For companies depending on fast, small deliveries, the costs of new Brexit trade rules are mounting.
LONDON — In a warehouse tucked under two railway arches in southeast London is a treasure trove of Greek delicacies, including barrel-aged feta, fresh oregano, Cretan olive oil and cases of nearly a hundred different wines destined for the city’s top restaurants and discerning home cooks. But as Britain phases in Brexit-required customs rules with the European Union, the tempting variety at Maltby & Greek is under threat.
The additional forms, customs charges and health safety checks needed for goods to cross Britain’s border are particularly arduous for businesses moving small quantities. That includes specialist food importers buying from small suppliers across the European continent who have helped make London one of the world’s best cities for dining.
It has “minimized our ability to discover and import unusual products,” said Yannos Hadjiioannou, the owner of Maltby & Greek, which for the past decade has imported food and wine from Greece and its islands, prizing itself on products rarely found in Britain. On Saturdays, under the arches, customers can peruse goat-milk butter; Mastelo cheese, a kind of halloumi made from cow’s milk from the island of Chios; bunches of mountain tea; and pale Gigantes beans from Feneos, in the northern Peloponnese.
Getting each of those items here became more complicated just over two weeks ago.
After a yearlong delay, on Jan. 1, Britain stepped up its enforcement of customs requirements for goods coming from the European Union, which in 2020 accounted for half of all imports into the country. Now, the goods must be accompanied by customs declarations. (Last year, British importers could delay reporting by about six months.) And businesses importing animal and plant products — most food, for example — must notify the government of shipments in advance.
At the border, the introduction of the rules has gone relatively smoothly. DFDS, a Danish logistics company that runs ferry services to Britain, said some customers had incorrectly filled out the paperwork, and some food shipments were stopped. On one day, shipments from the Netherlands had to be halted to deal with a backlog from the previous day.
“Everybody involved tried to learn from what happened a year ago,” said Torben Carlsen, the chief executive of DFDS.
Last year, the European Union introduced customs rules as soon as Brexit went into effect, and immediately the problems piled up: Deliveries were delayed, trucking companies stopped serving Ireland and food spoiled in ports. It took more than a month before most of the problems were resolved.
Britain couldn’t afford the same import issues this year. About a quarter of the country’s food is imported from the European Union, according to data from 2019, a figure that jumps substantially in winter for fresh fruit and vegetables.
But there are challenges — unseen, away from the border. Some British businesses are taking on the export costs of their European suppliers to avoid losing them. Others are just importing less, reducing the choices for customers. Still others are restricting purchases to bulk orders and forgoing trying new products.
The decline was noticeable even before the latest import rules began. In the first nine months of 2021, food and drink imports fell about 11 percent from 2019, according to the Food and Drink Federation.
After Britain left the European Union’s customs union at the start of 2021, Mr. Hadjiioannou kept business going as normal, he said. Within six months, however, the additional customs costs and associated price increases became prohibitive. He stopped getting weekly deliveries of anthotyro, a soft fresh sheep’s milk cheese from Crete, and traditionally strained sheep or goat yogurt, leaving the popular products regularly out of stock. Sausages from Crete now come frozen instead of fresh so they can be sent in larger, less frequent deliveries.
“Most of the perishable products have suffered, particularly the ones which were small volume but important for a lot of the restaurateurs and delis,” Mr. Hadjiioannou said. The biggest disruption from Brexit has been the loss of flexibility, he added.
Maltby & Greek’s warehouse is at Spa Terminus, a long strip of railway arches housing food producers, wholesalers and wine importers. At this time of year, fresh produce at its markets includes Sicilian citrus, Italian leafy greens and French root vegetables. At the opposite end to Maltby & Greek, Rachel Sills sells cheese made in Switzerland and the Netherlands. While her experience exporting from Switzerland softened the blow of Brexit’s trade rules, it hasn’t insulated her from the extra cost.
She buys cheese from four small producers in the Netherlands — so small that not all of them have an email address. Now each one is required to have an Economic Operator’s Registration and Identification number, as well as customs agents to do export and tax paperwork, and they must complete more detailed invoices, which include tariff codes.
Ms. Sills said she had taken on the extra costs for export clearances for the cheesemakers. Recently she was able to combine the orders to pay only 65 euros ($74.50) for each invoice, on top of her own import fees. “So they, to this stage, haven’t started paying for the real costs of the export charges,” she said. “I have.”
“It’s not that the paperwork or the cost is actually that onerous,” Ms. Sills said. But for companies with lots of suppliers, “when you add up the cost of each one, then it becomes insane,” she said, especially if buying small volumes.
And that is so far what Brexit has boiled down to for these businesses: extra costs.
“We are past the point of having wild shortages,” said David Henig, a trade policy expert in London. The customs systems work, but the damage will be more like a “slow boiling frog.” The extra costs will eat away at Britain’s economy, with independent forecasts indicating a long-run shortfall of about 4 percent of gross domestic product. For customers, the overall effect is likely to be less choice, Mr. Henig added.
It also continues to diminish the incentives for companies to invest in Britain.
“We are less U.K.-centric than we were a couple of years ago,” said Franco Fubini, the founder of Natoora, which began in London in 2004 and now supplies fresh produce from hundreds of small farms in Europe and North America to about 1,600 restaurants globally and shops including Selfridges and Whole Foods, with outposts in the United States.
Natoora reorganized its internal processes so that the British arm of the company no longer imports anything directly from the farms in Italy, France, Spain and Greece. Instead more employees were hired in Paris and Milan so the produce could be bought by the hubs in the continent and then sold to the London office. This consolidation means there is only one invoice, saving money on trucks and customs.
Even though Natoora found a workaround, Mr. Fubini said Brexit had dented Britain’s international reputation, making him reconsider his company’s future. “For the first time in 15 or 16 years, I really started to question how much we should continue to invest in the U.K,” he said.
When Prime Minister Boris Johnson announced the new trade deal with the European Union on Christmas Eve 2020, he said the agreement, “if anything, should allow our companies and our exporters to do even more business with our European friends.” In reality, it has made it harder, not easier. Brexit might free Britain from Brussels bureaucracy, but it has tied businesses up in other red tape. While the promises of Brexit were varied — from opening up new markets and deregulation — the slowness in realizing the benefits has frustrated even its supporters.
The other fresh produce market at Spa Terminus, Puntarelle & Company, is run by Elena Deminska, who said Brexit could be a great opportunity for British farmers to produce some of the food that was mostly imported from the European Union. The country has the climate for bitter winter lettuce or broccoli rabe or, “with a little bit of effort,” apricots, Ms. Deminska said. Instead she complains that the farmers are “not flexible.”
About four years ago, with great foresight, Ms. Deminska outsourced her customs work to an external company. Still she despairs at the Brexit-induced paperwork. “It’s just not helpful,” she said. “There is already enough paperwork.”
For all of these businesses there are more hurdles ahead. Beginning in July, food imports will need to be accompanied by health certificates signed off by inspectors in the European Union, and could be picked for spot checks at the border.
Those changes “are just going to add complexity, add cost,” Mr. Fubini said. “It is disruptive.”
