Grizzly’s Canceled Delivery Is a Warning of Brexit Trouble Ahead

(Bloomberg) -- Grizzly’s Custom Bikes services and upgrades Harley-Davidson motorcycles, importing aftermarket seats, exhaust systems and other parts from Germany.

This week, the owner of the Folkestone, England-based firm received a two-line email with bad news: his German supplier is stopping all shipments to the U.K. indefinitely because of Brexit.

“I was deflated,” said Paul Hayes-Watkins. His business is now struggling to find alternative sources of parts. “If this is how the future is going to be,” he said, “I may as well close the doors.”

Grizzly’s experience is a sign of how Britain’s departure from the European Union’s single market on Dec. 31 is already playing havoc with companies’ supply chains. Firms of all sizes are trying to avoid getting caught up in the delays likely at the border when new checks and paperwork come into force -- even if Britain and the EU manage to reach a trade deal.

Specac Ltd., a maker of laboratory equipment in the London suburb of Orpington, imports metal sub-assemblies from the Czech Republic and exports about 15% of its products to the EU. The firm has put an embargo on all imports and exports until Jan. 15 in order to avoid any early Brexit disruption.

Wrong Paperwork

“There are going to be people putting stuff on the road that have the wrong paperwork,” said David Smith, Specac’s managing director. His firm placed its orders early to beat the winter crunch. “If we didn’t have our own embargo, companies like us could find ourselves behind the queue.”

Britain is getting an early taste of border congestion due to a frenzy of stockpiling. Long queues approaching the busy ports of Dover and Calais this month forced Japanese automaker Honda Motor Co. to temporarily shut its factory in Swindon, England. With a trade deal between the U.K. and EU still not secured, buying goods now means purchasers can avoid paying tariffs that could be levied from Jan. 1.

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Pooch & Mutt, a British importer of gourmet pet food from Spain and the Czech Republic, said it has seen a 150% increase in the cost of bringing goods to the U.K. in recent weeks. It has struggled to book slots on trucks.

“The whole logistics is just a nightmare,” said Guy Blaskey, the company’s founder, who expects the expense of complying with new Brexit red tape will add 3% to his cost base. “We have warned our customers that we might have to look at price increases.”

In a further sign of the pressure building on Britain’s supply chains, Europe’s largest truck owner said this week it would turn away deliveries to the U.K. after Brexit if there are border snarl-ups.

The challenge is particularly acute for importers of fresh produce, who can’t stockpile extensively because the goods will spoil.

Bini Ludlow, whose firm makes luxury Indian ready meals in Somerset, has been buying in extra tomatoes and onions from the continent ahead of the Brexit deadline, making batches and putting them in the freezer.

“There’s going to be delays for everything,” she said. “It’s going to disrupt us all.”

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