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Home Supply Chain

UK logistics groups buoyed by Brexit

by Team Logistics Asia
April 22, 2021
in Supply Chain, Warehousing
UK logistics groups buoyed by Brexit
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Companies are enjoying surge in demand for warehouse space and custom clearance services

A set of little known British logistics companies behind the supply chains of well-known corporate brands such as Zara, Nike and Argos have become unexpected Brexit winners.

A surge in demand for warehouse space and custom clearance services has boosted a range of groups in the sector, which has already been buoyed by the boom in online shopping following the pandemic.

The success also sets the stage for a return to elevated pre-pandemic levels of deal making in the fragmented industry, which includes groups such as Clipper Logistics, Eddie Stobart, Wincanton and Xpediator.

Tony Mannix, chief executive of Leeds-based Clipper, said the company has experienced higher demand for stocking products and handling online returns for multinational retailers operating in the UK and the EU because it has warehouses on both sides of the Channel.

“Brexit has caught some people out. We see Brexit as an opportunity, not a threat,” he said.

The company’s share price has quadrupled since hitting their pandemic-induced low last March on the back of booming ecommerce and work to deliver personal protective equipment for the NHS.

Eddie Stobart has been helped by a 50 per cent jump in demand for full truck loads into the UK © Eddie Stobart

Eddie Stobart, the Warrington based group known for its distinctive trucks, also said demand has risen in the UK since Brexit for cross docking, which involves delivering products from factories to customers with little or no storage in between, and for warehouse space, particularly for goods yet to be processed by customs.

It has been helped by a 50 per cent jump in demand for full truck loads into the UK. Those inbound trucks are attracting better rates, which is compensating for an equivalent drop for full truck loads returning from the UK to Europe.

Wincanton, based in Chippenham, is another group expecting a boost. It said in a trading update last month that revenues for its public and industrial business would rise 10 per cent in the quarter to March 31 over a year earlier partly because of higher activity on contracts for inland border clearance services.

In the case of Xpediator, the Braintree-based company has hired 50 extra staff to cope with customs clearance outsourcing requests. The developments may also encourage takeovers.

The logistics market experienced a burst in takeover activity with 28 in the six months to March, marking a return to the high number of deals before the pandemic hit.

This is down to supply chain groups pursuing scale, access to key technologies and growth opportunities in ecommerce, food, drink and international freight, according to advisory BDO.

Robert Ross, chief executive of Xpediator, said he hoped to snap up rivals in the Czech Republic, Poland, Slovakia and Latvia, while Mannix of Clipper is hunting for takeover targets in France, Italy, Spain and the US.

The boost to business from Britain leaving the EU also comes at a good time for low-margin freight businesses as they face threats from Amazon encroaching ever further into logistics, while shipping companies such as Maersk attempt to become end-to-end logistics providers.

Clipper’s Mannix, however, was unfazed by the challenges, saying the sector stands to benefit from attempts to blend online and physical retail logistics through streamlined returns processes, inventory management and click and collect services. “As the high street is starting to emerge out of darkness, we’re going to see other things develop that will help the logistics sector,” he said.

Source: Financial Times
Tags: Supply ChainWarehousing

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