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

(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 Department for Transport said in an emailed statement on Saturday that the deal was scrapped when “it became clear Seaborne would not reach its contractual requirements with the government.”

The Daily Telegraph, which first reported the cancellation, said the company’s main backer, Arklow Shipping, had withdrawn support “without warning” on Friday, without saying where it got the information.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.

Seaborne Freight in December had been awarded the contract to run a service to carry trucks between Ramsgate, in southeast England, and Ostend, Belgium, if Britain were to leave the European Union in March without an agreement for future trade.

The department spokesman said the government was now in “advanced talks” with a number of companies to secure additional freight capacity, including through the Port of Ramsgate.

‘Very Significant’

Transport Secretary Chris Grayling in a written statement 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 contingency planning, the DfT 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.

“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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