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A recent report released by Savills, in association with the UK Warehousing Association (UKWA), highlights a critical lack of warehouse space in the UK. Three factors that point to a rapidly developing issue for the sector are:
  • Supply of warehouses in the UK is currently 32 million square feet
  • There is a headline vacancy rate of 7.5%
  • 20% of the stock is not fit-for-purpose
Lack of supply is not the only issue
The study also revealed that land will become increasingly scarce in prime logistics locations like the East Midlands. So it’s not just about lack of supply, attention also needs to be paid to the way that supply is used.
They report that, of the 424 million square feet of existing warehouse space, only another 32 million square feet is in development for future demand. And of the 32 million sq ft currently in development nearly 10 million is not fit for current warehousing requirements. This is an alarming amount considering that 51% of warehouses are purchased as Build to Suit units.
The UK economy relies on a supply of warehouse space that is fit for purpose and not addressing shortfalls now will negatively impact the UK economy.
Kevin Mofid, Head of Industrial Research at Savills, stated that: “The availability of modern and fit for purpose warehouse space has the potential to be a real pinch point for the logistics sector in the coming years”.
Old news
This isn’t a new concern. In 2012 the UKWA highlighted that the recession had made it increasingly difficult to fill warehouses and, to avoid paying the tax, many warehouse owners had simply demolished empty buildings.
Roger Williams, chief executive officer of UKWA, commented:
“When the Empty Property Rate Tax Rules were changed in 2008, Ministers justified the move on the grounds that the reforms would provide an incentive for owners to re-use, re-let or re-develop their empty properties.
 
“It was also felt that the changes would result in an increase in the supply of commercial property available to new and existing businesses, thereby helping to reduce rent levels which burden the competitiveness of the UK. Neither of these things happened.
 
“The fact is that the tax has not only encouraged the early demolition of older empty warehouse buildings but could also be said to have discouraged the construction of new speculative warehouses.”
As a result, companies looking for warehouse accommodation are still faced with a shortage of available warehouse space and are being forced to pay high rent rates for the use of decent facilities in prime locations.
E Fulfilment
A growing area within the storage sector is online retail fulfilment. With the rise of the internet and ecommerce opportunities, the way we shop has changed forever. As a result, the storage demands for online retailers will only continue to grow.
However, many businesses do not have the time, staff, specialist expertise or storage space to be able to handle all their own warehousing and transportation. One way to handle this would be to outsource these services with a growing number of companies who are now able to cover fluctuating business demands.
They also make considerable cost and time savings, boost profits and can provide their clients with a more efficient service, while enjoying more freedom to focus on their core business. At the same time, they are able to make better use of their own storage space, and can benefit from the expert knowledge and skills which specialist transportation and warehousing service providers have.
Jonen Shipping
In order to satisfy the growing demand for storage and the use of e-fulfilment services, we have recently acquired extra warehouse space at both our Leicester and Essex locations. This extra capacity complements our existing international and domestic offerings and positions us to be able to fully service our customers’ requirements into 2017.
Your shipping, storage and distribution needs; all under one roof.

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Currently there is great excitement in the freight transport, logistics and supply chain management sectors about the Nigerian government’s plans to increase port and terminal activity. Thousands of representatives from the transport and logistics industry, ranging from road, rail, sea, air to inland waterways, will meet for the Multimodal West Africa exhibition and conference in Lagos from 24th -26th January 2017.
Nigerian economy is ready to take a big leap
The Nigerian economy is ready to take a big leap but its port infrastructure unfortunately does not support the vision and forms a major bottleneck. With the new plans in place it is believed that the port and terminal industry landscape will completely change.
In July 2016, the Minister of Aviation noted that their ports are currently overwhelmed and as a result of that, they are creating dry ports for the different geopolitical zones. This will go a long way to strengthen connecting modes of transports, especially the rail system and also boost relationship within and outside African countries through the Ecowas Trade Liberalisation Scheme.
UK businesses are well placed to succeed in Nigeria
The UK’s importance in Nigeria has been declining. Since 2000, the UK has fallen from 1st to become only the 5th largest non-oil goods exporter to Nigeria behind China, US, India and Germany. Similarly, the UK’s share of the Foreign Direct Investment (FDI) stock in Nigeria has decreased from close to 7% to less than 2% between 2005 and 2014.
The UK’s decline can be attributed to the growing importance of China and India in global trade, and an apparent decline in the UK’s competitiveness relative to its developed economic rivals, most notably Germany. The German government appears to have been more effective at using closer cooperation at the ministerial level and trade delegations to bring together German and Nigerian businesses.
UK businesses remain well placed to succeed in Nigeria because of its familiar legal system, strong ties through the diaspora community, and the perception that UK brands offer high quality.
Challenges to overcome
Nigeria is dogged by a perception as being a difficult place to do business. While these constraints certainly exist, businesses can thrive if they are ready to adapt to the local business environment. We have categorised the constraints into two groups:
  • Infrastructure constraints – utilities (power, water), transport (roads, ports, rails and airports) and ICT (telecommunications and media connectivity).
  • Other business constraints – expensive and scarce financing (trade and working capital), lack of skilled labour, security concerns and higher cost of doing business.
Successful UK companies deal with these constraints in two ways: smaller companies tend to partner with local distributers and wholesalers, whereas larger companies typically establish a representative office in Nigeria and then build a supply chain locally.
The UK’s non-oil exports to Nigeria could reach £7bn in 2030
It is predicted that UK non-oil exports to Nigeria could account for £7.1bn by 2030, up from £1.9bn in 2014, and split 75% and 25% between goods and services. In addition, we estimate that the UK’s FDI footprint could increase to £4½bn from £1bn over the same period.
The critical success factors that will determine where in this range the UK’s export potential in Nigeria will be are:
  • The speed at which Nigeria’s government can overcome the current adverse economic conditions and make progress on reforms, particularly addressing corruption and infrastructure constraints;
  • Nigeria’s policies on trade openness to compliment economic growth and provide more opportunities for UK exporters; and
  • UK competitiveness relative to its advanced economy rivals.
The opportunity will only materialise if it is proactively pursued, by the UK government to ‘myth bust’ and facilitate cooperation, and by UK businesses to build relationships and partners in Nigeria.
Jonen Shipping
With Nigeria looking to invest heavily in its trade resources, this presents a great opportunity for trade from the UK to Nigeria and vice versa. With the highest level of expertise and years of experience Jonen Shipping are able to provide expert advice and shipping solutions for you to capitalise on this exciting prospect.

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