It’s been six weeks since Brexit, and given all that’s happened since then now probably doesn’t sound like a good time to launch a business.
However, Stowga went live two weeks ago and it’s been an amazing couple of weeks. We have been overwhelmed by the attention the website has got - and we think Brexit has a lot to do with that.
Here’s why we think that…
Economic uncertainty
The nation voted to leave but had no idea what it was actually voting for. It turns out nobody knows. The word ‘uncertainty’ has been bound a lot recently. It has become the new norm. On the stock markets volatility is high and trading volumes are massive. The Bank of England’s minutes last month were littered with references to the uncertain outlook and last week, European Central Bank President Mario Draghi used the word “uncertainty” 5 times in less than 30 seconds at the start of in his press conference.
As an aside, it’s worth noting that it’s not just Brexit — it’s the Italian banks, the non-stop terrorist attacks, that loud angry man in America and a whole load of other things that are all making the world a scary (or exciting?) place right now.
So what does this all mean for warehouses?
Pound goes down, warehouse demand goes up
The pound has taken a beating post-Brexit.
This is GBP/EUR, but the picture is the same for USD and other currencies for key UK trading partners outside the EU. The result: British goods are more attractively priced to foreign buyers. That means exports should rise - and continue to do so whilst the pound remains weak (or competitive, depending on your view point).
As demand for UK goods increases so to will demand for warehousing services, as these goods will need to be warehoused before being dispatched to wherever they are exported to.
Regulatory change: warehouse demand goes down… or up…
Leaving the EU means no free trade agreements with the single market as we currently know them. What the replacements look like is anyone’s guess — the Eastern Bloc may well be friendly, but some of the more heavy weights in the West may want to make a point, particularly if Michel Barnier has anything to do with it. If the EU is hard on the UK and imposes greater barriers to trade then that will mean less demand for warehousing and associated logistics services.
The other unknown is whether or not some unforseen new requirements will be placed on the industry, particularly around the storage of goods. Who knows what could happen but if there are additional requirements then this could increase operators’ costs, and has the potential to disrupt the UK’s supply chains.
Clearly strategies with regards to supply chains will have to be rethought. Will retailers seek to source more home-grown goods? Will Asia, Africa or the Americas benefit as UK companies look for alternative, potentially more predictable partners? Probably.
The need for Stowga
What is certain is that right now there is absolutely no way to predict what any future UK/EU trade agreements might look like and what the timeframe for negotiations will be. None of us have any idea what shape either the global economy, sterling or indeed international trade agreements will look like over any reasonable timeframe.
Now is not a good time for businesses to commit to anything long term.
We started Stowga with the belief that there was a fundamental flaw in the current warehouse market and that flaw was the long-term commitment to leases that leads to great inefficiencies in the system. In this environment no one wants to commit to a long term liability like that. Inefficiency can only go one way.
As a business it makes sense to have flexibility in order to maximise efficiencies, even if that means sometimes paying a premium for the optionality — ultimately it will save you money.
In the past two weeks we have been inundated with people looking for the solution we are building. If you want to know more about how we can help your business make more money, get in touch with us hello@stowga.com and one of our experts will help you out.
