Brexit: Sourcing New Markets in the EU
Lilita Zelca looks at the opportunities that present themselves to Ireland post-Brexit and the planning that needs to be done for the years ahead.
Brexit may negatively influence Irish trade and logistics; however, it can provide a unique opportunity for Irish exporters to increase export levels to the European Union, and create lean transportation routes with mainland Europe. It is certain that some kind of a border control will have to be put in place as a result of the hard Brexit.
The enhanced level of border control will result in time and cost increases for the transportation and logistics sector, and therefore, it might become more profitable for many to shift from using the UK land bridge to using direct shipping routes for Ireland’s trade with mainland Europe.
However, currently the direct shipment opportunities between Ireland and mainland Europe are underutilised. The direct shipment routes with mainland Europe, Benelux countries in particular, require a feasibility study to evaluate the infrastructure capacity, legacy, shipping routes and schedules.
This change would require major reorientation in services and a possible switch in shipping modes from RoRo to LoLo. If the modal shift from the road to sea happens, initial investment and further research is required to accommodate the change of logistical patterns. Assessment of the current Irish road and sea port infrastructure is required to determine the possible post-Brexit bottlenecks. There may be major infrastructure investments required to accommodate the post-Brexit trade.
On the land border, there may be a need for additional waiting and inspection areas, possible modifications, and improvements of IT systems. It is highly unlikely that any major capital investments will be made in the transport infrastructure before the EU and the UK post-Brexit trade deal is closed. However, scenario planning and risk assessment can help the Irish private and public sectors to avoid major supply chain disruptions.
Currently there are a lack of established sea routes that could accommodate direct trade with mainland Europe. Though the direct shipping routes could be both time and cost effective post-Brexit, there is currently no in-depth research that can confirm this. Detailed cost and time comparison between various transit routes with mainland Europe could increase the private sector interest in using direct shipping routes, and reduce the overall logistics costs.
Increased direct shipping volumes with mainland Europe could require major reorientation in services and initial infrastructure investment. Further analysis is required to assess the infrastructural ability to accommodate the switch from road to direct shipping routes.
Because of their historical connections, Ireland and the UK have similar tastes in products and common brand awareness. In post-Brexit Europe, products imported from the UK will face additional tariffs, and therefore, will become significantly more expensive compared to the EU products. This may provide an opportunity for Irish exporters to replace British products with European ones.
Brexit causes uncertainty over Ireland’s post-Brexit trade and logistics patterns. Though the possible change carries several risks including the possible increase of operational costs, Brexit also offers an opportunity for the Irish trade and supply chain to improve the direct relationship with the European markets and supply chains. These can be availed of but planning and research needs to be undertaken now to benefit.
Lilita Zelca is a logistics and supply chain expert with field experience in Ireland, The Netherlands and Hong Kong. Lilita currently works in IT strategic sourcing where she looks to optimise business and supply chain processes via strategic procurement and allocation of IT resources.