Latest warehousing Brexit poll reveals 48-hour capacity crunch
The latest Brexit poll from the United Kingdom Warehousing Association suggests stockpiling in the warehousing sector has led to the equivalent of just two days’ worth of capacity in the UK.
“UKWA reckons available space could be as little as 250,000 pallet locations across the UK, which is roughly equivalent to a couple of days’ freight coming inbound through Dover,” says Peter Ward, UKWA’s CEO.
The poll of UKWA’s larger members, who collectively operate some 7.5 million sq ft of warehousing in the UK – around 75% of the overall market, all reported an increase in demand for additional warehouse space.
Ward said the Brexit 31 Oct deadline couldn’t have come at a worse time, clashing with peak season in logistics in the run up to Christmas, including Black Friday and Cyber Monday.
He continued: “In previous years, these peaks have become increasingly challenging with rising labour and skills shortages in our industry. This year is likely to be exponentially more difficult, as members contend with not only shortage of warehouse space, but the ‘Brexodus’ effect of EU workers going home or heading to other EU markets.”
UKWA said there were “pockets” of space available, with some companies expanding for non-Brexit reasons or futureproofing. One or two members reported lost business due to Brexit, as clients relocate stock to mainland EU and there have been casualties in the sector, with Brexit-related uncertainty holding up investment decisions and hindering long-term planning
Ward continued: “We’re now seeing the start of the Government’s Prepare for Brexit campaign with warnings appearing on motorway gantry signs; our evidence suggests that business is less than 50% prepared for a hard Brexit on 31 October.
“In summary, Brexit is not good news for warehouse operators – nobody makes anything from static stocks – revenues are generated by turns of stock, frequent handling and provision of value-added services.”
While the real estate sector reports vacancy rates higher than in recent years and some speculative build after 10 years of austerity, these trends are far from satisfying Brexit demand as this availability is based on long term lease commitments and related to empty space. Brexit demand calls for ‘plug and play’ space with racking, handling equipment, labour and connectable.
Overall the warehousing and logistics sector is growing. The growth is not fuelled by Brexit, but rather by the continued rise of ecommerce and online retail, but, as Peter Ward warns, “bringing forward fit-for-purpose capacity in the right location is far from simple, given our outdated land use and planning policy and creaking infrastructure. To meet demand for more warehousing and the labour force to operate the necessary fulfilment systems, innovative thinking and radical policy change from the government will be vital post-Brexit.”
Posted on: September 24th 2019