UK container traffic will see more muted growth than expected a few months ago, at least in the short term, says Drewry.
Patrick Walters, Peel Ports’ Group Commercial Director, believes that the bigger Brexit-related risk for UK container ports is a short-term negative impact on box volumes caused by economic and political uncertainty and GDP slowdown.
According to the International Monetary Fund, the Brexit vote implies a substantial increase in economic, political, and institutional uncertainty, which is projected to have negative macroeconomic consequences. The IMF has just downgraded 2016 and 2017 GDP growth forecasts for the UK.
And a slowdown in UK GDP will mean a slowdown in UK maritime trade.
But Walters stresses that there will be both positives and negatives in the medium and long term. Positives include opportunities to have new or improved bilateral trade agreements between the UK and countries such as India, the US, Canada (with whom the UK has strong historical ties) and South American countries.
It may be easier for the UK government to strike an agreement with India without the need to get consensus approval from the other 27 EU countries, Walters observed.
The UK lo-lo container port sector derives 31% of its total volume from trade with the rest of the EU, so any new tariffs on trade between the UK and the EU will pose of risk of lower intra-Europe maritime trade volume.
Ro-ro maritime trade in the UK (primarily trucks and trailers on cross-Channel and Irish Sea ferries) is much more exposed than container maritime trade to the risk of new intra-Europe tariffs and/or onerous customs export and import procedures.
The 78% percentage for the EU is somewhat inflated, though, because it includes UK traffic via EU ports to and from non-EU areas such as Turkey.