Britain’s warehouses will be full within weeks, the industry has warned, as unsold goods clog up storage and tens of thousands of containers a week pile up at UK ports.
The UK Warehousing Association said the “lack of available warehouse space in the face of Covid-19 restrictions is reaching a critical point”, with capacity likely to be reached by early May.
“The danger is that nothing is moving, aside from essential supplies,” said Peter Ward, UKWA chief executive. “If ports get congested, we risk blocking off the flow of essential supplies. You can’t be selective, you have to keep all the supply chains moving.”
Many retailers and manufacturers have ground to a halt in the face of measures to counter the spread of coronavirus, with demand for consumer goods such as clothes and cosmetics plummeting while people stay at home.
Primark, which is losing £650m of sales a month, has rented 40 per cent more warehouse space than usual to store clothes it hopes to be able to sell later in the year. Next said it was trying to secure an extra 10 per cent of storage.
Retailers have in the past few weeks rushed to cancel imports worth billions of pounds, in some cases even invoking force majeure clauses to avoid paying manufacturers.
But Richard Ballantyne, chief executive of the British Ports Association, warned that international waters were already full of freight ships that had set off before retailers started reacting to the lockdown.
“The earlier shutdown in China meant they were shipping a backlog of orders just as we were coming into our own lockdown,” he said.
Based on a survey of its members, the UKWA estimated that about 1.5m free pallet spaces are left in the country — 10 per cent of capacity — with each week of imports adding about 750,000 pallets requiring storage.
To avoid a crisis, the UKWA has urged warehouses to log their free storage on an online “emergency space register” set up by the association. Mr Ward said the industry would also have to identify unused rail yards and old airfields to move containers away from the country’s ports.
The UK is also running out of cold storage warehousing for food, with the closure of restaurants and fast food outlets leaving fridges and freezers full of meat and other foodstuffs. Grocery market shifts have also led to congestion in warehouses used by stores.
Shane Brennan, chief executive of the Cold Chain Federation, said the country was within days of filling all its existing cold storage, while constructing new facilities would take years.
“Everywhere you look there is a jam in products going out of storage but the same amount coming in,” Mr Brennan said. “Everyone is operating at more than full capacity.”
Despite warehouses being full, the crisis has led to financial pain for cold storage businesses, since they make most of their profits from processing loads going in and out rather than from the storage itself. He said that meant many were losing money and being forced to furlough staff.
Additional reporting by Jonathan Eley and Michael Pooler
Source: Economy - ft.com
