The UK ’ s decision to leave the European Union will mean both positives and negatives . But there are more “ unknowns ” than “ knowns ” for UK maritime trade and ports . Drewry Shipping Consultants has gathered industry opinions from shippers , ports and shipping people and attempts to provide an informed preliminary assessment of the impact of Brexit , looking at 3 big questions .

Will UK maritime traffic rise or fall because of Brexit ?

UK container traffic will see more muted growth than expected a few months ago , at least in the short term . 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 . The key questions are how much difference tariffs and non-tariff barriers will make and , to the extent that they do , whether or not there will be tariffs on UK / EU trade and the introduction of more complex customs procedures . The British Shippers ’ Council debated the impact of Brexit at a meeting in July and concluded that it is too early to tell what the outcome will be , because it will depend on what new trade agreements are negotiated with both the EU and non-EU trading partners . Drewry agrees . Similarly , the British forwarders ’ association BIFA said it is too soon to give a sensible prediction whether Brexit will have a positive or negative impact on its members ’ trade volume with EU countries and non-EU countries . Some shippers see opportunities for more favourable trade agreements to be concluded on a bilateral basis between the UK and countries in Asia , Oceania and the Americas . Politicians in Australia have already said that they are happy to discuss a bilateral deal . But how about the depreciation of the UK currency since the Brexit vote ? Sterling has lost more than 10 % against the US dollar in the summer . Because the UK has a large merchandise trade deficit with the rest of the world and is a large importer of consumer goods , it would be reasonable to expect that more expensive containerised imports will become less appealing to UK consumers . However , a comparison of the trends in the US $/£ exchange rate and total UK port volume over a 10-year period shows only a weak link between exchange rates and total trade . This implies that a small change in the unit value of imports and exports has only a limited influence on total UK port volumes .

In Drewry ’ s view , irrespective of the exchange rate and irrespective of whether or not ( presumably smallish ) import tariffs are introduced , UK consumers will continue to buy large quantities of products made in Asia and will not return to “ made in the UK ” sourcing – the differential in labour costs with producing countries in Asia remains huge and compelling .

Will container lines skip UK ports because of Brexit ?

British importers and exporters prefer direct mainline container services calling at their national ports and tend to dislike feeder services . Is there a risk that a politically isolated UK will no longer benefit from direct vessel calls , particularly as there is no longer any large British container carrier based in the UK to champion their cause ? Drewry believes that the container lines will continue to call directly at UK ports . Even if the UK enters a small recession , UK volumes are more than large enough to justify direct calls with mainline vessels , mainly in the South of England ports and it is in the lines ’ own interest to call there direct . In fact , based on January-May statistics from Container Trade Statistics , the UK imports more containers from Asia than any other North European country , even Germany . Today , 15 of the 17 Asia-North Europe loops call at a British port ; Drewry says it expects this very high proportion to continue .

Will UK trade benefit from moving away from EU rules and regulations ?

British shippers are fearful of losing the benefits of free trade and customs harmonisation with the EU single market . They do not want to return to the days of red tape and single administrative documents . Drewry sees a risk of new inefficiencies and costs here , which trade negotiations with the EU will have to tackle . British companies are already lobbying their government to ensure that simplified trade processes are on the agenda . A return to tariffs for UK merchandise exports and imports , if this is the outcome of trade negotiations with the EU , will be detrimental to UK trade with the EU , and may result in a small reduction in UK-EU maritime volume . At a meeting of the All-Party Parliamentary Maritime and Ports Group on 19 July , Guy Platten , CEO of the UK Chamber of Shipping , said that the UK maritime sector can make Brexit work , and that although there will be some difficult issues , trade would continue . The UK Chamber of Shipping believes that nothing has changed at the moment and the UK is still subject to all EU directives relating to the maritime sector . As and when the UK exits , it will then have to be decided which directives are adopted within UK law . The EU ports policy will have to be reviewed . Platten said that the UK Chamber of Shipping has “ a feeling of optimism ” in a post Brexit world . British ship-owners support access to free trade and access to free movement of labour . But the UK Chamber of Shipping highlighted that , within the UK maritime sector , the UK relies heavily on skilled people from across the globe , and it felt that it is imperative the right to remain is invoked and that future immigration process should not deter European citizens wanting to work within the UK maritime sector . In Drewry ’ s view , again , the impact will depend on what is negotiated between the UK and the EU . Restrictions on the right of EU workers to work in the UK maritime sector could harm the UK shipping cluster .

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Chinese shipping company is set to start work on Pakistan Shipping

Terminal which would ensure mega ships access to Karachi , the commercial hub of Pakistan . Hutchison ’ s terminal operations in Pakistan will begin before end of the year . As per agreement with Karachi Port Trust , the company plans to invest in Pakistan as the country becomes posed for growth . This is all part of China ’ s plans to invest about $ 46 billion power plants and road projects under the China Pakistan Economic Corridor ( CPEC ). According to KPT most of the work is done and the leftover dredging and road work will be completed before the launch . More than half of Pakistan ’ s trade is dependent on transshipment . The roads and communication networks , surrounding the port is to be expanded as well to manage the arrival and departure of additional cargo through the super sized ships . Pakistan currently handles about 2.5 million twenty foot containers , including those from Hutchison ’ s first venture Karachi International Container Terminal . The International Container Terminal was launched in 1998 . South Asia Pakistan Terminals Ltd . is expected to manage as much as 1.7 million twenty foot equivalent units this year and increase the national container capacity by more than 50 percent . The Hutchison is expected to start operating in October and is estimated to handle about 250,000 twenty foot equivalent units during its first year of operations . The port will increase it to 2 million units in the next five years . Elsewhere in the region , Japan ’ s K Line has established a cargo handling joint venture , Nitto Baxi Private Limited in India . This is a partnership between K Line Group Company Nitto Total Logistics and J . M . Baxi & Co . Nitto Baxi Private Limited plans to start stevedoring and vehicle handling services for car carriers calling at Indian ports to begin with . In time the plan is to expand to other vessel types . rvices by taking advantage of Japanese systems and controls .