1. Brexitand the future of the UK warehouse
Well, we’ve gone and done it this time! Lower the portcullis and raise the drawbridge,
retreat back to this scepter’d isle! For better, or for worse, we have voted to leave the
European Union, and strike out on our own – subject of course to the vagaries of
politicians and the actual triggering of Article 50 of the Lisbon Treaty.
What will this mean for the warehousing sector servicing not only the UK, but also the
wider EU? Obviously no-one can fully answer this, or any other issue currently hanging
over this country, like some Sword of Damocles, but let me at least start to proffer up
some likely areas of both threat and opportunity.
UK vs EU warehouse
No doubt, when you set up your warehousing infrastructure, whether in the form of a
single warehouse or a network, the locations chosen fitted the circumstances that
existed at that time. If you happened to operate across the EU, that may have included
a location servicing multiple member states, or sites servicing specific states. With
Brexit, does this mean a change in this infrastructure?
There may now be a requirement to bring back UK destined products to a warehouse
within its’ borders, or establish a new facility to support your business in the remaining
EU member states, which in either case may be your own facility, or one operated by
a Third Party contractor.
If doing it yourselves, you need to consider whether you have got the relevant skillsets
and experience already in your company to manage such a project, both in terms of
the project and operational management aspects required, and have you got access
to all of the necessary assets and funding required to do this. You also need to ensure
that you do not ignore the potential impact of either moving your existing IT systems,
or implementing new ones, and most definitely do not under-estimate the effect
transferring stock to any new facility will have, especially on service levels.
In the case of contracting out, have you contracting out elements of your operations
before, and do you understand the process and the pros and cons that go with
outsourcing? Have you the skills for running an effective outsourcing procurement
exercise, and do you understand all of the potential pitfalls that await the uninitiated?
Do you appreciate the major differences between handing over your distribution to a
third party, and handing over your warehousing? Again, the issues of IT systems and
stock transfer should play a major part in your decisions.
Obviously, if you are a Third Party Contractor, you need to ensure that you are in a
position to benefit from this scenario. However, you need to make sure you have the
right resources and skill sets available to take advantage of the opportunities that will
arise, both in terms of Business Development, Implementation and Operations teams.
You may also need to invest in new facilities, infrastructure, fleet and systems as well,
so the availability of funding will need to be considered.
Recent trade press articles have identified a shortage in the availability of good quality
B8 warehousing stock across many parts of the country, as well as a short supply of

2. development land with which to create more. Local Planning Authorities still appear to
be resistant to authorising the building of new stock in many parts of the country,
especially in those areas which are already constrained. The view that warehouse
parks do not bring in high calibre, highly paid, skilled jobs remains a prevalent view.
In order to get around this, it could require the Government, as part of their plans post-
Brexit, to consider the development of distribution parks at the more strategically
important locations, in order to free up capacity, as well as deliver on such large scale
plans as the Northern Powerhouse.
Alternatively, the warehousing sector will have to become more “smart” in their use of
existing operations, through such initiatives as redevelopment of existing sites,
collaboration with other users, resource sharing, improved stock management and
forecasting. The most successful companies will be those who are willing to make a
quantum leap and question the status quo. Who, twenty years ago, could have
foreseen the impact an emerging online book seller would have on the whole logistics
sector?
Warehouse Labour – rise of the machine?
It has been identified in the trade press on a number of occasions in the recent past,
that the Logistics industry as a whole has suffered with regard to the quantity and
calibre of new recruits it is attracting at all levels. Over the past ten years or so, this
has resulted in large numbers of EU migrants coming to this country readily finding
employment across multiple warehousing roles. What would happen if, for instance,
as part of the new order, post-Brexit, a sizeable proportion of these, very competent
and diligent staff, decide that their futures lie elsewhere within the EU?
At the moment, the UK enjoys a low level of unemployment (4.9%)1, especially in
relation to other EU states (6.3% in Poland, 6.4% in Netherlands, 9.9% in France,
11.6% in Italy and 20.1% in Spain)2, so where are the replacement staff going to come
from?
One solution that the UK warehousing sector may have to start considering more, is
the adoption of both mechanisation and automation within the workplace. This is
obviously good for the companies supplying this equipment, but these companies are
heavily concentrated outside of the UK, which will obviously do no favours for the UK’s
balance of trade position. It should, however, lead to the UK becoming one of the
leading countries as far as warehousing efficiency is concerned, resulting in lower
costs to serve, which in itself may offset any additional costs that Brexit forces upon
servicing the remaining EU states from the UK.
Alternatively, making the warehousing sector a more attractive place to work may be
required, involving such things as defined progression plans, improved training, and,
yes, higher salaries. The jobs will also have to engage the employees more.
Remember, they are not robots! This will become more important with the ever
advancing age of e-commerce, and the desire for, at worse next day, and increasingly,
1 UK Officefor National Statistics July 2016
2 EUROSTAT April 2016

3. same day delivery to the customer. This is where the likes of UKWA and the CILT
need to step up to the mark, and sell the advantages of this vital sector, especially
within Further and Higher Education.
Tariffs and Duties
The UK has benefitted from an open European market since it joined the EEC, which
has removed the need to pay Customs Duty on products imported from or exported to
fellow EU states, along with reducing the associated paperwork and bureaucracy that
goes with it. Some things will now change, whether for the better (UK negotiating free
trade deals with non-EU countries), or for worse (EU imposing duties on a portion or
all of EU – UK trade). What it does mean is that there will be change.
I will leave the pros and cons of this discussion to others, but the warehousing sector
will need to consider what impacts this will have.
Firstly, there may be changes in the way product is picked and packed, if it is to travel
to the EU, which may mean additional labelling and paperwork, requiring IT systems
to be adjusted accordingly, not to mention staff training to manage the changes. It may
involve product sourced from within the EU, which now has customs duties applied,
being stored within bonded conditions, in order to effectively manage cash flow, which
again may involve changes to the IT systems as well as the infrastructure and security
of the warehouse, not to say the operational processes within.
The imposition of increased customs clearance timescales may lead to the use of
alternative delivery methods, i.e. air freight, in order to maintain service levels, which
again, may involve a change in the packing and documentation required for the
shipments, as well as increased security provisions within the warehouse, such as
application of C-TPAT3 or AEOS4. At a more mundane level, this might also involve a
change in the shift patterns of your operation.
Maybe your company has little to do with the EU, but you export to the wider global
market. In which case, you will probably be looking forward to the establishment of
Free Trade agreements between the UK and non-EU nations, which may work to your
advantage, with the stripping away of barriers and tariffs. This in turn may lead you to
removing some of the warehouse processes that go with them, as well as taking
advantage of the potential for increased export volumes, with the associated
requirement for more staff and potentially warehousing facilities.
Summary
In a glass half full versus glass half empty world, I prefer to side with the optimists.
Yes, there will be changes which are painful to some, and I am sure some businesses
will not be able to adapt to the new circumstances and -a number may disappear, but
for the majority the changes will be positive, as long as some forethought is given and
consideration given to the options.
3 Customs-Trade Partnership AgainstTerrorism
4 EU Authorised Economic Operator Safety and Security