Speaking on the topic of a recently released government white paper, Robin Woodbridge of Prologis opened by addressing the recent changes in supply and demand. Following a huge jump to online retail, October saw a record amount of warehouse space being used. He explained that 18 million sq ft of industrial space has been lost to other uses in the last twenty years. However, there has been an increase in demand coupled with a decrease in supply, which in turn leads to an increase in rent. Unless the position is changed, London and cities like it will struggle to provide a range of goods and services in the time frames expected, both B2B & B2C.
Taking the example of Bow Yard, just north of Canary Wharf in London, Woodbridge emphasised the importance of using multi level warehouses to maximise floorspace. Storage, manufacturing, e-commerce fulfilment, urban delivery – EV charging. It is a significant challenge to deliver new industrial logistics facilities in London as new development opportunities are scarce – and not just finding the space for them. Other pressures include what the community needs & expects from a logistics provider, being located somewhere that the warehouse occupiers will be able to find staff, and of course the facility working functionally from an operational viewpoint. Woodbridge provided a CGI flyover of a new multi-level logistics facility, close to the M25 at Enfield.
Woodbridge examined the government’s whitepaper on future planning. The Greater London Authority is trying to safeguard strategic industrial sites in London, but the government wants more residential properties. Not many have read it, but Woodbridge says you should be concerned: not having the right buildings in the right places with the right rent could cause severe issues to both individual businesses and the sector as whole. He claims the government has not planned to the level of detail, design & thinking that is required. Therefore, UK logistics needs to raise its awareness with government, and it’s got a great opportunity at the moment, given the pandemic putting a spotlight on our industry. The government, according to Woodbridge, seems to show little to no awareness of the UK logistics industry in its strategic plan-making, but Woodbridge invited listeners to submit consultation responses on the whitepaper.
Peter Ward, the Chief Executive of the UK Warehousing Association, brought us up to date with the latest border operations model from the government with regards to the end of the Brexit transition period. He stated that the ‘worst case scenario’ presented for Brexit in 2016 is no longer a model and is in fact our likely reality: more than 200 million more customs declarations for goods imported to and exported from this island. He described how the industry should ramp up intermedieries, customs brokers and freight forwarders to handle the increased volume at the start of next year.
The border operating model for 2021 that Ward outined was as follows. In January 2021, basic procedures will involve a deferred customs entry for all imports, along with full customs, safety & security declarations for all exported goods. In April 2021, all animal/plant products, including food, will require pre-notification and relevant health documentation. Ward pointed out that this will be a challenge since the UK currently imports 50% of it food, with 75% coming from within the EU. Beyond that, physical checks will continue at the point of destination until July 2021, at which point there will be full control of all goods and physical checks at the border for animal and plant products.
Ward said there would be disruption to the supply chains and that the market will react by putting more inventory into the supply chain: as basic supply chain management states, if you interrupt flow, you must provide more inventory to balance it out. This will aid in attaining the right outcome in terms of delivery times and product availability.
Ward gave the UKWA's checklist for traders looking to prepare for the impact of leaving the Brexit transition period, and stressed the importance of the checklist for warehouse operators looking to ensure their customers are well equipped to handle the coming changes:
- Economic Operators Registration & Identification (EORI) number All importers need to be registered with this number; any customers of exports need to be registered too.
- Tariff numbers are key drivers of duty rates; it is imperative that importers understand what classification their goods fall into so that the correct level of taxes is being applied.
- Under DEFRA regulations, plants, animal and forest products will involve a new level of inspection..
- This includes wooden pallets: unless they are ISPN pallets, they won't be allowed transit into the European Union.
- The EU settlement scheme all EU logistics workers must be registered under the EU settlement scheme to continue to have the right to work in the UK.
- The Smartfreight scheme means that goods drivers will have to have a Kent access permit before accessing the channel crossing.
In addition, Ward described the 'Brexodus' effect: a large number of eastern European workers have been gradually departing from the UK since the 2016 referendum on EU membership. The pound has devalued at around 20%, meaning the workers can earn more in countries like Germany and Scandinavia. The UKWA believes the threshold has been set too high for EU workers, particularly with the growth that the UK logistics sector is experiencing at the moment.