Regional Focus: Dublin eyes post-brexit opportunities

As the UK moves closer to the exit door from the European Union, Dublin is set to seize opportunities to capitalise by attracting new shipping businesses and the expansion of existing ones. Operators are looking at options to counter the loss of the UK as intra-EU landbridge between Ireland and the rest of the EU.

Several major maritime businesses are looking at Dublin as an attractive EU base for their operations while some UK-based firms look to Dublin as a convenient alternative option as Dublin and the Irish economy continue to recover from the earlier recession.

Multimodal operator Samskip believes its experience in door-to-door services connecting destinations in Ireland and North Continental Europe will prove decisive in its post-Brexit business growth plans. 

The wrangle over the terms under which goods will move across the EU’s new border after Brexit continues, but freight operators adapting to the UK’s expected departure from the bloc’s customs union include those who see an opportunity, rather than a problem.

The UK is the Republic of Ireland’s leading export partner by value, and second for imports behind the US. But Brexit will mean that the UK’s role as a landbridge between Ireland and the rest of the EU will be compromised due to new customs (clearance) and excise requirements. The Irish Freight Transport Association estimates that 40% of the 475,925 freight containers shipped from Ireland to the UK in 2017 were headed for destinations elsewhere in the EU via ports such as Dover or Hull, or the Channel Tunnel. 

Samskip, the Rotterdam-based multimodal operator offering separate shortsea services connecting the Netherlands to the UK and Ireland, believes it will grow its unitised volumes in both parts of Ireland post-Brexit. 

At present, lo-lo operations represent around 15% of Ireland’s unitised traffic, according to Samskip Ireland General Manager Richard Archer. Samskip container vessels make calls at four Irish ports – twice weekly at Dublin, Waterford and Cork, and weekly at Belfast. Samskip’s pair of 900teu capacity containerships sustain a port rotation that keeps road distances to a minimum, in line with its sustainable transport policy. 

In response to the speed advantage that has been at the root of landbridging success, Samskip recently added a new wheeled option to its Continent-Ireland link during the summer, collecting 13.6m long trailers in Germany and the Benelux countries for delivery by sea into Dublin. 

Mr Archer believes the economies of scale available to Samskip as a pan-European multimodal operator with scheduled services throughout its network will prove telling in a post-Brexit world. “We have the infrastructure, experience and processes to take care of every aspect of door-door deliveries between Ireland and all EU destinations. This is a measured response to the market based on that experience. Our expectation is that we can grow the trailer business to around 25 to 30 units a week in each direction, and that this will be in addition to lo-lo traffic,” he said. 

Samskip is not the only operator ramping up direct freight services between Ireland and continental Europe, while its entry into the wheeled market comes at a time when the country’s hauliers are making plans of their own to bypass British ports after Brexit. Significant new ro-ro tonnage recently entered the market connecting ports in the Benelux countries to Dublin, for example, while new ferry capacity is available Dublin-Cherbourg, and Cork-Santander.

Mr Archer concedes that Samskip’s Ireland services will not be entirely immune from the Brexit challenge, presuming that Belfast will become a hub for clearance activities. However, given that all operators will be affected in the same way, he suggests that any impact will be more at the level of an irritation and entirely different to that felt by shippers with production processes located in Ireland and the UK. 

He believes that the opportunity presented by Brexit will be based on a strong platform of economic growth in Ireland. “Our view is that, overall, the trading economy will grow between 4-5% overall this year,” he said. “Based on consumer confidence, there has been an uplift in FMCG (Fast-Moving Consumer Goods) and we have also seen strong growth in imported building materials. Housing upgrades are a factor, but there are also 60 to 70 cranes across the Dublin skyline. New office, warehouse and industrial building is bringing receivers back in the market that we have not seen for 10 years.”  

He added that exports to EU markets are also strengthening through 2018, with pharmaceuticals, which is Irelands leading export, and medical apparatus providing the strongest impetus. The withdrawal of a cap on dairy herd sizes two years ago has also driven an upturn in the production of baby products, as Irish exporters fill the void left by producing countries temporarily inhibited by contamination issues.  

“We are increasingly seeing strong growth in exports moving over long distances by rail over Rotterdam and our rail hub in Duisburg on to eastern Europe and Baltic states including Russia, where demand for pharma, dairy and alcohol loads are proving very strong.”  

North P&I seeks safety in Dublin

Among the UK-based maritime companies deciding to set up operations in Dublin to ensure that they have a continuing presence in the European Union is P&I Club North P&I. Since the UK voted to leave the EU at the in July 2016, North P&I and subsidiary Sunderland Marine, which covers fishing vessels and small craft, have been developing contingency plans to ensure that both companies continue to have access to EU markets. 

The Group’s general counsel Chris Owen said that North and Sunderland Marine currently rely on EU passporting rights to insure risks located in the European Economic Area (EEA). 

“Details of the future UK/EU trading relationship and its implementation are still unclear and subject to ongoing negotiations between the EU and the UK government. However, our expectation is that North and Sunderland Marine’s existing passporting rights will ultimately be lost either immediately upon termination of the UK’s EU membership or at the end of any agreed transition period. 

“Due to the ongoing uncertainty surrounding the future regulatory landscape, and a realistic prospect that passporting rights could be lost as early as 29th March 2019 on expiry of the current two-year Article 50 notice period, it was agreed at a meeting of the North Board of Directors on 8th November 2017 that a subsidiary insurance company should be established in Ireland to underwrite all future EEA business of North and Sunderland Marine with effect from 20th February 2019,” Mr Owen said.

This decision to locate a new subsidiary in Ireland followed an extensive exercise which considered a number of possible locations. The reasons for selecting Dublin included that the regulatory, legal and taxation framework in Ireland is similar to the UK, Ireland has a mature regulatory system with substantial experience in the supervision of Solvency II insurance companies, it has a strong talent pool in financial services, easy travel connections from North P&I’s base in Newcastle and that business is conducted in English.

Implementation of these plans got underway earlier in 2018 and should be complete by the time the UK leaves the EU at the end of March 2019.

Port of Dublin on a rising tide

The Port of Dublin is seeing strong growth in maritime traffic, especially containers and ro-ro, and that is expected to continue and could accelerate following the UK’s departure from the EU. This growth means that its already ambitious expansion plans will come under pressure to keep up with this rising demand.

In the first half of 2018 cargo volumes increased by 5.2%, compared with the same period in 2017. This followed a 4.3% rise in 2017 compared with 2016. In 2017 Dublin handled a new record of 36.4 million tonnes of cargo. This means that in the five years since the start of Ireland’s economic recovery in 2013 Dublin Port saw cargo volumes increase by more than 30%.

In the first six months of 2018 ro-ro traffic increased by 4.6% year on year to 508,000 units and containers by 5.8% to 356,000 teu. There was a particularly sharp increase of 11.7% in imports of trade vehicles to 63,000 units. Dry and liquid bulk products also saw a big 11.5% rise. Tourism is also providing growing business for the port with 64 cruise ship calls scheduled in 2018 compared with 50 in 2017.

It is therefore timely that in July this year Dublin Port completed and published a review of its Masterplan 2040, which updates its long-term development plan that was first produced in 2012. A major revision is that the plan is now based on an average annual growth rate of cargo 3.3% instead of the previous 2.5%, with a target handling capacity of 77 million tonnes by 2040, up from the earlier 60 million tonnes. However, plans to dredge the port to a depth of 12 metres has been reined back and the Masterplan has settled for a depth of 10m. In addition, the option of expanding eastwards into Dublin Bay has been ruled out. A major component of the port’s infrastructure development is the Alexandra Basin Redevelopment Project. The challenge of increasing cargo throughput within the existing port footprint will be supported by development of and Inland Port facility due to be operational in 2019, and improved port access roads.

Dublin Port Chief Executive Eamonn O’Reilly said: “The revised Masterplan is founded on our commitment to the proper planning and sustainable development of Dublin Port. We have identified a series of projects which will bring the port to its ultimate capacity by 2040. Work is continuing on the Alexandra Basin Redevelopment Project and on other projects and we will invest €132m in port infrastructure this year alone. This followed €75 million invested in port infrastructure in 2017. Where we had been planning to invest €600 million in the decade to 2027, we now know we need to spend €1,000 million if we are to continue to provide capacity for our customers. What is clear is that we need to build the maritime infrastructure we envisaged when we first published the Masterplan but we need to build it sooner rather than later.

“We have never invested that sort of money before but it is a measure of the need we have to accelerate investment. We do not want to have to push trade out of the port while we do the work needed. That is the challenge for the port in the coming years. Our investments match those of the major shipping lines such as Irish Ferries, Stena Line and CLdN, all of whom have already or will shortly introduce new larger ships on services between Dublin and both the UK and Continental Europe.”

On the impact of Brexit Mr O’Reilly said: “We continue to work with state agencies such as Revenue and the Department of Agriculture, Food and the Marine to ensure that essential border control and inspection facilities are in place for March 2019, for December 2020 or whenever they might be required, if at all. Critically, however, we have not allowed Brexit and all its uncertainties to diminish our focus on the long-term plans for the development of Dublin Port.”