The prospect of stockpiling products such as food and pharmaceuticals due to Brexit has been on the agenda for a while. Back in September, the Guardian reported that Cadbury owner Mondelēz had a contingency plan in place in case of a hard Brexit – stocking higher levels of ingredients and finished product as the UK is not self-sufficient.
Additionally, retailer, Majestic Wine, said it would increase stock levels in UK warehouses by £5m-£8m early next year “in order to mitigate any potential supply chain Brexit disruption in March 2019.”
Pharmaceutical companies, AstraZeneca, Sanofi and MSD are also building up extra supplies of medicines.
The reason for stockpiling is that if the UK leaves the EU without a proper trade deal, the transition of goods in and out of the UK will be seriously disrupted. Smooth, frictionless trade is essential for both the pharmaceutical and food industries which is why many companies have resorted to stockpiling.
Problems with stockpiling goods
However, as reported in the BBC, Peter Ward, chief executive of the UK Warehousing Association, wrote recently that he’d been “warning for two years [that] fit-for-purpose, appropriately located warehousing is in desperately short supply in the UK.” There is a particular lack of space close to densely populated areas.
This means that whilst companies need to stockpile goods, they may not have enough space to do so.
Tim Lang, professor of food policy at London’s City University, has stated that there are not enough warehouses in the UK, telling the BBC: “There are some people I talk to who are already at the limits of what they can do. There’s no storage left, there’s no chilled storage, no frozen storage.”
Food and pharmaceutical companies often need specialised storage due to the temperature sensitivity of their products which can narrow down the number of suitable warehouses available.
There’s also the issue of companies being priced out of renting additional warehouse space.
Charlie Pool, chief executive of the warehouse-renting platform, Stowga, said prices on storage facilities have risen by about 10% since September due to the shortages. The storage deficit has been worsened by warehouse owners taking their spaces off the rental market in case they need it themselves. Around 600,000 pallets of space has been removed since October and half of that was for cold storage.
Finding solutions to the lack of warehouse space
If there is a real lack of available warehouse space to rent, companies may have to look at repurposing the existing space they have. It may be beneficial to segregate warehouse space in to contained smaller environments, all within the same location in order to store multiple types of products. This could also be done by creating a mezzanine floor which can increase storage space by up to 50%.
Creating temperature controlled spaces may also be a solution, especially within the food and pharmaceutical sectors. This allows dual functions to operate under the same roof, such as storage of temperature sensitive products, and manufacturing processes elsewhere in the facility.
Despite reports of the stockpiling frenzy, the Confederation of British Industry’s recent survey identified that only 12% of businesses surveyed have begun to put contingency plans in place, and it really will be an uphill battle for businesses to find the extra storage space given the volume of goods moving between the UK and the EU.