Supply chain crisis and ecommerce boom pose capacity problems for UK warehouse sector

Tue 26 Oct 2021
Posted by: William Barns-Graham
Trade News

warehouse worker

Industry experts are warning that the UK could run out of warehouse space within a year, with the supply chain crisis and sustained ecommerce growth leading to record demand.

According to property agent Cushman & Wakefield, there is less than 50m square feet available warehouse space in the UK, the lowest level since it started tracking the sector in 2009.

There has been a take-up of 49m square feet of space over the first nine months of the year, meaning the country is on course to beat last year’s record figure of 53m, reports SHD Logistics.

Double whammy

According to the FT, the boom in demand has been driven by a combination of growth from ecommerce companies such as Amazon and other companies taking on warehousing to combat supply chain disruption brought on by Brexit and the pandemic.

European companies have also invested in warehouse space to be closer to their customers in the UK, said Bruno Berretta, head of logistics research at Cushman & Wakefield.

“Supply chains have been re-engineered along borders. You need a more local presence,” he said.

New developments

The demand for space has led to new development work in the industry, with 12m square feet of warehousing in the pipeline in Q3.

Ed Cornwell, a partner at Cushman & Wakefield, said: “We are currently tracking more than £22 billion in capital wanting to enter the sector which equates to approximately four years’ worth of transactions pre-Covid.”

Labour shortage

The lack of space is being compounded by a shortage of warehouse workers, with staff being offered pay rises of as much as 30% as firms compete to fill thousands of vacancies, reports the Independent.

Even ecommerce giant Amazon is struggling to fill positions, with CNBC reporting that the company is offering sign-on bonuses of up to £3,000 for temporary warehouse workers in the UK ahead of Christmas.

Holiday demands

In the US, Amazon is also bulking up shipping capacity ahead of the holiday season, doubling its container processing capacity and securing more shipping storage from ocean freight carriers to try to overcome supply chain bottlenecks, reports Reuters.

The BBC reports Next chief executive Lord Wolfson warning that warehouse and logistics staffing was “beginning to come under pressure” ahead of the festive period.

“We anticipate that, without some relaxation of immigration rules, we are likely to experience some degradation in our service in the run up to Christmas,” he said.