B
ritain’s trade transport
system is no longer fit for
purpose. Today’s deformed
structure amounts to a
failure of statecraft over
decades and – as we are
discovering – it is a potential threat to
economic national security.
Goods from Germany’s Ruhr Valley
or the manufacturing clusters of
Baden-Württemberg are transported in
lorries to the Channel and from there to
Leeds, Doncaster, Sheffield or
Manchester in the UK’s industrial
heartland. Shipments of Scottish
whisky are trucked in the opposite
direction down the length of this island
to Dover and on to markets in Europe.
The time saved, compared to using
longer shipping routes at ports closer
to product origin and destination, is
mostly insignificant for non-perishable
goods. The just-in-time mantra is a
canard. For some destinations it may
even take slightly longer.
Reliance on trucks and drivers
greatly increases the danger of a
logistical debacle if Britain is compelled
to leave the EU without a deal – that is
to say if Brussels insists on indefinite
EU control over swathes of UK law,
with no unilateral exit mechanism.
The problem mushrooms once
human beings are involved. There is an
extra layer of paperwork. “It is easier to
ship a container than process a truck.
You pre-clear customs. It is just a click,”
said Simon Bird, of the Humber region
for Associated British Ports (ABP).
The concentration funnel at Dover is
narrow and prone to delays. The risks
were already evident in 2015 when a
four-day strike by French ferry workers
caused a 17-mile lorry jam up the M20
and cost £250m a day.
The crossing is vulnerable to political
manipulation. If Emmanuel Macron
wishes to cause chaos at the French
ports, he has the means to do so. No
sovereign country can tolerate this.
Over-reliance on Dover road freight
may have made financial sense – at the
margin – when there was a surplus of
East European hauliers willing to work
long hours at low pay. Cheap labour is
one reason why the share of UK-EU
trade through Dover has jumped from
14pc to almost a third since the early
Nineties. That era of abundance is over.
Wages are soaring in the old Warsaw
Pact countries as their economies catchDeal or no, we must not remain
hostage to Channel choke point
PAambrose
evans-pritchardbrose
ans-pritchardB
oris Johnson has been
drinking in the wrong
pubs. While the Prime
Minister was sharing a pint
with shouty Wetherspoon
boss Tim Martin last
month, the chain’s far bigger rival,
Greene King, was in talks to be sold to
Hong Kong mega-billionaire Li
Ka-shing.
The takeover immediately raised
fears about job cuts and pub closures
at a company that employs a whopping
38,000 people at 2,700 boozers and
has been around since 1799.
Yet, Greene King’s fate is unlikely to
grab the attention of ministers.
Indeed, it is telling that as Li’s CKA
group was finalising the details of its
£4.5bn swoop, Johnson was wasting
his time listening to Martin bang on
incoherently about Brexit again.
One of Theresa May’s big pledges
when she took office was that the UK
would finally
have something
resembling a
sound industrial
strategy. Instead,
three years of
Brexit politics
consigned that
promise – and
many others such
as tackling
inequality- quickly to the
dustbin. Sadly, there seems little hope
of the Government coming up with a
more convincing strategy. While
ministers continue to be utterly
consumed by our looming departure
from the European Union, it seems to
have escaped their attention that
foreign buyers and private equity are
picking off British plc at the rate of
roughly one a fortnight.
If anyone has noticed, then we are
likely to hear the usual nonsense about
how the sudden interest from
investors is a vote of confidence in
Brexit Britain.
Don’t be fooled. The reason for this
sudden rash of deals is simple: the
‘It’s not real
investment ...savvy funds
spotted anopportunity
to make a
quick buck’UK plc is
sold on the
cheap as
fog of Brexit
thickens
Ben
Marlowlow
cheap pound, and another unintended
consequence of Brexit – bombed out
share prices. Sure it is a sign that
buyers are confident in the economy
once we leave but this isn’t real
long-term foreign investment; what it
really means is savvy funds have
spotted an opportunity to make a
quick buck.
It can be no coincidence that the
Hong Kong outfit can afford to open
the bidding for Greene King with a
juicy 50pc premium. Sterling has
dropped 17pc against the Hong Kong
dollar since the referendum. Similarly,
the pound has fallen 18pc against the
US dollar and 16pc versus the euro,
explaining why UK companies have
suddenly been falling like dominoes.
CKA has made a loose pledge to
protect Greene King’s headquarters in
Bury St Edmunds but, as the UK learnt
to its great cost when Kraft reneged on
promises to preserve the illustrious
Cadbury heritage, such statements
aren’t worth the paper they are written
on. Who seriously thinks that defence
supplier Cobham will look the same
once it emerges from the hands of
private equity firm Advent in a few
years? Experts are already talking
about the likelihood of a quick
break-up.
Does any rational person really
think Li Ka-shing believes in the
long-term future of Britain’s dwindling
pub trade? In recent years, pubs have
been closing at a rate of one every
12 hours. The number of small pubs
has almost halved since 2001. Almost
1,000 closed down in 2017 alone.
Greene King owns the freehold to
more than four fifths of its properties
and the value of its entire estate was
recently revised from £3.6bn to
£4.6bn, which is precisely the same
price tag that CKA has slapped on the
entire company. Uncanny.
As for the future of its two
breweries, which produce popular
ales such as Old Speckled Hen, one
only has to look to another rival
Fuller’s to see what the future could
hold. Its brewing arm was recently
sold to Japanese firm Asahi for £250m
because it contributed just 10pc to the
bottom line.
Watching silently while large
swathes of corporate Britain are
flogged on the cheap to the highest
bidder is not a proper industrial policy.
It is industrial sabotage.Steel purchase is tarnished
The fate of British Steel is another
reminder of the folly of selling to the
highest bidder. The chequered track
record of Knightsbridge financiers
Greybull should have prevented it
being allowed to own such a major UK
asset, never mind one with such a
challenged future.
Three years later, an equally
questionable owner in the form of the
Turkish army’s retirement fund is
being lined up after Greybull’s buyout
ended disastrously.
The track record of Turkey’s
authoritarian government alone
should be enough for the Government
to think twice about this deal.up. Hauliers say there is a shortage of
60,000 drivers in Britain. Hourly rates
for HGV transport last year rose 5.4pc.
Road shipments on the current
saturation scale through Kent, around
the M25 and up through the Midlands
occur only because the incentive
structure is warped. It does not fully
“price” the economic and social cost of
congestion, noise, diesel pollution, C02
emissions, road erosion, or the 15pc of
fatal accidents involving lorries.
The ecological footprint of
competing sea routes to ports on the
Humber or Teesside is lower, and will
be lower still under the world’s new
marine shipping rules. They are safer.
A study by the University of Hull
Logistics Institute for ABP found that
switching from Dover to the Humber
ports for destinations in the UK’s
“Central East-West corridor” added just
three hours to an average 34-hour
journey time. This was averaged over
routes from Frankfurt, Munich,
Hanover, Paris, Milan and Warsaw.
It would add three and a half hours
to the Manchester-Frankfurt route
(based on ship speeds of 17 knots), but
lower carbon emissions by a quarter.
Regardless of the environmental
imperatives of Net-Zero 2050, the
Brexit debate has exposed this
country’s over-reliance on a single
strategic choke point. Successive
governments have been careless. Brexit
“notifications” issued by Brussels say
UK goods will be deemed incompatible
with EU regulations on Nov 1 evenbefore any divergence could possibly
have occurred, in breach of WTO
principles, and therefore subject to
checks that could lead to jams.
French officials, under orders from
Paris, are threatening a maximalist
interpretation rather than a “risk-
based” approach on the basis of
common sense. This would guarantee
jams. Dutch and Belgian officials seem
less inclined to treat Brexit as a
punishment exercise. Ergo, switch to
them wherever possible.
French ports chief Jean-Marc
Puissesseau protests that there is
nothing to fear in Calais. He accuses UK
vested interests of whipping up
“catastrophism” and insists that freight
flows will be fluid even after a no-deal.
He may be right on technical grounds.
But political threats remain.
Two years of such “catastrophism”
has in any case caused the market to
take matters into its own hands. Lord
Wolfson said Next will no longer
import products via Calais-Dover. The
Humber ports at Immingham and Hull
have seen a 30pc rise in ship arrivals
since the referendum.
ABP says the raw economics of
UK-EU trade is driving companies
towards direct shipments – by
container or roll-on/roll-off using
trailers – to ports near the British
industrial core. Some of this shift would
have happened anyway. Brexit is
accelerating the process.
Antwerp, Zeebrugge and Rotterdam
are licking their lips. “Brexit has made
companies re-evaluate supply chains.
We see it as a real opportunity and the
Humber is our number one target,” said
Justin Atkin from the Port of Antwerp.
“We’re already seeing a change:
cargo is moving to alternative routes.
Shippers are looking for something that
doesn’t involve a truck. It doesn’t stop
the inspection of goods but it takes out
the human element,” he said.
“Once you move to unaccompanied
vehicles you don’t need the shortest
crossing any more. In some cases it may
be cheaper as well,” he said.
Dover and the road haulage industry
have done us a favour by warning in
apocalyptic language that 17-mile
queues await, even if their motive was
to soften Brexit or stop it altogether. “If
they keep saying we’re all doomed,
others are going to step into the fray,”
said one port expert.
Whether or not there is a Brexit deal,
this country needs a radical shake-up of
its port system and freight links. Sea
and rail should be the default
presumption for all long-haul trade.
We must never again allow political
adversaries to gain such sway over a
single strategic choke point. Start now.Business comment
Fed warns more rate cuts not
‘preset’ despite recession fear
By Tom ReesTHE US Federal Reserve’s policymak-
ers warned investors against expecting
more interest rate cuts in coming
months, insisting it is not on a “preset
course” despite rising recession fears.
The minutes from the central bank’s
July meeting revealed that most Fed
policymakers saw the first cut to rates
in a decade as a “mid-cycle adjustment”
rather than a new wave of stimulus.
Last month’s meeting spurred hopes
of more rate cuts but the Fed panel
largely viewed the stimulus as insur-
ance against slowing global growth and
simmering trade tensions, it revealed.
A “couple” of rate-setters favoured a
deeper cut to boost inflation.
The Fed’s policy “would be guided
by incoming information” and wanted
to avoid “any appearance of following a
preset course”, the minutes said.
However, the central bank’s meeting
was held before the recent escalation
in the US-China trade war and the out-
look for the world economy has dark-ened since. Markets will now look to a
key speech from Jerome Powell, the
Fed’s chairman, tomorrow to see if he
will signal more aggressive stimulus.
Donald Trump yesterday continued
to ramp up the pressure to cut rates,
telling the central bank to “wake up”.
The US president has played down
mounting recession worries but admit-ted he is mulling fresh tax cuts as trade
tensions weigh on global growth.
The cost of the trade war for Ameri-
can families could surge to $1,000 a
year after the next round of US tariffs,
JP Morgan has calculated.
US shoppers will face a jump in
costs from a 10pc tariff hitting another
$300bn of Chinese goods, lifting the
impact of Mr Trump’s trade war on
households from $600 to just under
$1,000 (£825).
The cost of the next tranche of tariffs
would significantly impact “the wallet
of the US consumer” in the run-up to
next year’s US election, warned JP
Morgan analyst Dubravko Lakos-Bujas.
The Wall Street bank said the trade
war could wipe out the majority of the
boost that households had enjoyed
from Mr Trump’s huge tax cuts.
The Trump’s administration’s spend-
ing spree will push the US budget defi-
cit above the $1 trillion mark in 2020,
two years sooner than expected, new
estimates from the Congressional
Budget Office revealed yesterday.Heathrow expansion
is £3bn ‘gravy train’,
says BA boss Walsh
Struggling Hammerson
appoints new financial chief
By Alan ToveyRETAIL property developer Hammer-
son has named a new finance chief
after coming under pressure from ac-
tivist investor Elliott to sell assets
more quickly.
James Lenton will join the FTSE 250
company on Sept 16 and take on the
role of chief financial officer on Oct 1.
He replaces Timon Drakesmith, who
departs in November having an-nounced he would quit Hammerson
earlier this year.
Elliott Advisors, which is Hammer-
son’s third biggest shareholder with a
5.5pc stake, has been pushing for the
company to boost its flagging share
price with sell-offs. The company,
which owns shopping centres such asBirmingham’s Bullring, is targeting
£500m of disposals this year.
The pressure comes after a tie-up
with peer Intu collapsed last year.
Hammerson also rejected a takeover
offer from French rival Klepierre. The
approach, at 635p a share, valued Ham-
merson at £5bn. The company’s shares
closed up 1.5pc at 209p yesterday, well
below the offer price.
The share price slump comes as the
wider retail industry battles stuttering
consumer confidence and the shift to
online commerce, which has hit high
streets and shopping centres hard.
Mr Lenton’s last role was at AIG,
where he was finance chief of the
insurer and investment group’s Euro-
pean business. Prior to that he worked
as a partner at EY.
David Tyler, chairman of Hammer-
son, said the new appointee had “dur-
ing his career demonstrated significant
success in working with and managing
complex organisations which are expe-
riencing periods of substantial change”.
Analysts at Goodbody said Mr Len-
ton’s appointment could be “inter-
preted as a vote of confidence in the
outlook for the business”.By Oliver GillPLANS for a third runway at Heathrow
amount to a “massive gravy train” and
will cost passengers more than £3bn
before a spade is in the ground, said
Willie Walsh, boss of British Airways’
parent IAG, as he launched another
attack on the airport’s management.
IAG called the extension a “heist”
and said it had “absolutely no confi-
dence in Heathrow’s ability to deliver
cost-effective expansion”.
“Heathrow’s on a massive gravy
train,” said Mr Walsh. “The airport’s
chief executive thinks expansion is a
‘fait accompli’ but with judicial, envi-
ronmental and political hurdles ahead,
there’s no guarantee. Spending £3.3bn
before receiving planning permission
is irresponsible and it’s completely un-
acceptable to expect passengers to pick
up the tab.” Heathrow bosses accused
Mr Walsh of “misleading rhetoric”.
The broadside comes after Grant
Shapps, the Transport Secretary, raised
fears about the viability of the runway.
Opponents of the expansion are to ap-
peal against a High Court decision not
to quash the Government’s approval.Lorries queuing at
Dover to board
ferries to France
may show that the
UK has become
too reliant on
road hauliersJerome Powell’s speech, due tomorrow,
will show if more stimulus is on the way‘If Macron
wishes to
cause chaosat the French
ports, he has
the means todo so. No
sovereigncountry can
tolerate this’£500m
The Hammerson target for disposals this
year. The company’s shares closed up
1.5pc at 209p yesterdayThe Daily Telegraph Thursday 22 August 2019 *** 29
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