No-Deal Brexit Risk Sparks Company Pleas for Customs Check Help

(Bloomberg) -- The rising threat of a no-deal Brexit has multinational companies rushing to prepare for potential customs checks, according to two people with knowledge of the situation.

German carmaker Volkswagen AG and U.S. food manufacturer McCormick & Co. are among those that have made appeals to logistics firms in recent weeks for help in case they’re suddenly faced with checks on goods moving between the U.K. and the European Union, said one of the people, who didn’t want to be identified because the talks are private.

Not all the companies are getting the assistance they need, the person said.

Prime Minister Theresa May is trying to extend the free movement of goods with the proposed exit agreement she’s struggling to push through Parliament, scheduled to go to a vote the week of Jan. 14. If Britain crashes out of the EU, companies will suddenly face tariffs and regulatory hurdles, meaning paperwork and border checks that would create delays.

“To have the right amount of people to deal with a significant increase in paperwork, there’s going to be a hiccup there,” if there’s a no-deal Brexit, said Ross Denton, a U.K. trade lawyer at Baker McKenzie. There’s “a skills shortage of people who understand what used to be a relatively rarefied issue of customs between the U.K. and third countries.”

May will make one last push to win support for her deal with U.K. lawmakers returning to Parliament next week. If her proposal is rejected, it’ll be tough to find an alternative before Britain’s scheduled departure on March 29.

A spokesman for Volkswagen declined to comment. A spokesman for McCormick said the company’s Brexit preparations were “well advanced” and that it’s “conducting ongoing risk management and mitigation-planning” to protect customer supplies, while not commenting specifically on customs checks.

Customs checks are just one part of the contingency planning companies have been doing since the U.K. voted to leave the EU in June 2016. Every sector from pharmaceuticals to the auto industry has seen businesses relocating and stockpiling goods in an effort to avert chaos if Britain leaves the bloc without an agreement.

Factories reported an almost record increase in stocks last month as U.K. manufacturers upped their stockpiling efforts, according to a report from IHS Markit.

Carmakers, including Volkswagen, have also been buying up bonded warehouse space at U.K. ports to try and avoid border delays, while the government has told supermarkets to keep as much stock as possible in warehouses around the country in case there’s no deal.

©2019 Bloomberg L.P.