Irish logistics resilience being tested
Flynn: For Was Facing The It Aidan Missed Sector A Budget Opportunity Intense To Through The The Pressures Is Support 2022 Government Logistics
The challenges with global supply chain efficiencies have been well documented, particularly the acute situation faced by our closest trading partner, Britain.
The resilience of the Irish freight distribution and logistics sector is continuously being tested as a consequence of the intense change demanded by post-Brexit trading requirements and, of course, Covid, where large parts of the world’s economies and key markets have seen rolling disruption to manufacturing and distribution.
All of this adds up to additional costs of doing business which fuels inflation.
Budget 2022 was a missed opportunity for the Government to support the logistics sector through the intense pressures it is facing.
The Government also failed to consider the impact rising fuel costs are having on the sector’s ability to remain resilient in the face of growing operational challenges.
New innovative tax initiatives that can stimulate the transition to more environmentally friendly rolling stock that is considerably more expensive than the diesel equivalent must be considered.
The tax mechanism is already there — via the diesel rebate scheme — to assist commercial fleet operators when fuel prices are high.
Gas offers over 20% reduction in carbon emissions compared to diesel but is now more expensive. Gas, including biomethane, should be included in the rebate programme.
The increased cost of fuel is of grave concern for the EU, as it is impacting not just businesses but the citizens of Europe and the EU’s executive branch has advised the 27 member states to adapt tax cuts, state aid and other measures to help households and businesses weather the impact of high energy prices.
The Government must take this advice seriously and take immediate action to alleviate some of the pressures within the Irish supply chain.
The EU is Ireland’s biggest export market, accounting for nearly €5bn, or 37% of total export trade for the period January to August 2021.
Whilst exports to Britain have remained steady at 18% of total exports, imports have decreased by 30% for the same period.
New markets, and new routes to the European market have protected Ireland from a supply chain crisis that is currently manifesting itself in Britain, visible through the fuel shortage issues and the scenes at Felixstowe port in eastern England where it is widely reported that £1.5bn (€1.8bn) worth of goods being imported into the UK will be hit by shipping delays in the run-up to Christmas.
There is no doubt that the issues faced in Britain are a combination of the Covid pandemic and post-Brexit trade requirements.
In 2019, the EU accounted for 47% of the UK’s total trade. The new customs arrangements and Sanitary and Phytosanitary (SPS) checks required for products of animal origin — agri-food —
have crippled the British supply lines.
The removal of free movement for European citizens in the UK has added fuel to the fire with the skills shortage contributing to the difficulties of keeping trade moving.
As the Northern Ireland protocol inches towards a conclusion, it remains to be seen if the EU and the UK authorities can come to a badly needed agreement.
The measures put forward by the EU last week would significantly cut customs processes on goods moving between the EU and UK.
The importance of sorting out the protocol is obvious.
Good relations between the EU and the UK are essential in delivering trade easements that would resolve many of the issues faced by Britain and would contribute to the development of better trade relations to the benefit of Irish exporters, who have heretofore been protected by the ongoing trade easements allowed by the UK authorities which are due to end in January 2022.