The latest report on the size and make up of the UK warehousing sector, commissioned by the UK Warehousing Association (UKWA) and produced by Savills, has confirmed predictions by the Association of critical shortages of space, particularly well-located grade A facilities.
The shortages, exacerbated by Brexit and the massive rise of ecommerce during the global pandemic, are not just down to recent panic stockpiling, but more about long-term trends. Supply chain management after all is about balancing capacity and flow, so any potential interruption to flow, such as new border checks and additional customs process as a result of UK’s departure from the EU, will inevitably lead to mitigation of risk by holding more inventory.
Of course, the warehousing shortage is not just about Brexit. It’s also been caused by response to Coronavirus related global lockdowns, which brought into stark relief the frailties of long supply chains and resulted in an increasing tendency towards shorter, more resilient supply chains that enable stock to be kept closer to markets.
Indeed, Covid-19 has created havoc in global supply chain planning, with factories closed in sourcing markets, ships out of sequence, container equipment in the wrong place, seasonal stock held over as a result of retail/hospitality lockdowns – not to mention the ripple effect felt as one of the world’s largest container vessels became stuck in the Suez canal in March!
The rise of ecommerce and home delivery has impacted significantly on warehousing availability. Our report found a staggering 614% increase in occupancy by online retailers over the last six years (worth noting too that the leading occupier group is now 3PLs, with increased occupancy levels of 42%), a trend certainly set to continue as an estimated 775,000sq ft of warehouse space is needed for every £1bn spent online.
Grocery retailers in particular, and retailers in general, are ramping up and re-engineering their networks to cope with demand, driving more stock in multiple locations to meet increasing consumer demands for immediate delivery of orders as the market struggles to keep up and compete with Amazon – last year, the giant retailer purchased 23% of all industrial space sold in the UK.
All this points to the importance of planning now for the coming upturn in demand as lockdown restrictions life and consumer confidence returns. We’re already half way through the year and all too soon autumn will be upon us with the run up to Christmas – and, of course, Black Friday and Cyber Monday – well underway. Last year, Christmas was necessarily somewhat muted. All being well, this year we can expect a bumper year.
It goes without saying that managing the Christmas peak successfully requires a reputable, experienced, reliable partner. All UKWA members are audited and accredited as meeting our required standards. What’s more, many UKWA members can support customers with customs and/or excise warehousing, helping mitigate risks around the ‘double duty’ on imports from the rest of the world for distribution into the EU, resulting from the Trade and Cooperation Agreement (as we have discovered, a Free Trade Agreement it is not!)
In addition, as the increased pressure on excise members as regulators come to grips with new procedures and the replacement for the former Excise Movement and Control System ( EMCS ) has led to misinterpretation by HMRC officials, in turn creating a culture of disproportionate response and severe penalties on retailers, distributors and warehouse operators alike.
Our expert partner Alan Powell on excise matters has played a pivotal role in securing a positive outcome for members and their customers on several occasions this year. As the leading trade Association for warehouse keepers, we continue to work closely with HMRC to ensure our members are protected, but also to help shape policy as the new post-Brexit world emerges.
A good 3PL partner will benefit your business throughout the year and deliver real competitive edge, so don’t miss out – start planning now.
Blog posted written by Peter Ward CEO UKWA for Kukla UK
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