Mr. Patrick Daly:

I thank the Acting Chairman and members of the committee for inviting us today. Ireland’s exporting sector is one of Ireland’s greatest strengths and has been the key driving force behind the Irish economic recovery, economic growth and job creation. It is critical for the Government to recognise how vital Irish exporters are to Irish economic growth and to use the review of the capital plan to maximise the opportunities that arise from an increase in global demand. Although the value of Irish exports as a whole last year rose to nearly €117 billion, the highest annual total on record, the fluctuation of sterling resulted in a loss of nearly €600 million in the value of exports to the United Kingdom, half of which was in food and live animals. Brexit, in whatever form it will take, is coming and we need to prepare immediately. We need to plan new direct shipping and air links to Europe and the rest of the world; become more cost competitive; lobby strongly for as close as possible a trade relationship with the United Kingdom, in particular in agrifood, although it is not in our best interests for the United Kingdom to be outside the customs union, and we must factor this into our negotiations; ensure companies consider their entire supply chain and the impact of a UK exit on all their input costs and start thinking about alternatives; and attract foreign direct investment, FDI, from the UK and elsewhere for those who want to retain access to Europe.

Brexit is already having an impact on Irish exports but the worst may yet be to come. The UK leaving the European Union will have major implications on Ireland’s connectivity and processes need to be put in place to combat what is coming down the line and preparations need to start happening immediately.

Brexit poses a serious threat to Ireland’s regional airports, which depend heavily on the United Kingdom. One example is Ireland West Regional Airport in Knock. The United Kingdom currently accounts for 80% of the airport’s passenger traffic with nine direct scheduled destinations. Airlines and airports are going to have to start planning for 2019 and beyond with no indication of what the future relationship between the United Kingdom and Europe's single aviation market will be. The uncertainty cast by Brexit could seriously impede route development across Europe. Minimising any potential disruption and cost resulting from more rigorous immigration or customs border checks will be imperative. The implementation of hub connectivity from the west of Ireland directly into Heathrow or another European hub airports, such as Schiphol or Frankfurt, would significantly enhance business connectivity and attractiveness to locate in the west of Ireland. This can be achieved with the implementation by the Government of a public service obligation, PSO, scheme on a similar basis to the recently activated Derry to London Stansted route by bmi regional.

The Irish Exporters Association would also call for a full derogation from the EU on state aid support to regional airports handling fewer than 1 million passengers under the general block exemption regulation, GBER, and not limit it to airports handling fewer than 200,000 passengers, as announced last week.

With regard to Dublin Airport and the north runway that is scheduled to operational in 2020, passenger numbers at Dublin Airport increased by 11.5% in 2016, making Dublin Airport the fastest growing major airport in Europe last year. Traffic forecasts indicate the potential for passenger throughput figures of up to 36 million by 2022 and up to 50 million by 2037. The level of growth at Dublin Airport is staggering and infrastructure needs to be put in place now to ensure Dublin Airport is equipped for further growth in the coming years. Priority should be given to the metro north link between Dublin city centre and Dublin Airport and to ensuring that planning and road development in the environs is put in place to deal with this growth.

With regard to the national planning framework, as discussed by this committee on 13 April with the Minister for Finance, Deputy Noonan, the IEA would like to add to the issue that focus will need to be given to road planning and commuter regions outside of Dublin. Development of regional infrastructure, especially in the west, has been poor. The poor road network across Ireland is having an impact on IEA members being able to attract and retain suitably qualified staff. Some 61% of IEA members experienced difficulty in recruiting in the first quarter of this year. Members have cited poor road infrastructure and lack of improvement to employees' commute as a factor in poor regional retention. Regional development is imperative, not only to maintain business, but to attract investment and development in the regions.

Immediate solutions need to be sought to the broadband and mobile phone coverage deficits to businesses and homes across the country if Ireland is to remain competitive in a technological age. Improvements in broadband and the mobile phone infrastructure need to be immediate. The new wave of business innovation with technology, such as robotics, additive manufacturing, 3D printing, big data and analytics, block chain and new business models based on digital platforms, is giving rise to a deep digitisation of industry on the scale that has not been seen so far. The countries that aspire to participate and lead in this digitisation of industry will require very solid, robust and scalable ICT infrastructure, data centres and 5G communications connectivity.

Airfreight and the significant capacity constraints on services operating out of Ireland is being cited as an issue for IEA members. There is a consensus among IEA members who are logistics providers that there is a shortage of air capacity to all markets from Irish airports.

There is also criticism of terminal and cargo handling facilities for, in particular, pharmaceutical and other controlled goods at Irish airports. This is forcing freight forwarders to truck cargo to British and continental airports and fly it from there. Questions have been raised about the availability of storage, particularly refrigeration and control facilities at Shannon and Cork airports and now increasingly in the east of the country. The practice of cutting airway bills at Irish airports by shipping goods by truck to British or continental ports has relied on effective landbridge operations. The freight forwarders concede that they are now under pressure to use direct ferry or lo-lo services to the Continent.

The acute shortage of warehouse facilities around Ireland is a major concern. The development of warehouse facilities across Ireland, including specialist pharmaceutical storage facilities, as well as the development of ports and airports could be a significant opportunity to develop this country as a distribution hub to elsewhere in Europe. The United Kingdom currently serves this function because it has the storage capacity for onward delivery within the European network. There is a serious opportunity for the Irish economy in the development of logistics clusters, or geographically concentrated sets of logistics-related business activities. Logistics clusters typically develop around transportation hubs such as air or sea ports or areas in which there is easy access to road or rail networks. Like large industrial clusters, logistics clusters exhibit a positive feedback loop, which means that the bigger they become, the more they grow.

I would like to comment on the figures and trends in shipping. It has been reported in the Irish Maritime Transport Economist which was published by the Irish Maritime Development Office in April that although there has been strong growth in traffic through all Irish ports, there is an increasing imbalance with volumes through Dublin Port being disproportionately large, while local ports do not put through the volumes that a good spatial strategy would dictate. Ports such as Cork should develop to take more of their fair share of traffic. Ports such as Drogheda and Galway which have been defined as regional ports and given to local councils to run should also be supported.

According to a recent survey of IEA members, it is not just our exports to the United Kingdom that will be affected by Brexit. Our exports that transit through the United Kingdom to get to continental Europe and beyond will also be affected. Two thirds of our members make use of the UK landbridge to access continental markets. Of these, 40% have said the use of a slower direct route would have an adverse impact on the quality of their product, while 53% said a longer time supply chain would have a serious impact on their inventory and other costs. Having examined the comments made by the Minister for Finance, Deputy Michael Noonan, at the meeting of this committee on 13 April about the use of the United Kingdom as a landbridge, the IEA believes this serious issue needs to be considered.

We are aware that much of the focus in the context of Brexit has been on exports. Brexit raises many potential challenges for importers, particularly for the supply chain where imports make up part of the final goods exported. It is not a one-way traffic issue. A possible solution in dealing with delays at land border crossings could involve queuing systems similar to the Estonian go-swift queue management solution. I will explain how such a system might work at the Border. The driver of a truck or another vehicle would go online to request a transit time slot at the Border. Such a driver, having given his or her current location, would be allocated an estimated time slot and advised to go to a designated controlled parking area some distance from the Border. This would be used as a rest stop until he or she was called to the Border crossing. The system operates in a similar fashion for drivers heading for ferries or other vessels in Tallinn Port, or for the major distribution centres linked with it, thereby eliminating queues in the city and port area. This system of virtual queues of trucks moves them away from lands that could have many better uses than as truck and car parks.

Delays at ports mean missed ferry crossings, delayed ferries or missed sailings. They reduce available capacity and undermine the economics of these services. They can mean that companies in the food sector, for example, can miss their docking slots at multiples' distribution centres in the United Kingdom. More and faster direct services to the Continent are needed. Waterford Port and Rosslare Port, in particular, will need capital funding both for the ports and road access to them. Under EU transport policy, neither of these ports is defined as a core port. For that reason, they do not qualify for TEN-T funding. There is scope and potential for an intermodal system between Rosslare and Cherbourg.

Indigenous Irish businesses are woefully unprepared for Brexit. From an administrative perspective, someone who has only ever exported to the United Kingdom has never had to deal with customs procedures. Realistically, the training and upskilling of staff should start happening now, rather than waiting until the chaos of implementation. The current situation highlights the need for Ireland to diversity its export markets. We need to focus more of our attention on high-growth markets such as China, India, the ASEAN states, Africa and South America. We need to become less dependent on our trade relationships with the European Union, the USA and the United Kingdom. There is a need to develop infrastructure around this.

Exports continue to lead the way in driving the economy forward. They are the most significant contributor to making Ireland one of the fastest growing economies in the world, helping to reduce unemployment, creating new employment in fast growing innovative companies and reducing the national debt. Exporting is the success story of the economy. It has helped to restore the country’s image abroad, attract greater foreign direct investment and foster the development of home-grown companies by encouraging more and more entrepreneurs to grow their businesses internationally. As a small open economy, Ireland can be particularly vulnerable to economic fluctuations in global markets. We are asking that investments be put in place to develop the infrastructure required to support the export markets of the next 50 years.