Fuel and food shortages in no-deal Brexit scenario

By Gwen Ridler

- Last updated on GMT

Food shortages, delays at the port and fuel disruption are all expected in a no-deal Brexit
Food shortages, delays at the port and fuel disruption are all expected in a no-deal Brexit

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A no-deal Brexit would result in shortages in food packaging, fresh food and up to three months of disruption at French ports, according to a leaked Government document.

Codenamed Operation Yellowhammer, the dossier – first seen by The Sunday Times​ – detailed the likely fallout of the UK leaving the EU without a deal on 31 October and provided the most comprehensive list of the impacts such a move would have on the country.

Much of the disruption caused to the food and drink supply chain stems from the delays expected at the French ports on day one of a no-deal Brexit. This is largely due to between 50%–85% of heavy goods vehicles (HGVs) not being ready for French customs.

“The lack of trader readiness combined with limited space in French ports to hold ‘unready’ HGVs could reduce the flow rate to 40%-60% of current levels within one day,” ​said the report.

“The worst disruption to the short Channel crossings might last three months before flow rates rise to about 50%-70% (as more traders get prepared), although disruption could continue much longer. In a reasonable worst-case scenario, HGVs could face a maximum delay of 1½-2½ days before being able to cross the border.”

Disruption to fuel supplies

Traffic delays at the border could also affect fuel distribution, as queues in Kent block the Dartford crossing and disrupt fuel supplies in London and the south east of England.

Freight Transport Association (FTA) chief executive James Hookham voiced his concerns that none of the planned scenarios leaked in the report had been shared with the logistics industry in meetings over the past three years.

“We are ready and waiting to adopt and adapt to new trading practices, but without knowing the scenarios the Government believes industry should prepare for, logistics operators cannot be expected to take adequate steps to get ready for a no-deal Brexit,”​ he said.

 “This is the first time the industry is learning of any threat to fuel supplies – a particularly worrying situation as this would affect the movement of goods across the country, not just to and from Europe, and could put jobs at risk throughout the sector which keeps Britain trading.”

The document also predicted a decrease in fresh food supplies, with many components of the food supply chain – ingredients, chemicals and packaging – also being in short supply.

Most vulnerable worst affected

While the combination of the two would not cause an overall shortage of food in the UK, it would reduce availability and choice that would result in an increase in price. This, in turn, would hit the most vulnerable – those on low incomes – the worst.

Operation Yellowhammer also noted the difficulties surrounding agri-food production in the UK, which would come to an end by the time Brexit rolls around, but said the Government would not be able to fully anticipate all the effects on the supply-chain.

Commenting on the leaks, Food and Drink Federation chief operating officer Tim Rycroft said: “Nothing in the leaked Yellowhammer document comes as a surprise to FDF. It accords with what we have been saying for more than two years.

“Some of these consequences may be mitigated by additional preparedness, but most of them cannot. That is why we continue to stress that leaving with a no-deal would be disastrous for UK food and drink.”

Meanwhile, a bailout fund for businesses worst affected by a no-deal Brexit has been welcomed by industry leaders.

Billed Operation Kingfisher, the fund would help businesses cope with potential cashflow problems that arise from the imposition of WTO tariffs and likely supply chain disruption.

‘Sleep walking in the dark’

In the absence of a deal come 31 October, there is a real prospect that food companies will have to take on considerable additional cost to combat food price inflation and distribution controls, according to Shore Capital head of research Clive Black.

However, despite the chaos surrounding the no-deal scenario, the seemingly defensive food system may yet prove to be quite relatively resilient still from an investment perspective, said Black.

“Noise is the order of the day but the participants of the UK food system, one of the most advanced in the world, need better and deserve better from the political class,”​ he added.

“As we sleep walk in the dark, which is generally not advisable, investors do need to be aware that all may not be hunky-dory for companies with a heavy exposure to the UK market.”

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