The results are in from the latest poll of UKWA members on the impact of Brexit. As stockpiling and shortage of warehouse space continues to hit the headlines, UKWA has conducted a follow-up to its initial survey at the end of last year, taking feedback on key Brexit indicators from its larger members who collectively operate some 7.5 million sq ft of warehousing in the UK, which is around 75% of the overall market.
According to CEO Peter Ward, little has changed since the first quarter of 2019 in that all members taking part reported demand for additional warehouse space; however, demand appears to have peaked in January in the run up to the March deadline, while enquiries over the corresponding time in the lead up to 31 Oct have fallen by half.
“Stockpiling has continued, and the market generally is running close to capacity,” he said. “The 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. 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.”
The poll showed “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.
“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, who also encourages UKWA members to take seriously some of the risks identified in the government’s Yellowhammer document.
“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 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 systems – the full service offering as provided by UKWA members.
Overall the warehousing and logistics sector is growing. The growth is not fuelled by Brexit, but rather by the continued rise of e-commerce and on-line retail, but 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.”