UK Contracts Freight Ferries to Ensure Trade After Brexit Transition
With the end of the Brexit transition period looming, the UK Government announced it has taken steps to ensure that critical freight will continue to flow in 2021 regardless of the outcome of the current negotiations with the European Union. Four of Europe’s leading ferry companies have been given contacts to maintain the flow of goods from the EU after the transition period ends on December 31.
The UK Department of Transportation announced that it has signed six-month contracts with Brittany Ferries, DFDS, P&O Ferries, and Stena Line valued at more than $100 million. They noted that should the contracts not be required, the termination costs would be an unspecified fraction of the full contract amount. That had become a major point of contention that last time the UK contracted for a post Brexit ferry service.
The contracts focus on nine essential routes serving eight ports in areas the Department of Transportation says are less likely to experience disruption. The ports included in the contacts are Felixstowe, Harwich, Hull, Newhaven, Poole, Portsmouth, Teesport, and Tilbury. The routes serving Dover and Folkestone are considered especially vital for trade between the UK and the EU.
“As the transition period comes to an end, we’re putting the necessary measures in place to safeguard the smooth and successful flow of freight,” said Transport Secretary Grant Shapps announcing the contracts. “Securing these contracts ensures that irrespective of the outcome of the negotiations, lifesaving medical supplies and other critical goods can continue to enter the UK from the moment we leave the EU.”
It is not the first time the UK has contracted for transportation services in the long battle over Brexit. At the end of 2018, the government entered into similar contracts with DFDS, Brittany Ferries, and Seaborne Freight to prepare for the potential of a “no-deal Brexit.” Those contracts valued at $140 million were designed to prepare for potential shipping bottlenecks focusing on the ports of Portsmouth, Plymouth, Ramsgate, and Poole.
That attempt at contracts to safeguard the flow of goods was widely criticized. Seaborne Freight was allocated 15 percent of the contract despite the fact the company had no vessel and no experience operating a freight ferry service. The government ultimately canceled the contracts after adverting that no-deal Brexit and the matter ended up in the courts. The settlements ended up costing well over $100 million according to various media reports.
For this round of contracts, the government emphasized it used the 2019 framework which was designed to improve the flow of goods. All of the contracts have gone to experienced operators. They noted that supply chains have been disrupted by the COVID-19 crisis but that these contracts would ensure that “lifesaving medical supplies and other critical goods can continue to enter the UK" when the transition period on the exit from the EU expires on December 31.