In recent weeks the odds of a no deal Brexit have shortened, and in such an outcome Northern Ireland stands to face serious obstacles both for freight and manufacturing compared to Great Britain.
This is due to the nature of the all-island economy and its supply chains, and to fully understand how Northern Ireland stands to be affected we need to look at two different trade flows.
In 2016, there was just over 800,000 trailers of goods transported via roll-on-roll-off ferries between Great Britain and the three Northern Irish ports of Larne, Belfast and Warrenpoint.
The number of these shipments from Great Britain to Northern Ireland was 419,000, and there was an increasing trend for trailers to be shipped unaccompanied, due to labour shortages around driver supply and savings on shipping costs.
This process also means all shipments must book passage via designated points of departure and arrival with a system that manifests and records all movements.
It’s also worth noting that, according to the Northern Ireland Statistics and Research Agency, of the 419,000 loads shipped from Great Britain to Northern Ireland, 70% was consumer goods destined for the high street and supermarkets.
The total value of imported goods from Great Britain was £11 billion.
When we turn our attention to commercial goods vehicles crossing the border between Northern Ireland and the Republic of Ireland, it’s a very different story.
According to Irish Revenue & Customs data, in 2016 over 4.6 million goods vehicles crossed the border (see the below table), but we must note this is the minimum figure as records are based on movements on 12 of the possible 204 roads.
Of those 4.6 million movements, the overwhelming majority, 28 per cent, was recorded on the A1 Belfast to Dublin road.
When we break down the figures on cross border traffic, this equates to an average of 13,000 goods vehicles crossing the border daily, which is 541 per hour – or to illustrate it in comparison to cross channel movements, it’s a large freight ferry fully laden every 15 minutes, 24/7, 365 days a year.
When it comes to volume, we can easily see that there is more commercial freight activity across the land border – five times as much, in fact.
But when we look at the value, then trade with Great Britain is more valuable, with NI exports in 2016 to the Republic worth £4 billion compared to sales of £14.6 billion to Great Britain.
Therefore Irish Sea freight is lower volume but higher value, while cross border trade is higher volume but lower value.
To explain why this is case, we can look to the all-island supply chains and the trade in intermediate products (components of final goods). The large role of two-way traders shows that supply chain links are a major element of cross-border trade.
A recent study by InterTrade Ireland concluded a very signiﬁcant share of cross-border trade is accounted for by ﬁrms that trade simultaneously in both directions. These two-way traders make up around 18 per cent of ﬁrms, but accounted for over 60 percent of exports and over 70 per cent of imports.
The share of intermediate products in imports from Northern Ireland to Ireland is higher in almost all sectors than trade in the same sectors from the rest of the UK.
So for example, a company could transport ingredients or components across the border several times before the finished product is completed in Northern Ireland, and is then ready for export to consumers in Great Britain.
Naturally the intermediate products will be of lesser value compared to the completed product, hence the disparity in value of goods crossing the Irish Sea compared to the land border.
In recent Brexit discussions the significance of the value of trade between Northern Ireland and Great Britain has been highlighted.
This is quite right and we must ensure this hugely important market for us is not jeopardised or impeded in any way as a result of Brexit.
What has often been overlooked is our reliance on being able to move goods quickly, cheaply and without tariffs across the Irish border, in order to assemble those valuable goods we end up shipping to Great Britain.
If the all-island supply chains are impeded with subsequent increased costs and subject to tariffs, then those exports we champion and put on those ferries to Great Britain will suddenly become less competitive in price – or, in the worst case scenario, won’t exist anymore.
At recent meetings in Belfast, London and Brussels, all business sectors from Northern Ireland have agreed a no deal Brexit must be avoided, which the insurance policy of a Northern Ireland backstop could prevent.
A holistic approach is required when trade from Northern Ireland is discussed and used as a bargaining chip due to the fact it’s a unique economic region that is finely interwoven with that of another EU member state.
To pursue, or indeed to sleep walk into, a no deal Brexit would unravel the carefully tailored economy of Northern Ireland and potentially leave it in tatters.
By Seamus Leheny, policy manager at the Northern Ireland Freight Transport Association.
The views expressed in this analysis post are those of the authors and not necessarily those of the UK in a Changing Europe initiative.