Brexit: More or less

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Brexit greatest enemy? Maths!

Contrary to much expert opinion, it is argued by brexiters of the so called European Research Group that leaving the EU without any deal, a so called “hard brexit“, won’t be so bad. And in any event, it would make sense to play brinkmanship with the EU, to get the best deal. Hence they have argued for example that the UK should start to stockpile food to show we’re serious.

Any sort of delays at the border present massive problems due to the fact most UK factories operate on a Just in Time basis (where as little inventory as possible is kept by the factory, with supplies arriving “just in time”), notably the car industry. However, Brexiter Brenard Jenkin suggested that trucks should just leave several days early and so what if they end up stuck in a queue at Calais (which suggests he has no clue about how JIT works!).

There appears to be a lack of awareness among brexiters of the magnitude of what they propose. So I thought it would be useful to put some numbers to these proposals, a sort of hard brexit version of “more or less”.

Let’s take car production for a start. How much warehouse space would you need to store all of those car parts? Or, if they are going to be stuck in a massive queue at Calais, how many trucks would we need? Well the approximate volume of a vehicle is 10-40m3. Note I use the term “vehicle” because the UK doesn’t just make cars, but also things like vans, construction equipment, military vehicles, ice cream vans, lorries, etc. So let’s take something broadly in the middle, 15m3 is the average volume of a medium sized SUV or an estate car.

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Next, we need to consider packing efficiency of the trucks or the warehouses. While some components can be neatly packed into boxes and stacked without taking up too much space, others are a bit on the bulky side. There’s only so many you can pack in at any one time. Some are either too heavy to be stacked one on top of the other, too fragile, or too big and awkward. And we need to remember that with logistics time is money. Yes, we could spend all day playing Tetris, but that’s going to cost more money than it would save. So let’s assume a 60% packing efficiency. 25% of UK car parts are of UK origin, so that’s 75% that comes from across the channel. Multiplying out those numbers, 0.75*(1/0.6)*15 = 18.75m3. We’ll round up to a nice even 20m3.

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The UK produces 1.7 million vehicles a year (currently 1.65 million, its slipped a little bit since brexit, but we’ll round up to 1.7 million all the same), so that’s 4,658 vehicles per day. So a seven day stockpile means parts for 32,606 vehicles, which means we’d need storage space for 652,120 m3. Assuming warehouses 10m high (which yields 7.5m of useful storage space), you’d need 86,949 m2 of floor area, which would cover about 12 football pitches. I’m going to pause and let you imagine 12 times the area of a football pitch covered in warehouses 4 stories high.

How many truck would be needed? Well assuming 80m3 per truck, that’s 8,151 trucks. BMW recently mentioned that they depend on 150 truck deliveries a day to manufacture the Mini. This gives us an alternative means of calculating the number of trucks. At 800 cars per day, that would imply that 32,606 cars would require 6,113 truck deliveries, noting of course that the Mini is at the lower end of our size scale (the clue is in the name!). Parked end to end, these trucks would stretch for between 110 to 147 km’s.

And that’s just the logistics of getting car parts across the channel and were assuming only one trip, when some components take multiple trips. About 80% of the UK’s car production is currently exported, mostly back to Europe (or transitions through Europe to other destinations), so that’s 26,084 vehicles you’re looking to move back over the channel every week. Parked end to end, they’d stretch for 107 km’s. It would take 4,075 trucks to carry them back over the channel (assuming 6 vehicles per truck) and those trucks would form a queue 73 km’s long.

I’m going to hazard a guess that we don’t have 10 to 12 thousand trucks going spare to handle these logistics. Should you wonder how the car industry copes at the moment, well they do so by not taking 14 days for their trucks to make a round trip across the channel (according to Google maps its currently an 8 hour journey from the Ruhr to the UK Midlands, or 4-5 hrs to the main industrial zones around Northern France & Belgium). And they also make use of railways, so its not just trucks queuing either side of the channel, but trains as well.

And should anyone accuse me of being mean, vehicle parts are easy (and represent only 12% of UK exports btw). It would be very expensive to have them stuck in a queue for a week, but at least they aren’t going to rot. But we can’t say the same for food. Faced with produce from the UK arriving late, as well as either rotten or frozen solid, it won’t be long before retailers the opposite side of the channel start buying local produce instead, even if its more expensive. And some chemicals or biomedical products are also time critical. They will not only spoil if they don’t get to their destination in a timely manner but can actually decompose and become hazardous (i.e. they catch fire!). So this would mean several industries that depend on such supplies, would have to shut down on brexit day itself, unless they can secure alternative supplies.

Indeed, even assuming shorter delays, say 24 hrs, you are still talking several thousand trucks being affected, all of which need to be checked (are there facilities at the ports to handle all of those vehicles? Do they have the staff?). Recall that delays happen at the ports as things stand due to various factors (weather, strikes, IT problems, etc.). The introduction of additional border checks will thus amplify the consequences of any such delays. Hence I’d argue that while perhaps it won’t be as bad as 7 days most of the time, that’s probably the sort of time frame you’d want to plan according too.

Currently the port of Dover handles about 5,000 trucks a day while the tunnel handles a further 5,000. The current plan, to stack trucks by closing off part of the M20 to hold 1,400 of them, will clearly become unstuck very quickly if delays build to any more than 4 hrs (which just a few minutes delay per truck at the front of the queue could quickly produce). And everyone seems to be forgetting that the main hub for freight traffic with the EU is actually Felixstowe and neighbouring Harwich, which handle between them 3 times the traffic that goes through Dover as well as nearly half of all the UK container traffic.

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Brexit, you’re going to need a bigger motorway!

There’s also the not so small matter of the 12,800 good vehicles that cross the Irish border every day. Or further traffic that enters the UK via the ports of Fishguard, Pembroke & Holyhead.

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The Irish border is busier than Dover and the channel tunnel combined and has almost double the number of crossing points then the entire eastern border of the EU!

And what about non-EU trade? Recall that the UK’s customs relationship will alter for practically everything entering the UK from overseas. To join the WTO (a critical part of any brexit plan, else the UK becomes the equivalent of North Korea!) the UK needs to agree a deal to split its WTO membership from the EU. All of the other 164 countries have to agree to the terms of this (unanimously, oh and btw a no deal raises the risk of an EU veto) and its already expected that several will object (including the US, Canada & Australia, you know the countries we’re going to get these brilliant trade deals with).

Speaking of food, how much storage space would the UK need to stockpile food? Well a standard can of food is 73mm in diameter and 106mm high. That’s a volume of 4.43×10-4 m3. Let’s assume we need 2 cans per person per day. And we’d want at least a month’s supply. So that comes to 3.6 billion cans with a volume of 1,596,000m3. Assuming a packing density of 75%, storing all of those in warehouses 10m high (which again yields 7.5m’s of useful storage space) they’d cover 37 football pitches (stacked with pallets of cans 7.5m high!)….so just to handle the cars and food, the UK needs over 50 football pitches covered in warehouses…..all of which needs to be built in 8 months time! So no pressure!

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Taking back control! Then again, the brexiters seem to live in the 1940’s, so they may just get their wish!

Possibly sensing the impracticality of what they propose, its being suggested by the brexiters that certain “priority” items such as food or medicines will be just waved through customs. What’s wrong with that? Well, firstly the EU might not reciprocate. And secondly, In the absence of a permanent solution, such temporary measures are likely to break down pretty quickly, so you’re just delaying the inevitable. Remind me, how did the foot & mouth outbreak a few years ago start? How long before smugglers just start labelling their shipments as “food”, stacking a few trays of week old potatoes at the door and fill the rest of the vehicle with whatever contraband they want to move? (fake Burberry, booze, cigarettes, weapons, migrants, etc.). And thirdly, why are we leaving the customs union if we’re not going to implement any border controls? That kind of defeats the purpose of the whole exercise. Its like going to the pub to get legless drunk but then only having mineral water all night.

But its not food or car components that worries me in the event of a no deal. Its energy supplies. The UK is a net importer of energy. There was much talk about how to provide for Northern Ireland in the event of no deal, with suggestions it would be buzzing with diesel generators, many of them on barges moored around the coast.

However, I’d worry less about the few hundred megawatts NI uses and be a little bit more concerned with the 3GW’s that Southern England draws from the European grid, which is often critical in winter. And the UK also imports 35.2 billion cubic metres of gas from the EU and Norway every year. Note that as Norway is part of the EEA they would get caught up in any trade dispute, particularly if the UK refused to pay its bills (Norway is a contributor to the EU budget). That’s an average of 96 million m3 of gas every day and several times that amount on a cold winter’s day.

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The UK has a grand total of 30 GWh’s of pumped storage, so that’s only 10 hours of reserves. In terms of gas the UK has a storage capacity for 4.3 bcm. So that would be exhausted with 1-2 weeks (depending on the level of demand). However 70% of that reserve capacity is contained within one facility (Rough), which recently closing down (which would cut the UK’s reserves to just a few days supply).

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Nearly all of the UK’s gas storage capacity is in one facility….which has just been shut down! Note that even prior to this, the UK has woefully small gas storage compared to other EU countries

And I suspect the national grid would point out that the UK’s pumped storage and gas storage facilities do not exist as a strategic reserve in case of a hard brexit. They are there to help even out the peaks and troughs that exist between supply and demand. And power cuts are usually not so much a lack of power on the grid, its a lack of grid capacity to shunt the power to where its needed.

So the reality is that the UK, particularly the South East of the country, could be experiencing an energy crisis within days or potentially hours of a hard brexit (depending on demand, e.g. a late Autumn cold snap). Its is difficult to see how the UK could make it through a winter if supplies were cut off. And given that the ERG plan is to essentially sacrifice farming and manufacturing in a hard brexit to the benefit of the financial services industry, rolling blackouts in London would be more than a little inconvenient. It would be a national crisis.

Pretty soon those barges up in NI will be unmoored and heading down to London (not that they’d do much good, you’d need tens of thousands to match London’s demand) with the DUP basically left to fend for themselves. If you want to annoy the public and start a riot, try turning off the lights for a while, at the same time as there’s shortages in the shops. I suspect that such a crisis would very quickly lead to a border poll in NI and a 2nd indy ref in Scotland (and possibly even one in London, which recall voted overwhelmingly to stay in the EU as well) and the UK starts to break up.

Now I’m not attempting project fear here (reality appears to be doing that for me!), I’m merely pointing out to brexiters the logistics of what they are proposing, and the potential consequences if they get things wrong. Its not being anti-brexit, its being pro-maths, and the numbers for a hard brexit just don’t add up.

And if the brexiters plan is to try and bluff the EU, well that is also unlikely to work, in fact it could be counter-productive. No doubt, some bureaucrat in Brussels has done the same sums I’ve just done and has realised that the hard brexiters are bluffing and the EU can easily afford to call their bluff.

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Worse still, they’ve also likely concluded that only a deranged lunatic would even consider a hard brexit. Which means that if they think the British are actually seriously considering a hard brexit, there is little point in the EU making any concessions, because you’d never be able to guarantee someone that crazy would stick to their side of the bargain. Hence why the UK threatening to withhold payment on the divorce bill is rather dangerous, as it implies the UK is undertaking these talks in bad faith.

And in related brexit news, the association of British insurers have warned that it might not be legally possible for them to pay pensioners living abroad their pensions in the event of a no deal brexit. Elsewhere MP’s were warned terrorists and criminals could walk free from jail in the event of a no deal.

While I would take these stories with a pinch of salt, equally I would point to real world examples which have already occurred, as I discussed in a prior post. The problem with a no deal brexit is that the UK government ceases to have any say in what brexit means. It will in many cases be left to lowly civil servants, judges and corporate lawyers around the world to decide what brexit means.

Another line of reasoning that is being pushed (which kind of shows how desperate they are getting) is that the EU should be nice to the UK, because the British people will blame them for the consequences of a hard brexit…..WTF? Oh, and apparently its the fault of those who voted remain that the UK voted to leave (conservative logic, don’t even try to understand it!). So the EU, and remainers, who wanted the UK to stay in, should be punished because leave voters (who were told all of this would happen prior to the vote) are such spoilt little snowflakes they’ll start to cry like a baby when they realise they aren’t going to get their lolly.

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The hard brexiters plan, hold their breath until they turn blue, hope the EU/nanny panics and gives them an ice lolly

And in any event, let’s get one thing clear, regardless of how well, or how bad brexit goes, regardless of what concessions the EU grants the UK, the tabloids and the brexiters will blame the EU (and remain voters) for whatever negative consequences come out of brexit. After all, their only other alternative would be to admit that this brexit thing they’ve been banging on about for twenty years was in fact a very bad idea. And as we’ve seen they value their ego well above the well being of the country.

As I see it, there are only three viable brexit options. Firstly, the hard brexit option. Revoke article 50 and agree some deal with the EU in which the UK stays in for at least a decade or two to give the country time to prepare and build the necessary infrastructure (i.e. those 50+ warehouses, new port facilities, etc.). Of course you’d want to be absolutely sure this is the “will of the people” before even considering this option (so a 2nd referendum would be recommended), else a future pro-remain government might come to power and just cancel the whole thing.

Secondly, go for the softest brexit possible, the Norway or Swiss models being good examples. This would be negotiated as an interim solution (a sort of “trial separation” as it were), leaving open the option at a future date to break further away (e.g. leaving the single market/customs union and ending freedom of movement) or re-joining the EU. I would note that this the option is the closest to May’s proposals. But its also the only one of the three that guarantees an immediate UK exit from the EU (something the brexiters need to consider next time her plan comes before the house).

Or thirdly, start over. If a hard brexit is undeliverable (in the short term) and a soft brexit just leaves the country a “vassal state (to quote several brexiters), then it might be best to question the wisdom of trying to undertake it in the first place. So you’d have to revoke article 50. Then after a suitable cooling off period (say 5 years), have another referendum, but this time asking the right questions (i.e. hard or soft brexit) and make sure everyone’s on board (i.e. a requirement that say 50% of the country has to vote for it and all major regions must back it).

The brexiters need to pick one of the three, they can’t have it both ways and they can’t just try and wing it and hope for the best.

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2 thoughts on “Brexit: More or less

  1. Pingback: Brexit reality bites – May’s deal or remain | daryanblog

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