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.