The warehousing and logistics sector is facing a ‘perfect storm’ with supply chain disruption likely “across all sectors” in the light of Brexit, the United Kingdom Warehousing Association (UKWA) is warning.
UKWA said logistics businesses are likely to respond by holding more stock in a bid to mitigate risk of supply shortfall, moving away from the current Just In Time model, but this will not be as straightforward as it sounds.
UKWA CEO Peter Ward (pictured above) explained: “There is a well-documented critical lack of fit-for-purpose warehousing close to large population areas. This is essential to serve technology enabled consumers who shop ‘little and often’ for food and other goods, and expect same or next day delivery of online orders – a situation which has already been highlighted by UKWA in its Feeding London 2030 report.”
He continued: “We are facing a ‘perfect storm’ in the warehousing and logistics industry, with little speculative build in the pipeline, urban development land earmarked for residential but not for the warehousing required to fulfil rising consumer demand, and a severe labour and skills shortage, exacerbated by the ‘Brexodus’ effect as Eastern European immigrant labour heads home.
“Added to this is the estimated 200 million extra customs declarations that may need to be processed post-Brexit. Clearly this will lead to an interruption in the supply chain, and, as half the food we consume is imported, 80% of that imported food comes from EU and 90% of that comes through the Dover corridor, so we expect property investors to be scouring the M20 corridor now because that’s where there’ll be demand."
He added: “Should ‘rest of world’ rules be applied, new food inspection facilities will be required; and to keep the vital Dover corridor clear post-Brexit these may have to be located inland. This is a critical issue for ensuring continuity of food supply throughout the UK.”
Regarding evidence of an upsurge in demand for warehousing space, Ward said this is "largely anecdotal" at this juncture, but activity on UKWA’s own warehousing portal MarketSpace, which tracks warehousing supply and demand from 150+ companies across 200 locations, tells the same story.
Ward explained further: “In the last two months, we have seen a spike in new visitors coming to the site, with 90% visiting for the first time and most going straight to the ‘Search for Space’ facility. There has also been a marked increase in visitors coming from outside of UK, particularly from the US, Canada and China, as well as additional new visitors from France, Germany and Poland.”
UKWA, which represents more than 700 logistics businesses, said visitors to its main website searching for space during September and October 2018 was up by 60%, compared to the same period last year.
UKWA is also supporting a government initiative, outsourced to Ipsos Mori, to evaluate warehousing capacity in the UK, particularly that which is currently customs approved (for inland clearance of goods), and/or is not currently approved but could be so in the future.
Posted on: December 4th 2018