Further to confirmation by the government that the COVID-19 restrictions are to continued and with no clear end in sight, the CEO of the UK Warehousing Association (UKWA) Peter Ward has made a direct appeal to Rishi Sunak MP, Chancellor of The Exchequer and Minister Robert Jenrick MP for additional support for the sector.
Stating that a large section of the UK’s warehousing industry is facing crisis, Ward commented, “While those operating in the food and essential supplies space are busy and visible both to government and the public, many more serve the non-essential sectors such as clothing and non-FMCG goods. For these warehouse operators, although their businesses have ground to a halt as shops and factories close, they are still receiving products as inbound flows continue to arrive at our ports from overseas, fulfilling orders placed before ‘lockdown’ was declared. They remain operational, trying to find additional storage space, unable to furlough staff and facing a massive drop in income.”
He added, “It is important the government understands that warehouses thrive on churn, namely handling, packaging and distributing orders – rather than on storage alone. Indeed, a survey of 100 of our members last week revealed that for 70% of respondents, storage charges alone represented less than 50% of income. This means that simply holding goods for customers, rather than receiving, handling and then distributing, has hit profitability hard.”
For the largest companies, it is likely they will weather the storm. However, for the vast majority of SMEs – many of whom are UKWA members – Ward believes the COVID-19 restrictions are threatening their very survival.
UKWA has therefore requested that the government considers a Business Rates holiday for hard-hit warehouse operators, to help with the current cashflow crisis. While understanding that Business rates are levied by local authorities, Peter Ward believes that the commitment by government to support warehouses with a six month holiday on Business Rates, ideally back-dated to March, would help immensely, reducing overheads during a period when income is severely reduced and customers are slow or unable to pay their bills.
“As the industry that keeps our country clothed, fed and supplied with the products they need, this sector will be vital to the future recovery of our economy. We cannot and must not let hundreds of small businesses in this sector go to the wall,” he said. “As the voice of the industry, the UKWA has responsibility to ensure the government recognises the plight of many of our members and the likely impact on recovery for the UK economy if these businesses fail.”