So, the first month of UK independence has gone and, despite volumes being very low, many of the consequences we predicted have come to pass. The border with Northern Ireland is proving challenging, some UK meat and fish exporters are struggling to sell their wares successfully on the continent, big carriers like DB Schenker have announced that services to the UK are withdrawn, meanwhile pressure on UK warehousing space continues to build.
The global pandemic has caused mayhem in supply chains, with stock in the wrong place at the wrong time as retail outlets close again and, in the UK, Brexit has exacerbated the problem.
2020 proved a record year for industrial and logistics real estate and the signs are that continued demand could see the same again in 2021. As we’ve noted previously, traders holding more stock closer to markets, mitigating the risks of both Brexit and the pandemic, is good news for the warehouse sector, which is currently running at around 98% capacity, but the question is, where do we go from here?
Clearly there is a huge opportunity, but how best to exploit it? It is likely that warehouse operators will need to look at re-engineering existing capacity and find ways to be more efficient. In addition to narrower aisles and higher space, how else can the industry optimise available space? Automation is surely one option to better manage and move stock, but right now there is an understandable lack of confidence and real reluctance to make big investments in new tech.
We will be looking to the government to play a role here. Those in warehousing and logistics have been lauded as heroes during the coronavirus crisis; now is the time to demonstrate tangible long-term support for the industry. Not in the form of business interruption loans, but in a more creative way, to get investment into the industry for the development of new technology, training and sustainability. Boris Johnson’s pet project – the roll out of Freeports – alone will simply not cut it!
The other great change on the agenda, on the subject of sustainability, is final mile delivery and the emergence of ‘suburban logistics’. Pre-pandemic focus was very much on the issues around urban logistics and the challenges of finding space to build fulfilment and distribution centres within the larger conurbations.
Of course, these issues haven’t gone away, but numerous white vans from multiple organisations making deliveries around suburban and rural areas as online shopping and the demand for home deliveries rises, the negative impact on the environment is clear.
Perhaps now is the time to look at future reconfiguration of the UK warehousing network, with satellite fulfilment, consolidation and click and collect centres established to serve regional postcodes. Whether the government takes steps to address this situation, or market forces intervene, the current situation is unsustainable.
Peter Ward UKWA, CEO