Warehouses across the UK have been facing unprecedented levels of enquiries and are fast approaching capacity, as retailers race to stockpile goods in the hope of mitigating the impact of a possible no-deal Brexit on their supply chains. But with warehouses bursting at the seams, it is unclear how much longer companies will be able to pursue this strategy.
Indeed, the CEO of the United Kingdom Warehousing Association (UKWA), Peter Ward, recently warned that stockpiling prior to the 31 October Brexit deadline ‘may be near impossible’ due to the market being ‘virtually at full volume.’ Meanwhile, August data from property agent Savills showed that the warehouse vacancy rate stood at just 6.8% (under 10% usually being considered as a catalyst for rising rental costs).
To make things worse, the Brexit deadline coincides with peak season for the warehousing sector. Not only is October the end of the growing season, but companies also tend to begin stockpiling goods for the commercially important Black Friday and Christmas periods. This means that the Brexit stockpiling panic is occurring at a time when space is traditionally already very tight. This could mean stock needs to be diverted to alternative premises; it will add pressure on stock management systems and may potentially result in breaches of contract if providers fail to meet agreed SLAs.
With storage space at such a premium, it’s no wonder that rental costs are also set to soar. In fact, Savills suggests that warehouse space in the capital is currently at such a premium that it could see rent increases of 1.1% in 2020 if a no-deal Brexit occurs.
Against this backdrop of uncertainty, freight forwarders and logistics providers could find themselves at an advantage. With most forwarders possessing their own warehousing space, and customs relations with the EU set to change dramatically post-Brexit, there could be opportunities for the industry. Some forwarding companies are already advertising how they can help to navigate the murky waters of post-Brexit trade. For example, International Forwarding Limited has set up a special page on its website to inform customers about the range of assistive services it has to offer, such as applying for an EORI number, facilitating customs clearance and providing warehousing facilities, among others. Moreover, the situation may offer logistics providers and forwarders the chance to explore and profit from international routes and trade.
From a legal and Customs perspective, companies will certainly have more hoops to jump through when trading with Europe and this is where forwarders can step in. The government’s guidance to businesses looking to export to the EU after Brexit includes advice on how to hire a freight forwarder or customs broker to help deal with customers. This may include…
- Advising on applying for an Export Operator Registration Identification (EORI) number, which will be needed to move goods in or out of the EU after Brexit
- Dealing with customs declarations
- Meeting any non-tariff requirements such as the provision
of Phytosanitary or Animal Health certificates
- Payment of extra fees such as import duties, taxes
- Generally ensuring that all paperwork and essential administrative steps have been taken to minimise shipping delays
However, with a deal still yet to materialise, nobody can be sure what shape post-Brexit customs will take, and many forwarders are concerned that a no-deal Brexit could have serious financial repercussions. A recent report from the Freight Transport Association (FTA) suggested that freight and logistics businesses have been finding it extremely difficult to fund Brexit preparations due to tightening profit margins, not to mention the additional difficulty of not knowing what shape these preparations should take due to the continuing uncertainty of what the customs landscape will look like once the UK has left the EU.
Further uncertainty surrounding new documentation and processes that could be required for cross-border trade, such as ECMT permits, is also proving a matter for concern. Ultimately, the situation is difficult for all players across the industry because nobody knows what the Brexit deal will be, or if there will even be one at all. For now, the British International Freight Association (BIFA) and other trade associations are continuing to advise members to make preparations.
If you are concerned about the impact a no-deal Brexit may have on your business, Woodfines’ expert Road Transport & Logistics and Commercial Property teams are well placed to help. We have wide experience in all matters relating to these complex sectors, and are able to advise you on what steps you can take to prepare your business for a no-deal Brexit. For further information or advice, please get in touch at email@example.com
Partner – Road Transport & Logistics, Woodfines Solicitors
Partner – Commercial Property, Woodfines Solicitors