No sign yet of UK ports storage crisis

5/9/2020

The expected shortage of cargo storage capacity in the UK this month, particularly at container ports, has not materialised so far, despite imports ordered before the coronavirus lockdown continuing to flood into the country while most retail outlets and manufacturers remain closed

With warehouses already close to full in mid-April, it was feared that demand for warehousing and distribution centre capacity would reach or exceed supply in May as import orders placed in the window after China’s factories resumed output after coronavirus shutdowns, and before the UK announced its own lockdown, arrived at ports.

There were also suggestions that some shippers might be tempted to leave boxes at ports and seek help from government with demurrage charges, potentially clogging up facilities handling emergence medical equipment.

However, thus far at least, the UK port and warehousing logistics system is coping with the influx of cargo, while many home-improvement or ‘DIY’ outlets have now reopened, helping to free up space.

Container terminal green lights

Although at the port of Felixstowe, hauliers are sometimes experiencing waiting times over three hours to collect boxes, cargo is generally not suffering any major delays, terminals are not congested and on-dock and off-dock storage space is available, according to Lloyd’s Loading List sources.

DP World told Lloyd’s Loading List that its London Gateway and Southampton facilities were also functioning smoothly, noting: “We expect it will remain busy with imports arriving from Asia until mid-May, but we see the imports continuing to flow out to inland destinations and, based on this, we don't expect our ports to get congested.”

Andy Tattersall, depot manager at James Kemball – which offers off-quay container storage near Felixstowe – told Lloyd’s Loading List that April had been busy, but the expected surge in volumes at the end of the month that might have required emergency capacity had not so far materialised.

“We’ve had a lot of boxes, but now with some DIY outlets opening, pressure has eased and we didn’t have quite the big surge we’d expected,” he said. 

“We are still extremely busy, but cargo is moving and we have sites available if more capacity is needed. A bigger problem is detention charges by lines [levied on customers for use of containers outside the free period] which are as high as £200 a day.”

Off-dock options

Tony Cole, head of supply chain services at freight forwarder Davies Turner, said the majority of clients were taking delivery of full container load (FCL) containers and less than container load (LCL) shipments as normal, or taking up Davies Turner solutions including repositioning FCL containers to off-dock and inland rail terminals, and moving cargo to various logistics facilities for unpacking and storage.

“Dependant on the volume of containers, importers may find it challenging to gain space for off-dock storage of FCL containers, be it near to the UK port of arrival or inland rail terminals, as availability may now be in short supply,” said Cole.

“There are alternatives for importers to consider; Davies Turner, for example, has space available at our sites in Dartford and Avonmouth. We can arrange the unpack of goods from containers, palletise and offer subsequent storage of cargo, irrespective of whether goods are in free circulation or not.”

Andy Thorne, CEO of the Kestrel Group, a Non-Vessel Operating Common Carrier (NVOCC), said while there was a lot of demand for UK storage at present, supply was still available and pricing had not increased.

“It seems that if the warehouses are full, they should be charging more money, but we are not seeing this reflected in storage prices or warehousing costs,” he said.

The Brexit factor

Thorne said the UK’s departure from the European Union on 31 January might also be a factor in current high storage levels.

“In the run up to Brexit, UK distributors carried more stock than usual,” he told Lloyd’s Loading List. “That filled the warehouses. Fast forward to post-Brexit and now Covid-19 and the reason the UK has fared better in terms of exports compared to other countries in my view is because distributors carried more stock, so that rather than having a two-week supply they had a six- or seven-week supply.

“So, we’ve continued to export by taking the stock out of the warehouses and it’s only now that manufacturers have been closed all this time that distributors are running out of stock.”

He expects a “blip” in UK exports in May when manufacturers run out of inventory, but expects production to start again in June. “Then cargo will be ready for export in July,” he added. 

“So, my view is that warehouses were full around Brexit. Now cargo has been exported, so warehouses had space which is now getting filled up with cargo ordered after the Chinese New Year [and coronavirus-extended] lockdown. 

“So maybe Brexit saved Britain from a coronavirus export disaster.”

Storage security risk

Freight insurance and risk specialists TT Club warned last week that lockdowns had caused significant build-ups of goods in importing countries, including the UK.

Michael Yarwood, managing director for loss prevention at TT Club, said security was the main risk for operators using new or temporary storage.

“Whether it’s taking up buildings not usually used for storage or laden vehicles parked adjacent to a full warehouse, or simply facilities unfamiliar to the operator, the security regime may not be of a similar standard,” he said.

“This concern is not just limited to fencing, lighting, security patrols and CCTV, but also communication with hauliers delivering cargo to the unfamiliar premises. 

“There is also the constant danger of vehicles being diverted into the hands of criminals; so-called ‘round-the-corner’ theft.”