The impact of Brexit and COVID-19 on the UK ports, distribution and manufacturing

Overview

With the end of the Brexit transition period fast approaching and COVID-related delays leading to congestion at ports, Travers Smith spoke to Stephen Carr, Group Commercial Director of long-standing client Peel Ports. Our briefing looks at how Brexit and COVID-19 could reshape the "distribution map" of the UK and increase UK manufacturing activity. We also examined the opportunities and challenges of the UK Government's freeports proposal.

Commercial, IP & Technology Partner Ben Chivers commented:

"With the end of the Brexit transition period literally days away, much attention has focused on possible disruption at the Channel ports.  But the bigger story in the longer term is how a combination of Brexit, COVID-19 and the Government's freeports policy is likely to redraw the distribution map of the UK."

Corporate Partner Anthony Foster commented:

"There's been a lot of negative coverage of freeports but like it or not, the Government is determined to press ahead with them – and whilst they will certainly be challenging to implement, it's important not to underestimate their potential attraction for investors with experience of freeports elsewhere in the world, such as the US." 

Key points

  • Deal or no deal, Brexit is likely to force some businesses to look seriously at alternatives to the dominant UK distribution model, which is heavily reliant on ro-ro traffic via the Channel ports. 

  • Meanwhile COVID-19 has highlighted the vulnerability of long, complex supply chains, prompting some businesses to look at carrying out more activity in the UK.  

  • Brexit may encourage this trend by opening up opportunities to import more products in bulk from non-EU countries for processing in the UK.

  • Taken together, these developments have the potential redraw the distribution map of the UK.

  • Although the tariff benefits of freeports can largely be achieved through existing customs processes, they will have other benefits including tax and planning advantages – and it is the overall package which some businesses are likely to find attractive.

  • For overseas investors, "freeport" is a well understood concept and the branding advantages for FDI are often underestimated.

  • That said, there are significant challenges for their implementation, including how to define the hinterland within the freeport zone, coordinating local authority input and significant regional variations in development costs.

For more detail, see our briefing here.

For more information on Brexit, see our Brexit Readiness Portal.

Key contacts

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