Hoard­ing firms fill Bri­tain’s ware­houses

The Weekend Australian - - THE WALL STREET JOURNAL - DAPHNE ZHANG

Global com­pa­nies are stock­pil­ing so many parts, in­gre­di­ents, drugs and other goods ahead of Bri­tain’s planned exit from the Euro­pean Union next year that stor­age space in Bri­tain is run­ning out.

Pfizer, Air­bus and cig­a­rette maker Im­pe­rial Brands are among a raft of busi­nesses stock­ing up to se­cure sup­plies ahead of a March sep­a­ra­tion date. Their con­cern is that Bri­tain might exit the EU without agree­ments in place to min­imise dis­rup­tion at the bor­der.

British mem­bers of the House of Commons are set to vote next week on a plan that could al­lay these fears, but the pro­posal has been crit­i­cised across the po­lit­i­cal spec­trum and isn’t ex­pected to gain par­lia­ment’s ap­proval. That would likely lead to more talks be­tween Bri­tain and the EU, in­clud­ing the spec­tre of a “no-deal” Brexit in which the UK essen­tially crashes out of the free-trade bloc, threat­en­ing to slow, or even halt, the flow of goods that move across the English Chan­nel.

Busi­nesses and lo­gis­tics firms say con­tin­gency plan­ning for that worst-case sce­nario has stepped up in re­cent months as politi­cians hag­gle. With so many com­pa­nies hoard­ing sup­plies, there are re­ports of short­ages in ware­house space in some ar­eas.

“We are turn­ing busi­nesses away every day, every sin­gle day,” Ken Rat­ten­bury, chief ex­ec­u­tive of Wild Water, a Cardiff-based cold-stor­age com­pany, said. “Every­body is look­ing to stock­pile. Cus­tomers are wor­ried about raw in­gre­di­ents, flour, meat pro­duce — ev­ery­thing you can think of.”

Wild Water fa­cil­i­ties have been fully booked for five months and the com­pany is in­vest­ing in ex­tra space to help meet de­mand.

Air­bus, which makes the wings for its air­lin­ers in Bri­tain, has been ask­ing sup­pli­ers to stock­pile parts to pro­tect it against pro­duc­tion dis­rup­tions from Brexit. The Euro­pean aerospace gi­ant has said its plan­ning right now is based on a “no-deal” out­come. “In a week’s time, hope­fully, we will know more but even then, there are still un­cer­tain­ties,” chief ex­ec­u­tive Tom En­ders said this week.

“We may cer­tainly not have con­tin­gency plans for ev­ery­thing,” he said. “But I’m quite con­fi­dent. If a with­drawal agree­ment comes through, we are well pre­pared.”

Food com­pa­nies are es­pe­cially vul­ner­a­ble to dis­rup­tion at the bor­der since many per­ish­able in­gre­di­ents and fin­ished prod­ucts need to be kept cold or frozen, and fewer ware­houses suit that pur­pose.

“Frozen and chilled (fa­cil­i­ties) are for all prac­ti­cal pur­poses booked out at the mo­ment,” Ian Wright, chief ex­ec­u­tive of the Food and Drink Fed­er­a­tion, told MPs at a re­cent hear­ing.

He said mem­bers of the trade as­so­ci­a­tion had dif­fi­culty find­ing space and that what was avail­able was of­ten in the wrong part of the coun­try.

Char­lie Pool, chief ex­ec­u­tive of Stowga, a ware­house-rent­ing plat­form sim­i­lar to travel site book­ing.com, said rates at stor­age fa­cil­i­ties had risen about 10 per cent since Septem­ber as con­tin­gency plan­ning kicked in.

Big ware­house own­ers such as su­per­mar­kets — which typ­i­cally use Stowga to rent out their spare stor­age ca­pac­ity — in Oc­to­ber re­moved from the mar­ket about 600,000 pallets of space, equiv­a­lent to 12 foot­ball fields. Half that was for cold stor­age.

A short­age of cold stor­age is a chal­lenge for the phar­ma­ceu­ti­cal in­dus­try, which needs to re­frig­er­ate a lot of medicine.

“At the mo­ment, we’re prob­a­bly near ca­pac­ity on re­frig­er­a­tion,” Pin­der Sa­hota, gen­eral man­ager for the British oper­a­tions of Novo Nordisk, told MPs at a re­cent hear­ing. The Dan­ish in­sulin maker has dou­bled its stock in the coun­try.

Di­rec­tor of food and sus­tain­abil­ity at the British Re­tail Con­sor­tium, An­drew Opie, said Brexit was slated for a par­tic­u­larly bad time of year — when Bri­tain is es­pe­cially re­liant on im­ports of fresh but per­ish­able pro­duce.

Straw­ber­ries from Spain, for in­stance, might have a shelf life of just four days.

“There is a limit to how much you can stock­pile,” Mr Opie said.

BLOOMBERG

Air­bus is stock­pil­ing parts for its wing fac­tory in Bri­tain

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