With changing online shopping habits post-pandemic and a major shake-up in UK distribution lines post-Brexit, it’s no wonder that warehousing and storage companies are on the rise. Many businesses are looking for answers to their growing fulfilment needs, and both national and regional centres are stepping up to meet this demand.
Here’s our round-up of the steps that the businesses that we’ve recently funded and those in the wider industry have taken.
Brexit-boosted end-to-end supply chain opportunities
Where many products coming into the EU used to pass through ports like Rotterdam and Antwerp before arriving in the UK, these are now sent directly to Felixstowe and Southampton. And with laws around delivery working hours that limit how long drivers can be on the road, it makes sense for many large distribution centres to set up in the centre of the country.
This is where the Golden Logistics Triangle becomes such an attractive location for warehouse providers. Within this roughly 300 square-mile stretch across the Midlands, 90% of the UK population can be reached in a 4-hour drive. And with easy access to major motorways like the M1, M6 and M42, it’s a prime location to build warehouses.
Samsung Climate Solutions is an example of a major business expanding its warehouse capacity in the region. Its new location, run by XPO Logistics, s in Leicester and has put it in a stronger position to receive more stock from its factories and distribute it more easily.
Taking advantage of new demand
For product-based businesses that are growing at pace, increased demand can require you to upgrade your logistics and warehousing needs. The UK warehousing sector has seen demand almost double within the last 10 years, with a large amount of this fuelled by pandemic online shopping habits. And where consumer demand is going up, so too is the demand for warehouse facilities to store and ship out all these new purchases.
This is something we have seen with the warehousing and logistics companies we’ve funded ourselves. We backed ASBT Warehousing Ltd with a loan in 2022, which funded the building of three new warehouses in Norwich. These were built with tenants already in mind, who then signed up for leases, keeping them in the warehouses for the next decade as they power on with their own growth plans.
Helping through transitional phases
At any given time, there’ll be plenty of businesses around the country both expanding their operations and some thinking about winding down. Naturally, there’ll come a point where the size of the premises doesn’t match the amount of equipment they need to house, and so external storage units can provide the answer to this problem. A temporary lease with a storage unit is particularly useful when you’re not quite sure what will happen next, as this gives more flexibility than signing up for more permanent warehousing solutions.
With rental terms and unit sizes to suit different needs, self-storage can be perfect for a business that needs time to decide on its next move. The industry is booming because it offers more flexibility to fit around different businesses and personal circumstances, from relocations to retirements.
We backed UK Storage Company earlier in 2023, who have grown to be one of the UK’s largest independent storage providers. They’re one of a growing number of storage solutions companies giving transitioning business options, and with multiple locations in smaller cities and towns, they’re going right to where their customers are.
Our Debt Finance Director, Martin Williams, has worked on several loans that support growth in self-storage and logistics chains. He sees the huge value of supporting the businesses that are filling this growing demand gap. “At a time where businesses may still be unsure of committing to longer-term contracts and there’s an undersupply of storage solutions, it makes sense to be backing companies like this with the cash they need.
Warehousing and distribution continue to see strong demand, with pan-European and global companies seeking distribution hubs on both sides of Brexit. Further focus on the carbon footprint of the “last mile” delivery means that for every super shed hub, there is a need for smaller, regional logistics partners. And we’re here to help get their funding sorted quickly, so they can step in and meet this demand.”
If your own business is expanding and looking at debt finance to take you to your next growth stage, check out how our business loans can support you.
