Brexit surcharge spoils U.K. exporters’ virus workaround

Brexit is driving up the cost to export U.K. goods using an air-freight method that British companies have relied on to cope with flight bans triggered by a fast-spreading coronavirus strain.

Deutsche Lufthansa AG has introduced a surcharge on U.K. shipments sent by truck to airports in the European Union for onward delivery, according to a notice sent to a customer seen by Bloomberg. The fees on so-called flight trucks can add as much as 3,000 pounds ($4,100) to the cost of sending a 20-foot container full of high-value items like urgent documents, electronics, or perishable seafood to places like China or Japan.

Normally, about half of air cargo is flown directly to its destination from the U.K. in the holds of passenger jets. But the virus has curtailed air traffic, reducing the amount of belly freight. That’s driven up prices while shifting more volume to dedicated freighters which are in short supply.

The problem has worsened for U.K. shippers since the more infectious virus variant began spreading rapidly in December, triggering added travel curbs. In response, logistics firms are relying on flight trucks to get U.K. goods to their destinations. Countries including China, Asia’s largest economy, have indefinitely banned passenger flights arriving from the U.K., so some goods are being trucked to Brussels or Paris to start the air-freight part of their journey.

The airlines say the added charges will compensate for the cost of security checks on these shipments, which are required under terms of the U.K.’s exit from the EU’s single market since Jan 1. Trucks arriving from Britain are no longer considered secure, and potentially subject to re-screening.

Lufthansa told one customer it would charge 0.15 pounds per kilogram to rescreen cargo, with a minimum charge of 17.25 pounds, according to the notice.

A spokesman for Lufthansa Cargo said the airline was legally obliged to follow laws governing cargo shipments.

From new taxes to additional paperwork, the cost of moving goods between Britain and Europe is rising in the wake of the U.K.’s exit from the EU. The price to move a truckload from France to the U.K. was 39% above the third-quarter average last week, according to high-frequency data from global logistics firm Transporeon.