U.K. Scraps No-Deal Ferry Contract for Company Without Ships

(Bloomberg) -- The U.K. canceled a 13.8 million pound ($18 million) contract with Seaborne Freight, a startup company that doesn’t own any ships, to deliver backup ferry service in the event of a no-deal Brexit. Lawmakers had criticized the contract award.

The deal was scrapped when “it became clear Seaborne would not reach its contractual requirements with the government,” the Department for Transport said in statement on Saturday. A department spokesman said the government is in talks with several companies to secure additional freight capacity, including through the Port of Ramsgate.

The Daily Telegraph, which first reported the cancellation, said the company’s main backer, Arklow Shipping, had withdrawn support “without warning” on Friday, without saying where it got the information. Arklow, which the newspaper said has more than 50 ferries, last month agreed to be a major equity partner for Seaborne.

The setback prompted cross-party calls for Prime Minister Theresa May to fire Transport Secretary Chris Grayling, the Guardian reported.

Political Storm

Several lawmakers suggested Grayling should review his role and former Conservative business minister Anna Soubry said Grayling “should be quietly considering his position,” the Guardian said.

Seaborne Freight was awarded a contract in December to carry trucks between Ramsgate, in southeast England, and Ostend, Belgium, if Britain left the European Union in March without an agreement for future trade.

Grayling told Parliament in January that the scale of potential disruption if additional customs checks are introduced on the French side of the English Channel -- at Calais, Coquelles and Dunkirk, where freight services disembark -- “could be very significant.”

As part of contingency planning, the department sought bids for ferry capacity and judged the proposals based on journey time, quality of delivery plans and pricing. Brittany Ferries of France, Danish shipping firm DFDS and Seaborne won the contracts worth 108 million pounds for roll-on roll-off ferries to carry about 4,000 extra trucks a week.

‘Utter Shambles’

“The whole exercise is a complete and utter shambles,” Mick Cash, general secretary of the RMT shipping and transport union, said in a statement Saturday. “They are blundering on from crisis to crisis.”

The award to Seaborne Freight also drew criticism from lawmakers, who said the company lacked the experience to operate a similar service.

Grayling told BBC Radio on Jan. 2 that civil servants had done “due diligence” and believed the company could deliver the services required.

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