A free port is an area designated by a government and is a zone where little or zero tax is paid to encourage business. Customers of free ports are able to import and then export goods without having to pay any customs charges, tariffs or import duties which would be levied otherwise.
In 1959, a free port was designated in Shannon Airport, in the west of the Republic of Ireland. At that time, the airport was struggling and wanted to use the 16th century idea to its economic advantage. On the back of this, passengers travelling through Shannon Airport were the first in the world to be introduced to duty-free shops.
As part of Prime Minister Boris Johnson’s election manifesto, he stated that he would establish ten free ports across the UK from 2021. The UK had seven free ports in operation from 1984 but these were disbanded by David Cameron in 2012. Boris Johnson’s election pledge to establish 10 free ports was a contingency plan in case the UK failed to make a mutually acceptable trade deal with the EU, unlocking post Brexit trade opportunities with Asian and US markets post Brexit.
There has been opposition to, and criticism of, the re-establishment of free ports in the UK, with many saying that the zones may not attract new business, but indeed encourage already established companies in the UK to move their operations in order to lessen their tax obligations. Critics also suggest that the zones may be treated as tax havens and be hubs for finance related crime. Construction firm Mace has stated that the re-establishment of free ports in the UK could help to create 150,000 new jobs across the country and contribute £9bn to the UK economy.1
The owners of the Ports of Tilbury and The London Gateway on the Thames submitted a successful joint bid to become a free port. The joint venture also included vehicle manufacturer Ford that produces engines at their plant in Dagenham. Forth Ports and DP World have claimed that the creation of a free port could generate 25,000 jobs along the Thames estuary and generate £5.1bn for the UK economy.2
The Port of Tilbury (home to Wilson James’ LCCC, built in 2005 to consolidate and distribute inbound construction materials) sees 16 million tonnes of cargo, including construction materials, pass through its facility every year, making it the busiest port on the Thames. Forth Ports have invested £1bn in Tilbury in the last 9 years which has resulted in its cargo business doubling in size.
Alongside London Gateway and Tilbury, other free ports are set to be created in the East Midlands, Felixstowe, The Humber, Liverpool, Plymouth, Southampton and Teesside. Whilst the UK Major Ports Group also entered a series of proposals, ultimately some, such as Bristol, were unsuccessful in their bids.3
