Brexit Delays Leave Londoners’ Parmesan at Risk of Being Dumped

(Bloomberg) -- Patricia Michelson runs La Fromagerie, a chain of upmarket delicatessens across north London. Each week, deliveries of parmesan and mozzarella arrive from Italy -- a flow Brexit now threatens to disrupt.

Like many small suppliers of perishable foods, she relies on a groupage service, where multiple products going to different destinations are transported across borders on the same truck. The practice allows her to bring small amounts of produce into the country quickly and in a cost-effective way.

When Britain finally parts way with the European Union at the year-end, customs checks will be re-introduced at the U.K. border. Trucks carrying multiple consignments will be required to file customs declarations for all of them. A problem with any single item could delay the whole delivery -- while the goods on board slowly deteriorate.

The food service industry “will need to procure their goods in completely different way,” said Jack Fleming, founder of Chill-Chain, a provider of logistics software for cold freight.

For Michelson, whose parmesan cheese retails for as much as 40 pounds ($52), border frictions mean she faces disruption, extra costs as well as the threat of lost sales.

‘Devastating'

Delayed deliveries in the past have been “devastating” to her business, Michelson said. A series of strikes in France last year meant deliveries to restaurants were missed and she couldn't stock some products.

“We had a problem with Parmesan -- it just got dumped in the end because it couldn't come over the Channel,” she said. “That's 10,000 euros a drop for the amount of Parmesan we bring in, and for mozzarella it's 2,000 or 3,000 euros a time.”

Such delays could be become typical after the end of the post-Brexit transition period. “If there's a problem with the paperwork and the processing, what happens then?” she said.

Michelson complained that a lack of information from the government about the new customs process is making it hard to prepare. She said she is committed to keeping her original suppliers, even if it means paying their additional paperwork costs.

Exporter Woes

It isn't only importers like Michelson who are at risk, but firms exporting produce to the EU, too. Groupage made up 14% of imports and 15% of exports in 2019, according to the Department for Transport's International Road Freight Statistics.

Britain's small meat producers in particular use groupage to ship small quantities on a regular basis, said Peter Hardwick, trade policy adviser to the British Meat Processing Association. That allows them to avoid the risk of single large consignment of perishable produce being delayed.

But the government has no mechanism to facilitate groupage services to the EU that include chilled fresh meat after Brexit.

The competitive advantage of the U.K. meat industry turns on its ability to ship to the continent as quickly as their EU counterparts, Hardwick said.

“Buyers will have to think very hard about who they're going to buy from,” he said.

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