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magazineCould logistics firms benefit from stockpiling ahead of Brexit?
Food and beverage companies seem to be following in the footsteps of the drug firms in making preparations for a ‘no-deal Brexit’.
Heineken recently announced plans to deal with supply chain issues and back in July pharmaceutical giant AstraZeneca (AZN) caused quite the stir when it announced that it would begin stockpiling medicines in preparation for a no-deal outcome.
The company said it would increase the amount of finished medicines available to pharmacies and hospitals by around 20% ‘as a safety net’.
Less than a month later rival Sanofi announced that it would also stockpile medicines in the UK.
Sanofi is one of the world’s leading producers of insulin and vaccines and imports its medicines into the UK.
CROSS-CHANNEL TRADE RISKS INCREASING
Every month some 37m packs of medicine come into the UK from Europe and 45m travel the other way, according to a BBC report.
All drugs are licensed, tested and certified according to strict national regulations, and for now tests in the UK and Europe are treated equally.
Under a ‘no-deal Brexit’ that would no longer be the case, potentially causing major delays in the UK getting drugs from Europe and vice versa.
Now it seems food companies are following suit. Cold storage firm Wild Water says it is running out of room because food producers and supermarkets are concerned that food will be held up at ports ‘with or without a deal’.
Last week Heineken, the world’s second-largest brewer, admitted that it had begun adding warehouse space in the UK to give it ‘greater flexibility to meet customer demands’.
Its comments came after the chief executive officer of UK logistics firm Wincanton (WIN), Adrian Colman, described the Dutch firm as stockpiling ‘thousands of pallets worth of goods’ ahead of the March deadline.
EARLY CHRISTMAS (AND EASTER) FOR LOGISTICS FIRMS
The Centre for Economics and Business Research estimates that UK firms will stockpile close to £40bn of goods ahead of Brexit.
Among the goods being stored by Wild Water are 1.75m turkey crowns, 7,000 pallets of cakes, 4,000 pallets of supermarket deserts and 1,000 pallets of mozzarella sticks of all things.
Wild Water’s chief executive Ken Rattenbury described the surge in demand as ‘completely out of sync’ with normal trading and says it is having to turn customers away on a daily basis.
As well as finished products, customers are worried about keeping access to supplies of raw ingredients post-Brexit including such basics as flour and fruit juices.
Besides brewers stockpiling beer, Wincanton has seen chocolate-makers producing and stockpiling Easter eggs months ahead of normal in order to ensure it can supply its customers.
Next year Easter falls in late-April so there is likely to be a big rush for all kinds of seasonal products before the March 31 Brexit deadline.
Other UK stocks which may be linked to stockpiling in coming months include transport firms Eddie Stobart Logistics (ESL) and Xpediator (XPD:AIM) and warehouse landlords like Segro (SGRO) and Warehouse REIT (WHR:AIM). (IC)
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