Thursday, October 31, 2019

As the Brexit Goalposts Move Yet Again Advice to Shippers from the Experts Remains Consistent

Hope for the Best and Prepare for the Worst as Sufficient Warehousing Remains Paramount
Shipping News Feature
UK – Despite the collective shenanigans going on in Westminster there was a collective sigh of relief from the logistics professionals this week as news came of a postponement of the British exit from Europe until the New Year. Members who just received their monthly BIFA link update from the British International Freight Association will be hoping all the advice given, that would be essential in the case of a no deal, will not be necessary when the dust settles.

The substantial element added to the mix is, of course, the General Election on December 12, but until such time as the result is clear the country remains in limbo as far as preparations go. Certainly however the pressure for suitable, safe and secure warehouse space is likely to ease a little, at what is the busiest time of the year for such trade.

One other organisation with a consistent view on the problems has had its CEO speak out this week, particularly with regard to this changing pressure of available warehousing, as stocks fluctuate dependent on the latest headlines, and the relief the delay will bring. The United Kingdom Warehousing Association (UKWA), which tomorrow (Friday 25/10) is to host a Free Interactive Workshop and Networking Lunch in Stratford-upon-Avon on the subject, has been both active and verbal on the matter, and boss Peter Ward commented this week:

“With retailers gearing up for Black Friday, Cyber Monday and Christmas, the previous date set for Britain’s EU departure (today) coincided with peak season for many UKWA members at a time of the year when UK warehouse and distribution facilities are operating close to full capacity. With Brexit now coming after peak season, the extended deadline should allow our members to deliver Christmas without the added risk and impacts of a simultaneous day-one no deal scenario.

“The UK logistics sector has been the subject of considerable media focus with reports implying that warehouse operators are profiting from those companies seeking to stockpile inventory in the run-up to Brexit. This is a myth. UKWA members report that, in most cases, the requests they have had for additional pallet space has been from existing customers and, of course, the space is offered to these clients at pre-agreed terms.

“Furthermore, it is recognised that in most cases storage alone does not generate sufficient margin. Warehouse operators make their modest profits from handling frequently turning stock and providing value added services such as picking and packing, so they do not simply want a warehouse full of pallets sitting idly on racking.”

The UKWA has consistently highlighted that the UK’s withdrawal from the EU, whatever the outcome, and whatever the timing, is likely to drive a long term demand for additional warehousing. Should the UK divert to WTO terms for its trade to and from the EU, some 200 million extra customs declarations will be required, with border checks on animal and plant imports. Such interruptions in the supply chain will naturally lead companies to hold more inventory in their supply chain and therefore more warehouse capacity will be required.WArd continued:

“Those companies that prepared for Brexit did so in run up to the original March deadline. Data collected by UKWA in September showed little evidence of further stockpiling after April in preparation for October, and we expect little to change in this next period, especially now that the threat of a cliff-edge fall-out has been significantly reduced.

“The warehousing shortage has been driven by several factors, not the least of which is the rapid growth of e-commerce. Additional warehousing is needed, strategically located close to population centres to meet the online consumers’ expectations of same or next-day delivery, and the necessary infrastructure to support these changes simply isn’t there at the moment.

“It is important that those companies who trade with the EU make every effort to ensure that they have done all that they can to mitigate the effects of Britain’s withdrawal from the EU. UKWA will continue to keep its members informed of legislative changes and the support provided by HMRC and other governmental departments and we will keep working with the current and future Government to offer insights from the ‘frontline’ and provide a voice for our industry.”