Brexit, the new
Grinch who steals
Christmas is on the way, but what should feel like the most wonderful time of the year actually gives off a whole lot of other vibes. October 31st is almost there and it’s not going to be good. Seven weeks before Christmas and four weeks before Black Friday, the nightmare for retailers and consumer good firms will show it’s ugly face. Brexit, The new Grinch who steals Christmas.
Food for thought
The subject discussed the most within the Brexit topic seems to be the food chain. ‘The no-deal already created “particularly stark” problems for food supply,’ the Food and Drink Federation (FDF) said. All warehouse space and cold and frozen storage has been reserved for Christmas goods for at least two years. Meaning suppliers cannot store or increase production in anticipation of delays in food imports getting across the border. Ports have estimated that they will only be able to handle up to 60% of the traffic that currently passes through. This because of all the new rules and regulations.
All of this could result in shortages on shelves and production lines being shut down if just-in-time ingredients fail to arrive. Fresh fruit and vegetables might rot away in trucks at the border. As a solution the Christmas supplies may have to compensate for “random shortages” caused by the no-deal disruption. It seems that Britons aren’t that keen on these Brexit insecurities, since one in five people are already hoarding food, drinks and medicine. According to a survey by the finance provider Premium Credit, they are spending an extra £380 each for this stockpile.
October’s stockpiling peak
Autumn is the time of year when food imports are usually at their peak. Within all sectors, it’s the busiest warehousing period. Available storage is at its lowest level while demand is at its highest. One FDF retailer claims that in November, warehouses in the UK are 105% full (relative to March with only about 75% to 80% ) and yet the UK alone needs 30 huge warehouses to store enough food for one week. The UK Warehousing Association says the warehouse sector is already full to the brim: “Businesses aren’t jockeying to find additional warehousing space in the run up to October because there isn’t any,” says Peter Ward, who heads the UK Warehousing Association, a trade body. “Everybody is getting a bit hacked off with the whole thing now,” he said, citing “a whole load of Brexit fatigue.”
“Businesses aren’t jockeying to find additional warehousing space in the run up to October because there isn’t any”Peter Ward – UK Warehousing Association
Supermarkets aren’t the only ones with Brexit headaches
In spring, vaccine makers are told by the World Health Organisation which strains of the virus they need to include in the vaccines. This is based on the flu season in the Southern Hemisphere. The manufacturing of these vaccines take about six months to manufacture. The shipping is between September and November which adds to the strain.
Car makers who rely on just-in-time delivery parts made in Europe, scheduled factory shutdowns for April to avoid disruption. Though shutting down for November isn’t an option. To avoid traffis that might be introduced following a hard Brexit, luxury cars are being imported ahead of the deadline by the ‘super-rich’.
Importers and exporters are not only increasing their stocks, such as winter clothing, promotional stock and non-food Christmas products. They are also looking for warehouse space to store the new collection for the beginning of next year. However, they are not going to have anywhere to store it.
Warehouse space auctions
It seems you need to have a fat wallet in order to store your products. Neil McDonnel, Chief Executive of Isme, the representative body for small and medium-sized businessess, thinks that warehousing will be rationised by price. The one who bids highest, will get the warehouse space.
What if you’re a small company in need of warehousing space because of Brexit?
Reserving large amounts of short-term warehouse space to sustain supply chains just in-case of emergencies, is not something smaller operators can do. Certainly not in the mainstream warehousing market where short leases are not an option. Definitely not when warehouse space may be auctioned. If you feel limited by boundaries, it’s probably time to literally step across borders. Seek your solution out of the UK.