By Kate Holton
LONDON (Reuters) – Britain’s departure from the European Union has triggered the biggest change in trade since it joined the bloc 48 years ago, with companies grappling with export documents, longer delivery times and the need to re-engineer supply chains.
Freight volumes moving between the United Kingdom and the European Union were down 38% in the third week of January compared with the same week a year ago, real-time truck movement data shows.
Below are just some of the ways in which trade is changing since Britain exited the EU’s single market and customs union on Dec. 31:
LONGER DELIVERY TIMES
Fishermen were the first workers to be hit in January when the introduction of health checks, certificates and customs declarations delayed the movement of stocks to such an extent that they were rejected by European buyers as no longer fresh.
Since then food producers of products ranging from cheese to high-end beef have stopped exporting to Europe for now, put off by expensive health certificates and overwhelming paperwork.
Some companies are trying to find a solution. Some Scottish fishermen have taken their catch directly to Danish markets to avoid the British bureaucracy. However about a fifth of small and medium-sized businesses that export to the EU have temporarily halted sales.
SUPPLY CHAINS
The new friction has forced those companies that can afford it to re-examine their supply chains, particularly those British firms that risk tariffs by selling goods into the EU that were made from materials originally imported from Asia.
Online clothing giant ASOS expects a 15 million pound ($21 million) tariff hit because, although most of its European sales go via a Berlin warehouse, some still enter Britain first. Superdry will use bonded warehouses.
Japanese carmaker Nissan plans to source more batteries from Britain to avoid tariffs on electric cars.
VAT AND COSTS
Companies and consumers have received unexpected charges for customs fees, VAT and higher logistics costs that will make some sales prohibitive.
Logistics groups said the cost of hiring European drivers to bring goods into Britain had surged. The fact that drivers also need a negative COVID test to leave means the island nation is a much less attractive destination for them.
A CBI survey of UK manufacturers showed optimism about their competitiveness with EU rivals has deteriorated at the fastest pace on record. Despite that, EU orders improved, suggesting that EU firms are still sourcing from the UK.
FINANCIAL SERVICES
Britain’s Brexit trade deal with the EU, in force since Jan. 1, does not cover financial services, leaving its City of London financial centre largely cut off from the bloc.
European daily share trading worth 6 billion euros ($7.36 billion) left the City of London for the continent in early January, along with a chunk of swaps trading. That raises questions over the value of any future EU access, given that UK banks and trading platforms have opened units in the bloc.
Brussels has said it will not consider granting more equivalence access until a regulatory cooperation pact with Britain is in place and planned UK divergence from EU rules have been examined.
London has no desire for a bonfire of regulations to retain its position as a top international finance centre after Brexit but it is ready to act if the EU blocks access, the City of London’s political leader told Reuters.
The Bank of England has said Britain should not submit to EU rules just to secure better access, warning that the price could be too high.
IRELAND
The most obvious sign of the Brexit impact can be seen in the ports where large ferries now ship goods directly between EU member Ireland and the rest of the bloc to cut out the paperwork and delays associated with the once speedier route via Britain.
Some gaps have appeared on supermarket shelves in Ireland and the British province of Northern Ireland as retailers struggle to cope with the customs paperwork, a situation that could deteriorate after a three-month grace period for Northern Ireland supermarkets expires.
E-commerce has also been badly hit due to the numbers of Irish customers who shop online from UK stores. Some British suppliers have stopped trade while Northern Irish logistics groups have warned that prices are rising as trailers return from Britain empty, without a return load to cover the cost.
($1 = 0.7283 pounds)
(Reporting by Kate Holton; Editing by Gareth Jones)
