Drifting away?European companies fight to reach UK customers

ROME / STOCKHOLM-Post-Brexit trade rules require Prosecco supplier Serena Wines 1881 to store bottles for the UK in expensive fumigation pallets in the corner of a warehouse in the northeastern Italian town of Conegliano. It means that.

The new shipping requirements are an example of the additional cost and complexity faced by European continental companies in servicing UK customers since January 1, disrupting the COVID-19 pandemic with the UK. Reduce EU trade volume.

“These first few months were busy and hellish for everyone,” said export manager Nicola Piobesana. “The delivery time was longer and it took us two weeks to reach our (UK) client, but until then it took up to a week.”

After years of debate over post-Brexit trade terms, the December 24 agreement was signed between the UK and the EU, at least about half of the total EU-UK commerce of $ 900 billion annually. Meaned that was exempt from tariffs and quotas.

However, January trade volume fell as a challenge to the new rules, coupled with the blow of pandemic regulation and the large stockpile of companies on both sides of the English Channel in the second half of 2020 in anticipation of trouble.

UK data released on Tuesday showed only a partial recovery in February, with UK product exports to the EU down 12.5% ​​year-on-year and imports down 11.5%. Data from Italy, France and Germany, the UK’s largest EU trading partners, all show a decline in UK trade in February.

The UK is the second largest export market after Germany, and Serena Wines aims to secure business with UK hotels, restaurants and catering companies by renewing domestic customs clearance and dedicating one staff to the UK only. I’m back to.

However, the pallet problem is typical of the knock-on effects that companies currently have to deal with. In this case, trade with countries other than the EU means that international regulations on pest control of wood packaging apply.

According to Piovesana, fumigation pallets cost around € 9.50 (8.23 sterling) per pallet, almost 20 percent higher than regular pallets. UK guidance aims to allow businesses to consider switching from wooden pallets to plastic pallets.

“Easy to ship to Asia”

High Quality Foods, a Rome-based food supplier from artisan bakeries to luxury restaurants in the West End, struggles to document specialty meat products such as Black Angus beef crossed with Italian varieties. doing.

“There seems to be a trap in every corner,” lamented Managing Director Simone Cozzi, who gave the company’s hygiene officer (a trained veterinarian) extra time with them to fill out the required paperwork. He added that he had to spend.

Customs delays have also been added to shipping costs as drivers are asking for more money to make up for wasted time, according to Kozzi, but compared to just 30-45 minutes in Hong Kong, the UK At the airport, you can carry out air transportation for more than 24 hours.

“At this point, it’s easier to actually ship things to Asia,” he said.

Italy’s Farmers Association Coldiretti has raised hurdles such as endangering Italy’s agricultural exports of € 3.4 billion, with grocery exports to the UK down 38% in January and nearly 14% in February. It shows that it has decreased.

Some companies have found a workaround, albeit at a cost.

Swedish timber supplier Vida Wood, riding a wave of booms caused by blockades in DIY home renovation activities, had an existing UK subsidiary.

CEO Karl-Johan Löwenadler admitted that UK-less SMEs would not have access to the solution, such as the 11-person business in Villa Riki, 25 miles (40 km) east of London. I am.

Future check

The big turmoil is common among commodity exporters in various sectors of Europe, but the unanswered question is what will be the long-term impact on trade.

A spokesperson for the UK government showed that February data showed “welcome growth” in trade with the EU since January, suggesting that most traders and carriers are currently adapting. Said that.

“It’s too early to make a firm decision on the long-term implications of the new trade relationship with the EU, especially as the pandemic continues,” a spokesman added.

The Bank of England expects UK-EU post-EU regulations to reduce trade in UK-EU goods and services by more than 10% in the long run.

In addition, exporters to the UK will need additional paperwork to import British food products such as meat, fish and cheese from October, and more checks will be carried out from January 2022. It will get more complicated in the coming months.

A group of lawmakers and business leaders will hold the first “evidence session” on Brexit’s trade implications on Thursday to make suggestions for possible improvements.

But even before Brexit, the EU’s share of UK trade has already declined for years, and the figures quoted in last year’s British Parliamentary report show that UK exports to the EU will be in 2019. In 2006, it accounted for 43% of all exports.

For some major European exporters, the initial turmoil will eventually subside, but the logic of Brexit trading, which has spurred close ties, will inevitably lead to further drifts of UK-EU trade volume to the south. I have resigned from the idea that it will lead to.

In a December 2020 survey of members of the German BGA industry group, one in five companies reorganized their supply chains to replace UK suppliers in favor of EU single market suppliers. It was shown to be.

Julia Segreti and Simon Johnson