motors at Ellesmere Port on Merseyside and Luton in Bedfordshire is looking at possible relocation to the continent and other companies must be looking at options too, all of which have implications for the health of port activity and of the shipping companies themselves.

This uncertainty comes at a time when much of the shipping industry is struggling to pay its way. The modern, largely short sea traders of the Dutch based Flinter fleet, frequently seen in UK and North European waters, commenced business in 1989 and has grown to be one of the top ten shipping companies in the Netherlands, making it one of the largest in Europe with some 50 multi-purpose handy sized vessels. Flinter had to announce in October, that one of its major lenders had withdrawn support. In a rather sorrowful statement, the company said it had been dealing with a continuing downturn in the shipping business for nine years now, but their bank’s decision was still unexpected. Flinter may need to sell at least nine vessels – and under a forced sale or auction situation, their losses could be considerable.

More on this and other news in Sea Breezes Magazine - December 2016 Issue
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