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Why preparing for ‘No Deal’ means investing in storage

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Why preparing for ‘No Deal’ means investing in storage

When the nation voted in the EU referendum on 23rd June 2016, few would have predicted that we would still be uncertain of the outcome in 2019. Yet almost three years later, the UK’s future relationship with the European Union remains a point of contention. With the exception of another vote, it seems that every option is still on the table, from Theresa May's ‘soft Brexit’ to a ‘no deal’ scenario.

Many onlookers believe that the risks of a ‘no deal’ Brexit are overstated, and that things would continue much as normal in the event that no agreement is reached. While it is possible that the UK may enjoy a prosperous future outside of the EU, most business leaders will tell you that uncertainty is never good for business. This is particularly pertinent for the storage industry, where preparations are underway to deal with drastic changes in how we trade and store goods.

 

The effects of Brexit

While some have dismissed the risks associated with a ‘no deal’ Brexit as scaremongering, there are a number of tangible and intangible factors that could come into play. Chief among them is the issue of trade and border control, and how the application of WTO standards to traffic through UK ports and airports could slow down shipments. While some preparations have been made, many people worry that the UK simply isn’t ready to deal with the fallout ‘no deal’ would present.

The Port of Dover presents one major (and local) example. Before the Single Market came into being in 1993, there were around 300 customs officers working in the port; there are now just 24. The number of customs clearance agents, meanwhile - who will be responsible for double the previous amount of paperwork - has fallen from 185 to 17. The amount of traffic through th port has also increased tenfold since 1993, with relatively few structural changes to the way traffic is dealt with.

With passport controls currently taking place in Calais, EU traffic can be waved through with relatively little paperwork - and only the occasional random check. Under a ‘no deal’ scenario, however, every vehicle will require 10-15 minutes of paperwork to pass through. With an average of 10,000 lorries passing through Dover every day, this presents an obvious issue. While technology has helped to cover the shortfall, the signs are that much more needs to be done to prevent major delays and tailbacks, such as those seen during French strikes in 2015.

 

Storage wars

Delays in goods making their way from the EU and rest of the world into the UK would pose a number of problems for UK businesses. Food and drink companies in particular face a crisis, with the short shelf life of certain goods meaning that they could spoil before they even reach shelves. For others, such as car and pharmaceutical firms, longer-life goods have been stockpiled for months to address any increase in demand.

Manufacturing is another industry suffering from Brexit anxiety. While the prospect of post-Brexit trade deals has been talked up, businesses are still having to negotiate the transition. With the prospect of ‘no deal, this means stockpiling at the fastest rate since records began in 1999, and importing key components in bulk from outside the UK. This is easier said than done, however, with storage costs up 25% over the past three months as demand escalates.

The rush to stockpile is such that a reported three quarters of UK warehouses are full to capacity, with a particular shortage of space around major cities. Pharmaceuticals storage is said to be at capacity, while frozen and chilled food storage is booked out in many places until at least April. Many storage firms have reported turning customers away, while major businesses are improvising solutions. Tesco for instance has rented frozen food containers outside of its biggest stores for the entirety of 2019, a tactic it usually only employs at Christmas.

 

Creating space

The reasons for this sudden lack of storage space are threefold. First is the fact that new warehouse storage has broadly not been built, as much of the prime land in and around cities has been prioritised for homebuilding. Second is the presence of Amazon, which has been buying up broad swathes of warehouse space around the UK, potentially for its own move into the food retail business. Third is the fact that there have been widespread staffing shortages at existing warehouses, due in part to the effects of leaving the European Union.

It’s not that storage firms haven’t tried to accommodate the demand from Brexit, either. Midlands based Miniclipper Logistics has built a temporary warehouse, added a storage mezzanine and replaced some of its standard pallet racking with a narrow aisle variant, yet is still full to bursting. What this has done however is provide some inspiration to other businesses. Rather than relying wholly on external storage providers, many companies have opted to add new storage on site, or have managed to expand their existing storage capacity within the same floorspace.

Narrow aisle racking and storage mezzanines are a perfect means of doing this. By using specialised forklifts which can pivot on the spot to access both racks, narrow aisle racking can save as much as 50% of the space occupied by traditional racking. A storage mezzanine meanwhile can make use of empty headroom in your warehouse or other space, conjuring new storage capacity out of thin air. It’s even possible to shift an existing production area or offices to a mezzanine, keeping all of your racking on the same level.

With prices rising alongside demand for external storage, expanding your on-site capacity is more economical than ever. Adding or replacing racking not only gives you room to stockpile and grow in future, but also has the potential to improve the logistics of your warehouse space or distribution process. Racking can be designed to better integrate with a warehouse management system, or built with shuttles or autonomous vehicles in mind. It can also be built with flexibility in mind, with the option to relocate or further expand the racking as your business - and Brexit - develop.

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While there’s been plenty of talk about trade difficulties, the role of storage has gone underappreciated in Brexit coverage so far. With the withdrawal date now looming large, businesses cannot wait for clarity any longer: action needs to be taken, and soon. With a lack of off-site storage options and rising prices, expanding your on-site storage with more efficient racking and mezzanines seems like the best way to protect yourself against a ‘no deal’ Brexit.

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