With a no-deal Brexit looking increasingly likely, logistics managers in the grocery sector face some challenging times. A likely shortage of warehouse space is making the headlines, but there are other significant problems to be tackled too.
The current landscape
Ahead of the original March deadline, Ian Wright, chief executive of the Food and Drink Federation, told MPs that frozen and chilled goods warehouses across the UK were ‘for all practical purposes booked out’ and that while space for ambient goods was available, it was ‘not necessarily close to the correct infrastructure for supply chains’. The situation this October can only get tighter, as warehousing enters the peak Black Friday and pre-Christmas stock building period. What’s more, any new warehousing on the market has been snapped up by the expanding eCommerce sector – particularly it is said by Amazon.
A third of the UK’s food is imported from the EU, some 50,000 tonnes per day, but the pressure is not purely from retailers stockpiling against possible delays to imports. Food manufacturers and processors may need to buffer against disruption to raw material and ingredient flows and a large proportion of food packaging material is imported, and again, may need to be stored.
What’s the problem?
The problem is two-way. Food and drink is a major export category and delays to cross-Channel shipping may result in stocks building up. There is, inevitably, an Irish dimension. In Q1 Irish cheese exports to the UK soared by 39% against the 29 March deadline. A similar surge is expected in October. And of course the grocery sector is competing for space with other industries from automotive to FMCG and pharma.
In theory, ambient warehouse space is available – warehouses are typically only 75% full. But locating this spare capacity is challenging, and shared occupancy of facilities running close to capacity can be problematic. Also, warehousing has to be staffed and labour is scarce in the Autumn peak – who knows how many EU nationals will be staying around?
There are other logistics issues to be factored in. If border delays increase journey times, then that inevitably lowers the capacity of the transport fleet. Hold-ups and inspections may impact on driver hours, creating further delay – although the government could issue a temporary waiver. Many food manufacturers strike fine balances between imports of brands from Continental factories, backhauling with UK manufactured goods. If tariffs have a significant effect on demand patterns, this will affect efficient operation. Unexpected delays in transit may compromise the maintenance of temperature regimes for food, and of course for perishables such as salad crops, which can’t be buffered, some firms may have consider alternatives such as air freight.
Grocery supply chains need to be looking beyond short-term warehousing needs. Transport provision, choice of lanes and ports, availability of labour and the whole architecture of the logistics network, will be under review in both short and long-term scenarios. Some radical solutions may emerge – for example, much greater levels of collaboration and sharing of assets between ‘competing’ retailers.
The team at Bis Henderson Space can help. Our space finding expertise can help locate and secure appropriate warehousing in the short and long terms, and our wider Group can advise on staffing, refitting and equipping to maximise the use of existing space. More widely, we can help firms review and revise their logistics architecture to remain competitive in this uncertain but challenging new environment.
Steve Purvis, Operations Director at Bis Henderson Space says:
In 1999, collaboration in the logistics industry was being talked about but there was little appetite for it. Fast forward to 2019 and that picture has changed. Forward thinking logistics managers are now embracing the benefits of collaboration in terms of flexibility, agility and cost savings. At Bis Henderson Space we are experts in helping business to collaborate and share the benefits.
To discuss your grocery supply chain challenges contact us today – we can begin work immediately.