Market Overview

Brexit Delay Throws Freight Industry Into Turmoil Amid Warehouse Crisis


Preparations by the freight industry to cope with the UK's exit from the European Union were thrown into more turmoil by Prime Minister Theresa May's decision to delay the Brexit debate indefinitely.

In addition, the European Court of Justice's ruling that the UK Government can unilaterally stop Brexit will add further confusion as the growing cries for another referendum, mainly by those wishing to remain in the EU, will be boosted by the ruling.

Whether Great Britain remains in or leaves the EU, the UK Warehouse Association (UKWA) believes that it will face some difficulties as well as benefits from the government's final decision.

While the UKWA believes that if the UK remains in the EU it will be business as usual, any form of Brexit will hit the supply chain and could severely impact both UK and European industry.

UKWA CEO Peter Ward told FreightWaves that the supply chain is simple: it is composed of warehouse capacity and the flow of cargo. If you interrupt the flow of cargo you will need more storage space.

The association sees new storage capacity becoming available in anticipation of delays in the movement of freight, particularly in the island's southeast corner, as movements slow down at the ports on both sides of the English Channel.

"There is evidence of an increase in capacity as there has already been an upsurge in demand for storage space. Our view is that even with an orderly exit of the EU there will be some form of customs union that doesn't exist today and that will cause an interruption in the supply chain," said Ward.

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Pauline Bastidon, the head of European policy and Brexit at the Freight Transport Association (FTA) said, "The supply chains across the Channel are complex. Take the UK car industry: parts are brought in from a number of countries in Europe to assemble cars in the UK, that cargo is just-in-time, so the choice of ro-ro vessel and truck as delivery is because the shippers cannot allow cargo to be delayed at the port. It is the same with perishable foods such as salads and tomatoes, ro-ro vessels are used for the quick turnaround."

Bastidon added that warehousing in the southeast region is already at capacity, particularly for perishable foods, while it is already too late to consider building more capacity and as nearly one fifth of the staff in warehouses in the UK are EU nationals and there is already a staff shortage.

Warehouse capacity in some regions is already constrained by the lack of staff, with workers having to be bussed to some facilities.

"The Brexit migration policy means that workers at a salary level of £30,000 ($37,700) annually with a level five education [degree level] will get work permits, but our industry does not need people educated to such a high level," explained Ward.

He went on to say that while Brexit has boosted demand for capacity it has also limited the industry with the new migration regulations. He added that the labour difficulties existed prior to the Brexit decision, but he went on to say, "Brexit has accelerated the problem".

Like Bastidon, Ward believes there will be severe capacity constraints in the warehousing sector, but Ward blames NIMBY (Not In My Back Yard)'ism and the planning regulations as well as the government's migration policy.

"The UK is already a land constrained island with the shortage of warehouse capacity exacerbated by archaic planning policies and NIMBY'ism. People want their Amazon goods delivered, but they don't want the warehouse next door," Ward complained.

Posted-In: News


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