With the Brexit date looming again, how will the UK leaving the EU impact the warehouse and storage sector and what potential impact could this have on your insurance?
These questions are ones that insurers, freight forwarders and the logistics industry as a whole have been considering since the UK voted to leave the EU on 23 June 2016. Here we hope to provide some illumination, as far as possible, of what may occur once Brexit happens and what you may need to advise your insurers about.
Fundamentally, Brexit could mean that warehouse keepers will need to re-assess their infrastructure. Some may be geared towards operating across the EU where they are able to accommodate multiple member states through warehouses located abroad. With the implementation of Brexit, will such arrangements need to change? If so, and you move towards a more UK-focused warehouse infrastructure, then make sure that you have informed your insurers of any changes you intend to make, such as arranging for cargo to be stored in your own warehouse; or if you decide to sub-contract to third-party warehouses, that such storage facilities have appropriate security measures in place (such as CCTV, remote-monitored alarms and sprinkler systems). Obtaining confirmation of these measures will no doubt help to protect your own and/or your customers’ goods being stored in the long term. In addition, should you aim to conglomerate multiple warehouses from abroad to the UK, you may need to revisit the limits and terms of your insurance.
Should more warehouse space be created within the UK due to Brexit, it is likely to lead to more products entering the UK. Currently goods can arrive tariff free, with some instances allowing the customs fees to be deferred (for goods such as alcohol). Once Brexit occurs, the processes surrounding importing and exporting goods may complicate further, for goods held in bonded warehouses subject to tighter restriction. Should such things occur, make sure you have sufficient guarantees in place with your bank or provider if arranged via an insurance company.
If additional warehousing is required, finding the staff to operate warehouses in the UK is not considered a problematic issue, with the UK currently enjoying a period of low unemployment. With just 3.8% (as of May 2019) of the population unemployed, this contrasts starkly with other EU member states such as France (9.8%) and Spain (14.3%). With Brexit on the horizon, will the loss of migrant workers performing warehouse keeper roles have an effect on staffing for the industry? If this does occur, what are the possible solutions? Potentially, lower levels of staff will lead to more automation in the industry, with processes delegated to machines or more sophisticated software, leading to cost savings in the workplace. If such things were to occur, make sure to inform your insurers of the decrease in staff wages as this may be a consideration under your employer’s liability insurance. In addition, should such mechanical systems be in operation, insurers should be informed of the processes in place to be able to better understand the risks that are present in your warehouse.
Whilst automated processes may speed up productivity in your warehouse, the prospect of delay in the storage industry looms ever closer. Once Brexit occurs, it is reasonable to assume that delays will occur across the UK’s border with the EU. Such delays may lead to problems with receiving or moving onwards yours and/or your customers’ stock to other locations. It should be highlighted at this stage that a claim for delay is something for which marine insurance policies will categorically not provide cover, as dictated under the instituted cargo clauses. These cargo clauses are internationally recognised and adopted throughout the world and form the basis of cargo insurance.
Rosemarie O’Connell, Company Secretary, The Insurance Broker Limited