State forestry group Coillte is seeking additional warehousing capacity in the UK so that it can stockpile three months' worth of timber products as a contingency measure against a hard Brexit.
This move is designed to minimise the impact on Coillte's customers in Britain in the event of the UK leaving the European Union without a trade deal in place.
Coillte is concerned that a hard Brexit could lead to long delays at customs checks at British ports, which could severely disrupt its logistics chain and affect the timeliness of deliveries to customers.
Some 72 per cent of Coillte’s products are exported to the UK, with about another 10 per cent moved by road through Britain for continental European markets.
Coillte is also looking at the feasibility of using the North as a land bridge to its customers in Britain, assuming there will be no restrictions from the North into England.
In addition the company is considering options around moving from truck deliveries to whole-ship movements to reduce administration. In the past 12 months, Coillte has consolidated its key sales activities in Dartford, 18 miles southeast of central London.
Other hard Brexit contingency measures include hedging almost all of the next nine months’ exposure to sterling when it would usually have three to six months’ hedging in place.
Coillte also recently resumed shipments to the United States, after an absence of more than a decade. This is aimed at trying to reduce the company's reliance on the UK market.
And it is beginning to test the readiness of its IT systems to manage the administration and logistics of a hard Border scenario.
These measures combined could cost the company more than €500,000. However, Coillte is believed to have achieved a strong trading performance in the first half of this year and it has substantially reduced its debt pile in its most recent reporting period, giving it greater capacity to absorb these once-off expenses.
Coillte's chief executive Fergal Leamy said the company was taking a number of steps to protect the company against a no-deal Brexit in 2019.
“Nobody knows right now what the final shape of Brexit will be, but we have to be proactive and we have to do everything we can to protect our position in what is our most important market,” he said.
“It is a significant challenge but the reality is the UK will remain a dominant market for Coillte. It is the second largest importer of timber in the world and that’s not going to change overnight. The actions we’re taking are prudent and I believe we have the best possible contingency plans for the business.”
Coillte has also participated in the Timber Industry Brexit Forum, which has involved members of the industry having discussions in Brussels, Dublin and London in an effort to influence discussions on how timber exports will be treated after Brexit.