Freeports offer opportunities but SMEs need help to benefit, IOE and IT's Shakespeare tells committee

Wed 25 Oct 2023
Posted by: Danielle Keen
Trade News

Kevin Shakespeare

The UK’s freeports programme is capable of yielding opportunities to businesses but more work is needed to help smaller companies take advantage of these benefits, a leading trade expert told a parliamentary committee yesterday (24 October).

The Institute of Export and International Trade’s (IOE&IT) director of strategic projects and international development, Kevin Shakespeare, made the comments while submitting evidence to a Department of Business and Trade (DBT) select committee hearing.

The session was evaluating UK freeports and investment zones.

Benefits of freeports

While acknowledging the potential benefits of freeports, Shakespeare said that there has been “less engagement from the SME community” and that more must be done to support them.

There are currently eight English freeports, with two sites planned in both Wales and Scotland.

Freeports offer a range of economic incentives, such as tariff exemptions and reduced planning permissions, to encourage trade, investment and job creation in formerly industrialised areas.

SMEs

Asked what could be done to better support SMEs, Shakespeare emphasised the importance of customs benefits and suggested SMEs should be encouraged to become customs-authorised:

“Currently the customs compliance requirements can be met by big businesses, so a support package to help smaller businesses would be helpful.”

Shakespeare gave evidence alongside James Brougham, senior economist at Make UK and Stephen Marcos Jones, CEO at the Association for Consultancy and Engineering (ACE).

Brougham also warned that more support for smaller businesses was needed, saying that larger companies typically had larger administrative capacity and were better placed to take advantage of business investment schemes.

The need for assistance on customs is supported by results from an IOE&IT webinar poll last year, in which simplified customs processes was voted as the most important freeport benefit by attendees.

‘Flexible with customs’

In addition to further support, the ability of SMEs to maximise freeport benefits creatively was also mentioned.

Shakespeare used the example of a large automotive manufacturer and its supply chain, saying:

“[The manufacturer] might not be in the freeport, but by importing into the freeport, they can create a corridor to their approved customs warehouse.

“Using trade corridors between freeports and investment zones where you have raw materials, semi-finished goods and finished goods can join up to create an integrated supply chain.”

Similar opportunities exist under UK trusted trader schemes, in which organisations with a proven track record of customs compliance can trade internationally applying trade facilitation measures. Shakespeare suggested that by incorporating participating sites in their supply chain, SMEs can reap the benefits.

“If you have a customs site operator, or the main freeport operator, who is a trusted trader, this should create be an umbrella arrangement for SMEs to benefit.”

Untapped green potential

The development of green energy and critical mineral supply chains was highlighted separately by Shakespeare, who described them as “an opportunity that hasn't quite been realised”.

“In the desperate need that we have globally, and in the UK, we have an opportunity, through digital trade, through customs innovations, to really build supply chains.

“Whether its lithium, cobalt, copper, graphite, I think [supply chain development] has been looked at but not fully implemented. Now is our opportunity.”

Freeports

The session also included discussions on whether freeports can deliver economic growth.

When asked on whether freeports could deliver economic growth, Shakespeare noted that in order to achieve both local and national benefits “the connectivity between freeports and investment zones, and the opportunity for them to actually work together” needed greater consideration.

Shakespeare said a combination of “transport-trade corridors” would better connect freeports and investment zones, but “there’s an element of linking supply chains, as well – so linking a tier 1, tier 2, tier 3 suppliers in an investment zone with an original equipment manufacturer in a freeport”.

ACE’s Marcos Jones echoed Shakespeare’s point, voicing concern around the risk that a “freeport becomes a bubble”.

Freeport infrastructure

Shakespeare identified key stakeholders surrounding freeport infrastructure that could aid connectivity, noting that “the port operators [and] the shipping lines become crucial” in order to maximise economic benefits to businesses.

“If we think about trade with the UK, there is too much trans-shipment through Rotterdam, through Dubai.

“More direct routes will help the UK economy get the goods here quicker. The shipping lines and the freight forwarders have a key role to play – certainly within freeports.” 

Education education education

When asked to define freeport stakeholders, Shakespeare also identified those in education, such as academic institutions, further education providers and colleges, as key players. He added:

“I think it’s really important that they all work together, that it’s not seen to be one academic institution in an area, but several.”