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Is There a Storage Shortage?

April 23, 2019
Gareth Whyatt

Space in short supply

Britain’s food industry has been left scrambling for additional warehousing space as growing fears of a no-deal Brexit have led manufacturers and retailers to stockpile goods. In November last year prices per pallet went up 15% every week in the rush for warehouse space amid fears that key ports such as Dover will come to a gridlock, leaving supply chains vulnerable. Premier Foods, which owns Bisto, Mr Kipling and others, have announced immediate plans for stockpiling and are expected to spend up to £10 million on preparations. Tesco has even rented frozen food containers outside its largest stores for the rest of this year. A major problem being faced is that fresh produce cannot be stockpiled. Furthermore, food is manufactured and stored on a just-in-time basis, and the system isn’t built for stockpiling, so Britons could face shortages of fresh food, less variety and price rises if the country leaves the European Union without agreeing trade terms.

According to the Food and Drink Federation, the problem of finite warehousing cannot be solved this side of Brexit. Large warehouses cost tens of millions in investment and require around three years to build, so even if the funds were already in place, they still couldn’t be built in time. Some companies hold out hope that the suppliers will shoulder some of the burden placed on the warehouses by holding on to higher levels of stock, but it’s unlikely to happen. Mounting fears resulting from the uncertainty include whispers of whether rationing would be necessary for a sovereign country once considered a bastion of economic stability, and warnings that some medications will run into short supply, including life-saving insulin, are troubling, to say the least.

Taking stock of the problem

With companies taking measures to protect their own stock and supply lines, the industry is left scrambling for any possible solution, but the panicked hoarding mentality could prove rather short-sighted. The National Farmer’s Union (NFU) calculated that in any given year, the UK would run out of British-grown food by August.

By the most generous estimate Britain is around 60% self-sufficient with food, so in the event of a no-deal Brexit, that percentage would need to dramatically increase. Ideally, the Food Storage and Distribution Federation (FSDF) and the bigger manufacturers with warehouse space at their disposal could be offering refrigerated storage space for essential perishables produced in the UK, keeping the chain of supply alive and well. But they don’t have any space at their disposal.

There is currently over 50,000 tonnes of fresh and perishable produce flooding into the country every day, but with chilled warehouses approaching full capacity, there is simply nowhere to put everything. According to the FSDF, over 90% of the 385 refrigerated warehouses across the UK are already full. The UK Warehousing Association have said that as much as 75% of total warehouse space is already taken up: meaning European companies rushing to request UK pallet space are being turned away.

A complex concern

It’s not simply a case of finding the space, stockpiling is a very costly business. Britain currently spends £50 billion per year on medicine and non-perishable foods and stockpiling only a month’s worth of such supplies would cost almost a billion pounds more than the entire £3 billion budget planned for a no-deal outcome. But Britain doesn’t have the capacity to stockpile more than a few days of food at a time anyway.

The Food and Drink Federation (FDF) has already warned the government that companies looking for extra storage space for fresh produce are already too late, as there is no bookable space left. Many companies will need to be innovative in order to stay on top of supply demands, with some smaller ones already adopting a kind of Airbnb approach to their current warehousing space. A fantastic idea, but sadly one that is not an option for medium-sized and larger companies.

There is still a small amount of room for ambient goods – food stored at room temperature in sealed containers – but at inconvenient locations to supply routes.

Which way to turn

So, whose problem is this? Where should the burden fall? The government has no means to stockpile food and its proposed contingency plans have already been contradicted by industry professionals. Which means it would be left up to the food industry to deal with. However, an industry is the sum of its parts and everything is interconnected, so if one aspect fails there is a knock-on effect. One recent example saw a shortage of CO2 lead to major supply problems for various disparate products, such as beer and crumpets. If storage space isn’t offered then British companies could go under, meaning massive job losses and a downturn in the economy, which is already facing a troubling time ahead in every sector without the added woes of British food manufacturers and supply companies taking major hits or even closing down.

A cooperative conversation

Now is not the time to just horde and hope for the best, it’s time to open the doors to other businesses, to discuss how the industry can collectively stay afloat, so that it may thrive again in the future. The British Retail Consortium has revealed that clients and their suppliers are already in talks to see how costs and risks would be shared in the event that stock is delayed but are yet to arrive at a definitive agreement. It will take innovation and cooperation and it definitely won’t be easy.

Like many aspects of Brexit, the questions posed are no closer to being answered. Whatever the final outcome, it seems likely that the UK will, at the very least, experience an erosion of choice and we might see major changes to the industry and how we eat.

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About The Author

Gareth Whyatt

After 12 years’ experience within the industry predominantly focusing on Operations and Supply Chain, founding The Sterling Choice has provided me with the opportunity to take a step back and focus on my passion for developing people and teams! As the self-proclaimed Head of Training I love seeing people develop and grow through the recruitment ranks and ultimately achieving both their personal and business goals.

For me The Sterling Choice is all about fun, results and collective success

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