Brexit UK Warehousing and Distribution

If you have come to this blog looking for the answer to the above question, prepare to be disappointed – we just don’t know! You may get more satisfaction and useful answers from a previous blog, ‘ 1001 things to do with a pallet ’!

However, in the last of our reports from this year’s UK Warehousing Association (UKWA) Conference, we summarise the points made by Jade Rickman, Senior Policy Advisor at the CBI, an excellent late replacement for two government ministers who gave backword at the last minute, presumably as they – like us – don’t know the answer either.

The result of the referendum on June 23rd made it very clear that the UK is a divided nation – divided by age, class, urban/rural location and educational attainment (with some overlap across all of these). That the country was somewhat divided is no surprise, almost a truism; that it was so decisively divided was a surprise. And as Teresa May implicitly stated (or admitted) at the Conservatives party conference in October, those that voted for Brexit were often not so much voting for Brexit – after all, nobody had made it clear what Brexit meant across the competing axes of trade, regulation and migration – but protesting more generally about being ignored by the so-called urban liberal elite. Jade Rickman admitted that the CBI had prepared two sets of briefing papers – Remain and Leave – but were very surprised as to which one they had to dust down on June 24th. They weren’t the only ones.

Since then events have moved on apace. Cameron resigned, Boris had his ‘Et tu Brute’ moment; and we got Theresa May as Prime Minister, possibly not too bad a result for a neutral in the circumstances, though she has a pretty rubbish hand of cards to play with. The extent to which interest groups ask her to ‘guarantee’ things now (e.g, the rights of UK residents in Europe) is astonishing, the underlying assumption that the UK has the controlling share of the negotiation naïve. We have at least got a large new department dedicated to Brexit, probably – and ironically – chewing up a proportion of the fallacious saving of not being in Europe, but before we even get that.

Since the UKWA conference, Theresa May has confirmed that Article 50, which will begin the Brexit negotiations, will be triggered by March 2017. Jade believes that the negotiated deal will not emulate countries like Norway and Switzerland but will be bespoke to the UK (so longer and more difficult to negotiate). ‘Harder’ – more emphasis on migration controls – rather than ‘softer’ seems to be the implicit direction of May’s rhetoric.

Jade spoke very briefly about how other countries models could be used as part of the UK’s negotiations:

  • Norway – potentially could give us the best access to the marketplace. But we are hardly Norway – our oil is running out, and we failed to create sovereign wealth with it in the first place. And Norway doesn’t get many migrants (ever tried to learn Norwegian? Or raise the mortgage needed to buy a pint?).
  • Switzerland – slight half way house solution that could be both complicated and time-consuming. Again, we hardly match the dynamics of a small hilly country with a wealth built on secretive banking (though some would argue it’s just the size of the hills that differentiate us). More seriously, Switzerland’s position vis a vis Europe is the result of long and difficult negotiations.
  • Canada – free movement is restricted; the trade deal took ages and nearly got stuck in the foothills of Wallonia; it doesn’t include services (80% of what we do in the UK!) and Canada’s close trading status with the US makes it a poor analogy for the UK.

What is clear is that a Brexit time-table needs to be put in place to give businesses and the economy a chance to plan in a time of uncertainty and make some investment decisions. The later point is key – all the crowing by Brexiters that the economy continues unabated misses the point about investment’s role as a key economic driver; in particular not appreciating the investment lag. For many businesses, it is hard to stop investment cash going out straight away – projects are half completed, contracts signed – a warehouse with a roof and no walls is not going to stop at that point. But it’s very easy to stop making decisions that reduce investment in 6-24 months’ time. The time to measure the economic shock of Brexit is not now, but 12 months hence by which time we’ll also have the inflationary effect of sterling’s decline and the maybe the monetary tightening that that catalyses. At least, it looks like – post Osbourne – we are going to have some fiscal loosening.

So, to return at last to the question which heads up this blog, what does all this mean for distributing products in lorries and pallet storage in warehouses? Should we continue to buy lorries and increase warehouse space? Or even save our pallets for burning as we enter a long, hard, cold recession (sorry, winter)?

Still don’t know. But hard to see it’s going to be good! Trade with Europe won’t go up (at least, not more than it otherwise would have done); is statistically impossible to stay the same, so has to go down, though maybe not much. But it will get more complicated, and large businesses are going to be wary for the next 2-3 years (the period of negotiation and initial execution) of implementing more cross border arrangements for shipping goods between factories, warehouses and customers. And the lorry driver shortage will get worse – however much the government bangs on about apprenticeships and training for young British workers, the sound of it putting its hand in its own pocket to fund this – or even orchestrate it – is feint. For more views on what we think will happen, see our articles on what we thought might happen before it happened, [ here ] and [ here ]

But in the meantime, life goes on and ‘bread on the table’, ‘roof over one’s head’ aphorisms run true. So if you need help filling your warehouse space or finding warehouse space for your pallets, Zupplychain can help. To start advertising your warehouse space, register here ; to look for pallet storage, use our warehouse space search tool here.