For now there is free trade between the UK and the continent but that is due to end on March 29 when Britain is scheduled to leave the EU.
Without a free trade deal, or at least agreement to maintain current trading terms until one can be negotiated, the UK and the EU will be forced to trade with each other on terms still to be approved by World Trade Organisation members.
British officials are predicting gridlock at ports as exporters and importers grapple with an avalanche of new paperwork and border checks.
The British government has placed 3500 troops on stand-by to assist in keeping the traffic moving.
There is not enough time between now and the March 29 Brexit date for the EU and the UK to negotiate a free trade deal to streamline customs procedures and reduce WTO tariffs.
Instead British Prime Minister Theresa May will take a makeshift deal to the UK parliament this week to maintain current trading arrangements until December 2020, by which time it is hoped a new trade deal will have been concluded.
However, she is fighting a losing battle with members of her own party and is almost certain to lose the vote.
Meantime NZ exporters are preparing for the worst.
NZ’s largest seller of sauvignon blanc to the UK, Villa Maria, is running its bottling plants at full tilt to get as much of its product landed before the end of March.
“In January we will be bottling for the first time 24 hours a day to build up a bit of stock and have it there as a contingency,” chief executive Fabian Yukich said.
It was offering extended credit terms to its UK customers to encourage them to build up a buffer.
“You work very hard to get shelf position with the retailers and we do not want to give that up.”
Mark Calver, the commercial director of Villa Maria’s UK distributor, Hatch Mansfield, said May could delay the Brexit date if she did not get her transition deal through the UK parliament this week.
But that was not guaranteed and Hatch Mansfield was building stocks now to cover six weeks of demand should the UK border seize up from the end of March.
“In a sense NZ is in the worst possible place on this … we have had to make decisions with Villa Maria to do stuff which may turn out to be irrelevant but if we waited to do it and we needed that extra stock it would be too late.”
The chairman of Alliance Group, Murray Taggart, said the potential disruption at UK ports came at the worst time for exporters as they focused on getting chilled meat into British supermarkets for Easter.
Because chilled meat had a limited shelf-life any hold-ups would reduce its value to the supermarkets.
Taggart said that might be able to be covered by insurance or forestalled completely by diverting meat to other markets.
“Ships can be diverted but the reason they were heading to their original destination is because that is the most preferred one from a revenue point of view.”
Silver Fern Farms chief executive Simon Limmer said whether it was UK supermarkets or exporters absorbing the loss from port delays depended on at which point ownership of meat was transferred and that varied between customers.
“Ultimately though it is going to be worn by the customer and SFF regardless of who has taken ownership, because the customer is going to be less willing to take product if there is uncertainty.”
Limmer said a no-deal Brexit would also see British sheep meat shut out of the EU by high tariffs.
While that would increase competition in the UK market it would create opportunities in the EU for NZ exporters agile enough to take advantage of them.
